Rent the Runway Inc

Previous wording

We give customers ongoing access to our “unlimited closet” — with thousands of styles by hundreds of designer brands — through our Subscription offering or the ability to rent a-la-carte through our Reserve offering. We also give our subscribers and customers the ability to buy our products through our Resale offering, which offers customers pre-loved styles from our closet at a discount to retail price, up to 90% off of designer retail value. These offerings allow us to engage and serve our subscribers and customers across diverse use cases from everyday life to special occasions. We have served approximately 3 million lifetime customers across all of our offerings and we had 185,346 ending total subscribers 1 (active and paused) as of April 30, 2024. We had 145,837 active subscribers as of April 30, 2024. The majority of our revenue is highly recurring and is generated by our subscribers. For the three months ended April 30, 2024 and 2023, respectively, 88% and 87% of our total revenue (including Reserve and Resale revenue) was generated by subscribers while they were active or paused.

Current wording

We give customers ongoing access to our “unlimited closet” — with thousands of styles by hundreds of designer brands — through our Subscription offering or the ability to rent a-la-carte through our Reserve offering. We also give our subscribers and customers the ability to buy our products through our Resale offering, which offers customers pre-loved styles from our closet at a discount to retail price, up to 90% off of designer retail value. These offerings allow us to engage and serve our subscribers and customers across diverse use cases from everyday life to special occasions. We have served approximately 3 million lifetime customers across all of our offerings and we had 175,087 ending total subscribers 1 (active and paused) as of July 31, 2024. We had 129,073 active subscribers as of July 31, 2024. The majority of our revenue is highly recurring and is generated by our subscribers. For the six months ended July 31, 2024 and 2023, respectively, 89% and 88% of our total revenue (including Reserve and Resale revenue) was generated by subscribers while they were active or paused.

Previous wording

Restructuring charges for severance and related costs of $0.2 million and $2.0 million were recognized during the three months ended April 30, 2024 and the year ended January 31, 2024, respectively, and are reflected in Restructuring charges on our Condensed Consolidated Statements of Operations. We may incur additional restructuring charges in the future.

Current wording

Restructuring charges for severance and related costs of $0.2 million were recognized during the six months ended July 31, 2024. No restructuring charges were recognized during the three months ended July 31, 2024. Restructuring charges of $2.0 million were recognized during the year ended January 31, 2024 and are reflected in Restructuring charges on our Condensed Consolidated Statements of Operations. We may incur additional restructuring charges in the future.

Previous wording

The January 2024 restructuring plan is expected to generate total annual operating expense savings of approximately $12 million, which primarily includes the reduction in force, with some open role closures/reduced backfills, and excludes potential hiring of new employees or other additions to the Company’s costs and expenses. The restructuring plan was substantially completed by the end of the fourth quarter of fiscal year 2023 and is expected to be fully completed by the end of the second quarter of fiscal year 2024.

Current wording

The January 2024 restructuring plan is expected to generate total annual operating expense savings of approximately $12 million, which primarily includes the reduction in force, with some open role closures/reduced backfills, and excludes potential hiring of new employees or other additions to the Company’s costs and expenses. The restructuring plan was substantially completed by the end of the second quarter of fiscal year 2024 and is expected to be fully completed by the end of the third quarter of fiscal year 2024.

Previous wording

Additional Key Fiscal First Quarter and Recent Business Highlights:

Current wording

Additional Key Fiscal Second Quarter and Recent Business Highlights:

Previous wording

•Record low quarterly consumption of cash flows from operations plus cash flows generated (used) in investing of less than $2 million, which is $11 million lower than the first quarter of fiscal year 2023 and $27 million lower than the first quarter of fiscal year 2022.

Current wording

•Improved consumption of cash flows from operations plus cash flows generated (used) in investing of $6 million for the six months ending July 31, 2024, which is $24 million lower than the six months ending July 31, 2023 and $48 million lower than the six months ending July 31, 2022.

Previous wording

•145,837 and 145,220 ending Active Subscribers 2 (excluding paused subscribers), respectively, representing a slight increase year-over-year;

Current wording

•129,073 and 137,566 ending Active Subscribers 2 (excluding paused subscribers), respectively, representing a change of (6)% year-over-year;

Previous wording

•135,896 and 135,966 Average Active Subscribers 3, respectively, relatively flat year-over-year;

Current wording

•137,455 and 141,393 Average Active Subscribers 3, respectively, representing a change of (3)% year-over-year;

Previous wording

•185,346 and 185,720 ending Total Subscribers (including paused subscribers), respectively, relatively flat year-over-year;

Current wording

•175,087 and 184,389 ending Total Subscribers (including paused subscribers), respectively, representing a change of (5)% year-over-year;

Previous wording

•Gross Profit was $28.4 million and $31.4 million, respectively, representing a gross margin of 37.9% and 42.3%, respectively;

Current wording

•Gross Profit was $32.4 million and $33.2 million, respectively, representing a gross margin of 41.1% and 43.9%, respectively;

Previous wording

•Adjusted EBITDA was $6.5 million and $4.5 million, respectively, representing an Adjusted EBITDA Margin of 8.7% and 6.1%, respectively;

Current wording

•Adjusted EBITDA was $13.7 million and $7.7 million, respectively, representing an Adjusted EBITDA Margin of 17.4% and 10.2%, respectively.

Previous wording

•Net Loss was $(22.0) million and $(30.1) million, respectively. Net Loss as a percentage of revenue was (29.3)% and (40.6)%, and included $0.2 million of restructuring and related charges for the three months ended April 30, 2024;

Current wording

•Net Loss was $(37.6) million and $(56.9) million, respectively. Net Loss as a percentage of revenue was (24.4)% and (38.0)%, respectively, and included $0.2 million of restructuring and related charges for thesix months ended July 31, 2024;

Previous wording

•Net cash used in operating activities plus net cash used in investing activities was $(1.4) million and $(12.1) million, respectively;

Current wording

•Net cash used in operating activities plus net cash used in investing activities was $(5.9) million and $(29.6) million, respectively;

Previous wording

•Net cash used in operating activities plus net cash used in investing activities as a percentage of revenue was (1.9)% and (16.3)%, respectively; and

Current wording

•Net cash used in operating activities plus net cash used in investing activities as a percentage of revenue was (3.8)% and (19.7)%, respectively; and

Previous wording

We acquire and monetize products in three ways: Wholesale, Share by RTR and Exclusive Designs. Wholesale items are acquired directly from brand partners, typically at a discount to Wholesale price. Share by RTR items are acquired directly from brand partners on consignment, at zero to low upfront cost with performance-based revenue share payments to our brand partners over time. Exclusive Designs items are designed using our data in collaboration with our brand partners. These units are manufactured through third-party partners with a low upfront fee and minimal revenue share payments to our brand partners over time.

Current wording

We acquire and monetize products in three ways: Wholesale, Share by RTR and Exclusive Designs. Wholesale items are acquired directly from brand partners, typically at a discount to Wholesale price. Share by RTR items are acquired directly from brand partners on consignment, at generally zero to low upfront cost with performance-based revenue share payments to our brand partners over time. Exclusive Designs items are designed using our data in collaboration with our brand partners. These units are manufactured through third-party partners with a low upfront fee and minimal revenue share payments to our brand partners over time.

Previous wording

Customer acquisition is dependent on both organic growth and the effectiveness of our paid marketing strategy. During fiscal year 2024, we anticipate focusing on increasing customer awareness of the Rent the Runway brand through brand campaigns, live events, and other initiatives. We are also focused on improving the efficiency of our paid marketing through channel diversification, improved creative content, and other optimizations. Our acquisitions are also reliant on new customer promotions. We expect our promotional spending to be below historical averages in the near to medium term, which is anticipated to reduce subscriber acquisition in the near-term, but support the health of the business over the longer-term. Our promotional strategy is subject to change depending on business and market conditions.

Current wording

Customer acquisition is dependent on organic growth, the effectiveness of our paid marketing strategy and the availability of and satisfaction with our rental product. During fiscal year 2024, we anticipate focusing on increasing customer awareness of the Rent the Runway brand through brand campaigns, live events, and other initiatives. We are also focused on improving the efficiency of our paid marketing through channel diversification, improved creative content, and other optimizations. Our acquisitions are also reliant on new customer promotions. We expect our promotional spending to be below historical averages in the near to medium term, which is anticipated to reduce subscriber acquisition in the near-term, but support the health of the business over the longer-term. Our promotional strategy is subject to change depending on business and market conditions. In fiscal year 2024, we have focused, and plan to continue to focus, on improving both the availability of and satisfaction with our rental product for our Reserve and Subscription customers.

Previous wording

We believe customer retention plays an important role in driving business growth. Customer retention is influenced by a number of factors, including rental product in-stock levels and satisfaction, product experience, and customer service levels. Starting in fiscal year 2023, we increased depth of our rental product purchases to improve rental product in-stock levels. We currently expect to continue to improve depths and maintain in-stock levels in fiscal year 2024. We are also focused on new product features as well as more personal customer service and styling. As a result of these initiatives, we have seen better customer retention in recent quarters.

Current wording

We believe customer retention plays an important role in driving business growth. Customer retention is influenced by a number of factors, including rental product in-stock levels and satisfaction, product experience, and customer service levels. Starting in fiscal year 2023, we increased depth of our rental product purchases to improve rental product in-stock levels. We currently expect to continue to improve rental product in-stock levels through our depth strategy in fiscal year 2024. In addition, we are focused on improving the availability of and satisfaction with our rental product by focusing on improved logistics and merchandising. We are also focused on new product features as well as more personal customer service and styling. As a result of these initiatives, we have seen better customer retention in recent quarters.

Previous wording

We use Adjusted EBITDA to assess our operating performance and the operating leverage of our business prior to capital expenditures. We also measure the cash consumption of the business including capital expenditures by assessing net cash used in operating activities and net cash used in investing activities on a combined basis. The 2023 Amended Temasek Facility reduces our cash interest payments during fiscal years 2024 and 2025 relative to the original agreement, which we expect to improve our overall liquidity.

Current wording

We use Adjusted EBITDA to assess our operating performance and the operating leverage of our business prior to capital expenditures. We also measure the cash consumption of the business including capital expenditures by assessing net cash used in operating activities and net cash used in investing activities on a combined basis.

Previous wording

We experience seasonality in our business, which has been impacted and may in the future change due to the effects of COVID-19, the macro environment, and business decisions. For our Subscription rentals, we typically acquire the highest number of subscribers in March through May and September through November, as these are the times customers naturally think about changing over their wardrobes. We generally see a higher rate of subscribers pause in the summer, and in mid-December through the end of January. In the third and fourth fiscal quarters, our Reserve business historically (prior to COVID-19) benefited from increased wedding and holiday events but this seasonality has varied since the onset of COVID-19. In fiscal year 2022, we believe that a price increase of our Subscription programs in April 2022 affected traditional seasonal patterns. In fiscal year 2023, changes in rental product in-stock levels and changes to promotional prices also disrupted typical seasonality. Given continued business changes, our future seasonality may not resemble historical trends.

Current wording

We experience seasonality in our business, which has been impacted and may in the future change due to the effects of COVID-19, the macro environment, and business decisions. For our Subscription rentals, we typically acquire the highest number of subscribers in March through May and September through November, as these are the times customers naturally think about changing over their wardrobes. We generally see a higher rate of subscribers pause in the summer, and in mid-December through the end of January. In the third and fourth fiscal quarters, our Reserve offering historically (prior to COVID-19) benefited from increased wedding and holiday events but this seasonality has varied since the onset of COVID-19. In fiscal year 2022, we believe that a price increase of our Subscription programs in April 2022 affected traditional seasonal patterns. In fiscal year 2023, changes in rental product in-stock levels and changes to promotional prices also disrupted typical seasonality. Given continued business changes, our future seasonality may not resemble historical trends.

Previous wording

Active Subscribers: Active Subscribers represents the number of subscribers with an active membership as of the last day of any given period and excludes paused subscribers. As of April 30, 2024, we had 145,837 Active Subscribers, slightly higher year-over-year.

Current wording

Active Subscribers: Active Subscribers represents the number of subscribers with an active membership as of the last day of any given period and excludes paused subscribers. As of July 31, 2024, we had 129,073 Active Subscribers, down from 137,566 as of July 31, 2023. The decline in active subscribers was driven by lower acquisitions due primarily to the change in our promotional strategy during the second quarter of fiscal year 2024 versus the same quarter last year. This decline was partially offset by improved subscriber retention during the quarter compared to the same quarter last year.

Previous wording

Average Active Subscribers: Average Active Subscribers represents the mean of the beginning of quarter and end of quarter Active Subscribers for a quarterly period; and for other periods, represents the mean of the Average Active Subscribers of every quarter within that period. As of April 30, 2024, we had 135,896 Average Active Subscribers, relatively flat from 135,966 as of April 30, 2023.

Current wording

Average Active Subscribers: Average Active Subscribers represents the mean of the beginning of quarter and end of quarter Active Subscribers for a quarterly period; and for other periods, represents the mean of the Average Active Subscribers of every quarter within that period. As of July 31, 2024, we had 137,455 Average Active Subscribers, down from 141,393 as of July 31, 2023. The decline in active subscribers was driven by lower acquisitions due primarily to the change in promotional strategy during the second quarter of fiscal year 2024 versus the same quarter last year. This decline was partially offset by improved subscriber retention during the quarter compared to the same quarter last year.

Previous wording

Gross Profit was $28.4 million for the three months ended April 30, 2024 compared to $31.4 million for the three months ended April 30, 2023, representing Gross Margins of 37.9% and 42.3%, respectively. Gross Profit and Gross Margin for the three months ended April 30, 2024 decreased due to the impact of higher rental product depreciation and revenue share costs as a percentage of sales, partially offset by lower fulfillment costs as a percentage of sales. We will seek to continue to drive fulfillment and operational efficiency gains over time and strategically evolve our mix of revenue and product acquisition to offset cost increases.

Current wording

Gross Profit was $32.4 million for the three months ended July 31, 2024 compared to $33.2 million for the three months ended July 31, 2023, representing Gross Margins of 41.1% and 43.9%, respectively. Gross Profit was $60.8 million for the six months ended July 31, 2024 compared to $64.6 million for the six months ended July 31, 2023 representing Gross Margins of 39.5% and 43.1%, respectively. Gross Profit and Gross Margin for the three and six months ended July 31, 2024 decreased due to the impact of higher rental product depreciation and revenue share costs as a percentage of sales, partially offset by lower fulfillment costs as a percentage of sales. We will seek to continue to drive fulfillment and operational efficiency gains over time and strategically evolve our mix of revenue and product acquisition to offset cost increases.

Previous wording

Adjusted EBITDA and Adjusted EBITDA Margin: We define Adjusted EBITDA as net loss, adjusted to exclude interest expense, rental product depreciation, other depreciation and amortization, share-based compensation expense, write-off of liquidated rental product assets, restructuring charges, other income and expense, and other gains / losses. Adjusted EBITDA margin is defined as Adjusted EBITDA calculated as a percentage of total revenue, net for a period.

Current wording

Adjusted EBITDA and Adjusted EBITDA Margin: We define Adjusted EBITDA as net loss, adjusted to exclude interest expense, rental product depreciation, other depreciation and amortization, share-based compensation expense, write-off of liquidated assets, non-recurring adjustments, restructuring charges, income tax (benefit) expense, other income and expense, and other gains / losses. Adjusted EBITDA margin is defined as Adjusted EBITDA calculated as a percentage of total revenue, net for a period.

Previous wording

Adjusted EBITDA was $6.5 million for the three months ended April 30, 2024 compared to $4.5 million for the three months ended April 30, 2023, representing margins of 8.7% and 6.1%, respectively. Adjusted EBITDA Margin improved year over year due to lower fulfillment costs and the impact of our fixed cost reduction efforts partially offset by higher revenue share payments due to a greater proportion of revenue share units.

Current wording

Adjusted EBITDA was $13.7 million for the three months ended July 31, 2024 compared to $7.7 million for the three months ended July 31, 2023, representing margins of 17.4% and 10.2%, respectively. Adjusted EBITDA was $20.2 million for the six months ended July 31, 2024 compared to $12.2 million for the six months ended July 31, 2023, representing margins of 13.1% and 8.1%, respectively. Adjusted EBITDA Margin improved year over year due to our fixed cost reduction efforts, higher revenue and lower fulfillment costs partially offset by higher revenue share payments due to a greater proportion of revenue share units.

Previous wording

Subscription and Reserve Rental Revenue. We generate Subscription and Reserve rental revenue from subscription and Reserve rental fees. We recognize subscription fees ratably over the subscription period, commencing on the date the subscriber enrolls in a subscription program. These fees are collected upon enrollment and any revenue from an unrecognized portion of the subscription period is deferred to the following fiscal period. We recognize Reserve fees over the rental period, which starts on the date of delivery of the product to the customer. Reserve orders can be placed up to two months prior to the rental start date and the customer’s payment form is charged upon order confirmation. We defer recognizing the rental fees and any related promotions for Reserve rentals until the date of delivery, and then recognize those fees evenly over the four- or eight-day rental period.

Current wording

Subscription and Reserve Rental Revenue. We generate Subscription and Reserve rental revenue from subscription and Reserve rental fees. We recognize subscription fees ratably over the subscription period, commencing on the date the subscriber enrolls in a subscription program. These fees are collected upon enrollment and any revenue from an unrecognized portion of the subscription period is deferred to the following fiscal period. We recognize Reserve fees over the rental period, which starts on the date of delivery of the product to the customer. Reserve orders can be placed up to four months prior to the rental start date (increased from two months prior to the rental start date beginning in June 2024) and the customer’s payment form is charged upon order confirmation. We defer recognizing the rental fees and any related promotions for Reserve rentals until the date of delivery, and then recognize those fees evenly over the four- or eight-day rental period.

Previous wording

Total Revenue, Net. Total revenue, net was $75.0 million for thethree months ended April 30, 2024, an increase of $0.8 million, or 1.1%, compared to $74.2 million for thethree months ended April 30, 2023. This increase was primarily driven by the increase in units purchased per subscriber offset by lower reserve revenue. In fiscal year 2024, we expect revenue to increase as we work towards growing our customer base, improving the customer experience and continuing to focus on our resale revenue.

Current wording

Total Revenue, Net. Total revenue, net was $78.9 million for thethree months ended July 31, 2024, an increase of $3.2 million, or 4.2%, compared to $75.7 million for thethree months ended July 31, 2023. This increase was primarily driven by the increase in units purchased per subscriber. In fiscal year 2024, we expect revenue to increase as we work towards growing our customer base, improving the customer experience and continuing to focus on our resale revenue.

Previous wording

Other Revenue. Other revenue was $8.9 million for thethree months ended April 30, 2024, an increase of $1.5 million, or 20.3%, compared to $7.4 million for thethree months ended April 30, 2023. This increase was primarily driven by an increase in the items purchased per subscriber. Other revenue represented 11.9% of total revenue, up from 10.0% in the same period last year.

Current wording

Other Revenue. Other revenue was $10.4 million for thethree months ended July 31, 2024, an increase of $2.7 million, or 35.1%, compared to $7.7 million for thethree months ended July 31, 2023. This increase was primarily driven by an increase in the items purchased per subscriber. Other revenue represented 13.2% of total revenue, up from 10.2% in the same period last year.

Previous wording

Costs and Expenses. Total costs and expenses were $91.5 million for thethree months ended April 30, 2024, a decrease of $(4.0) million, or (4.2)%, comp ared to $95.5 million for thethree months ended April 30, 2023. This decrease wasprimarily driven by lower share based compensation expense, cost savings from the January 2024 restructuring plan, the implementation of our new transportation contract in September 2023 and improvement in warehouse labor productivity, which reduced costs compared to the same period last year, offset by higher rental product depreciation and revenue share.

Current wording

Costs and Expenses. Total costs and expenses were $88.5 million for thethree months ended July 31, 2024, a decrease of $(4.7) million, or (5.0)%, comp ared to $93.2 million for thethree months ended July 31, 2023. This decrease wasprimarily driven by lower share-based compensation expense, cost savings from the January 2024 restructuring plan, the implementation of our new transportation contract in September 2023 and improvement in warehouse labor productivity, which reduced costs compared to the same period last year, offset by higher rental product depreciation and revenue share.

Previous wording

Fulfillment. Fulfillment expenses were $20.6 million for thethree months ended April 30, 2024, a decrease of $(1.3) million, or (5.9)%, representing 27.5% of revenue, compared to $21.9 million for thethree months ended April 30, 2023, representing 29.5% of revenue. The decrease in fulfillment dollars and as a percentage of revenue was primarily driven by transportation and processing cost efficiencies and higher revenue per shipment that offset an increase in wage rates during the first quarter of fiscal year 2024.

Current wording

Fulfillment. Fulfillment expenses were $20.6 million for thethree months ended July 31, 2024, a decrease of $(1.9) million, or (8.4)%, representing 26.1% of revenue, compared to $22.5 million for thethree months ended July 31, 2023, representing 29.7% of revenue. The decrease in fulfillment dollars and as a percentage of revenue was primarily driven by transportation and processing cost efficiencies and higher revenue per shipment that offset an increase in wage rates during the first quarter of fiscal year 2024.

Previous wording

Technology. Technology expenses were $9.6 million for thethree months ended April 30, 2024, a decrease of$(3.5)million, or (26.7)%, compared to $13.1 million for thethree months ended April 30, 2023. This decrease was driven by cost savings from the January 2024 restructuring plan, other cost saving initiatives and lower share-based compensation expense. We were able to realize these benefits while supporting growth initiatives including enhanced search, fit and discovery experience for the consumer. Technology expenses were 12.8% of revenue for the three months ended April 30, 2024 compared to 17.7% for the same period last year as we saw increased operating leverage with higher revenue and a lower cost base post-restructuring. Technology related share-based compensation expense was $0.6 million for the three months ended April 30, 2024 and was $1.9 million for the same period last year.

Current wording

Technology. Technology expenses were $8.7 million for thethree months ended July 31, 2024, a decrease of$(4.2)million, or (32.6)%, compared to $12.9 million for thethree months ended July 31, 2023. This decrease was driven by cost savings from the January 2024 restructuring plan, other cost saving initiatives and lower share-based compensation expense. We were able to realize these benefits while supporting growth initiatives including enhanced checkout completion and search, fit and discovery experience for the consumer. Technology expenses were 11.0% of revenue for the three months ended July 31, 2024 compared to 17.0% for the same period last year as we saw increased operating leverage with higher revenue and a lower cost base post-restructuring. Technology related share-based compensation expense was $0.5 million for the three months ended July 31, 2024 and was $1.8 million for the same period last year.

Previous wording

Marketing. Marketing expenses were $9.0 million for the three months ended April 30, 2024, a decrease of $(0.3) million, or (3.2)%, compared to $9.3 million for the three months ended April 30, 2023. This decrease was driven by lower share-based compensation expense and the timing of our marketing campaigns. Marketing expenses unrelated to personnel costs were $8.2 million in the three months ended April 30, 2024 and 10.9% of revenue, compared to $8.5 million and 11.5% of total revenue for the same period last year.

Current wording

Marketing. Marketing expenses were $7.8 million for the three months ended July 31, 2024, a decrease of $(0.4) million, or (4.9)%, compared to $8.2 million for the three months ended July 31, 2023. This decrease was driven by the timing of our marketing campaigns. Marketing expenses unrelated to personnel costs were $7.1 million in the three months ended July 31, 2024 and 9.0% of revenue, compared to $7.5 million and 9.9% of total revenue for the same period last year.

Previous wording

Rental Product Depreciation and Revenue Share. Rental product depreciation and revenue share was $26.0 million for thethree months ended April 30, 2024, an increase of $5.1 million, or 24.4%, compared to $20.9 million for thethree months ended April 30, 2023. The increase was primarily driven by higher Share by RTR units acquired, higher base of rental product and an increase in other revenue. Rental product depreciation and revenue share was 34.7% of revenue in the three months ended April 30, 2024, up from 28.2% in the same period last year primarily due tothe factors discussed above.

Current wording

Rental Product Depreciation and Revenue Share. Rental product depreciation and revenue share was $25.9 million for thethree months ended July 31, 2024, an increase of $5.9 million, or 29.5%, compared to $20.0 million for thethree months ended July 31, 2023. The increase was primarily driven by higher Share by RTR units acquired, higher base of rental product and an increase in other revenue. Rental product depreciation and revenue share was 32.8% of revenue in the three months ended July 31, 2024, up from 26.4% in the same period last year primarily due tothe factors discussed above.

Previous wording

Other Depreciation and Amortization. Other depreciation and amortization was $3.3 million for thethree months ended April 30, 2024, a decrease of $(0.5) million, or (13.2)%, compared to $3.8 million for the three months ended April 30, 2023. This decrease was primarily driven by lower depreciation and amortization associated with capitalized software and reusable packaging.

Current wording

Other Depreciation and Amortization. Other depreciation and amortization was $3.3 million for thethree months ended July 31, 2024, a decrease of $(0.4) million, or (10.8)%, compared to $3.7 million for the three months ended July 31, 2023. This decrease was primarily driven by lower depreciation associated with reusable packaging and machinery and equipment.

Previous wording

Interest Income / (Expense), Net. Interest expense, net was $(5.6) million for thethree months ended April 30, 2024, a decrease in expense of $3.2 million, or (36.4)%, compared to $(8.8) million for thethree months ended April 30, 2023. This decrease was driven by lowered paid-in-kind (“PIK”) and cash interest from the 2023 Amended Temasek Facility, partially offset by higher debt discount amortization. Of the $(5.6) million total interest expense in the three months ended April 30, 2024, $0.8 million was the net of cash interest, interest earned, financing lease and other interest and $(6.4) million was debt discount amortization, compared to $(7.1) million of PIK interest, $(0.1) million net of cash interest, financing lease and other interest and $(1.6) million of debt discount amortization in the three months ended April 30, 2023.

Current wording

Interest Income / (Expense), Net. Interest expense, net was $(6.0) million for thethree months ended July 31, 2024, a decrease in expense of $3.5 million, or (36.8)%, compared to $(9.5) million for thethree months ended July 31, 2023. This decrease was driven by lowered paid-in-kind (“PIK”) and cash interest from the 2023 Amended Temasek Facility, partially offset by higher debt discount amortization. Of the $(6.0) million total interest expense in the three months ended July 31, 2024, $0.7 million was the net of cash interest earned, financing lease and other interest and $(6.7) million was debt discount amortization, compared to $(7.6) million of PIK interest, $(0.1) million net of cash interest, financing lease and other interest and $(1.8) million of debt discount amortization in the three months ended July 31, 2023.

Previous wording

Other Income / (Expense), Net. Other income / (expense), net was $0.1 million for the three months ended April 30, 2024, an increase of $0.1 million, compared to $0.0 million for the three months ended April 30, 2023.

Current wording

Other Income / (Expense), Net. Other income / (expense), net was $0.1 million for the three months ended July 31, 2024 compared to $0.1 million for the three months ended July 31, 2023.

Previous wording

Subscription and Reserve Rental Revenue. Subscription and Reserve rental revenue was $66.1 million for thethree months ended April 30, 2024, a decrease of $(0.7) million, or (1.0)%, compared to $66.8 million for thethree months ended April 30, 2023. This decrease wasdriven by lower reserve revenue compared to the same period last year.

Current wording

Subscription and Reserve Rental Revenue. Subscription and Reserve rental revenue was$134.6 million for thesix months ended July 31, 2024, adecrease of$(0.2) million, or(0.1)%, compared to$134.8 million for thesix months ended July 31, 2023. This decrease wasdriven by lower reserve revenue compared to the same period last year and partially offset by higher revenue per subscriber driven by changes in our promotional strategy.

Previous wording

General and Administrative. General and administrative (“G&A”) expenses were $22.8 million for the three months ended April 30, 2024, a decrease of $(3.7) million, or (14.0)%, compared to $26.5 million for the three months ended April 30, 2023. This decrease was driven by lower share-based compensation expense and cost savings from the January 2024 restructuring plan. G&A expenses as a percentage of revenue were 30.4%, compared to 35.7% last year, as we saw increased operating leverage with higher revenue and a lower cost base post-restructuring. G&A related share-based compensation expense was $2.4 million for the three months ended April 30, 2024 and was $6.8 million for the three months ended April 30, 2023. The decrease was primarily due to incremental share-based compensation expense due to equity award modifications related to the transition of the Chief Financial Officer role in the first quarter of fiscal year 2023 and reduced share based compensation in the current quarter.

Current wording

General and Administrative. General and administrative (“G&A”) expenses were $45.0 million for the six months ended July 31, 2024, a decrease of $(3.7) million, or (14.3)%, compared to $52.4 million for the six months ended July 31, 2023. This decrease was driven by lower share-based compensation expense and cost savings from the January 2024 restructuring plan. G&A expenses as a percentage of revenue were 29.2%, compared to 35.0% last year, as we saw increased operating leverage with higher revenue and a lower cost base post-restructuring. G&A related share-based compensation expense was $4.3 million for the six months ended July 31, 2024 and was $12.4 million for the six months ended July 31, 2023. The decrease was primarily due to incremental share-based compensation expense due to equity award modifications related to the transition of the Chief Financial Officer role in the first quarter of fiscal year 2023 and reduced share-based compensation in the current quarter.

Previous wording

Restructuring Charges. Restructuring charges were $0.2 million for the three months ended April 30, 2024 for severance and related costs in connection with the January 2024 restructuring plan.

Current wording

Restructuring Charges. Restructuring charges were $0.2 million for the six months ended July 31, 2024 for severance and related costs in connection with the January 2024 restructuring plan.

Previous wording

Adjusted EBITDA and Adjusted EBITDA Margin. Adjusted EBITDA and Adjusted EBITDA Margin are key performance measures used by management to assess our operating performance and the operating leverage of our business prior to capital expenditures. Our Adjusted EBITDA was $6.5 million for the three months ended April 30, 2024 compared to $4.5 million for the three months ended April 30, 2023, representing margins of 8.7% and 6.1%, respectively. Adjusted EBITDA Margin significantly improved for the three months ended April 30, 2024 due to lower fulfillment costs and the impact of our fixed cost reduction efforts partially offset by higher revenue share payments due to a greater proportion of revenue share units.

Current wording

Adjusted EBITDA and Adjusted EBITDA Margin. Adjusted EBITDA and Adjusted EBITDA Margin are key performance measures used by management to assess our operating performance and the operating leverage of our business prior to capital expenditures. Our Adjusted EBITDA was $13.7 million for the three months ended July 31, 2024 compared to $7.7 million for the three months ended July 31, 2023, representing margins of 17.4% and 10.2%, respectively. Our Adjusted EBITDA was $20.2 million for the six months ended July 31, 2024 compared to $12.2 million for the six months ended July 31, 2023, representing margins of 13.1% and 8.1%, respectively. Adjusted EBITDA Margin significantly improved for the three and six months ended July 31, 2024 due to lower fulfillment costs and the impact of our fixed cost reduction efforts partially offset by higher revenue share payments due to a greater proportion of revenue share units.

Previous wording

(1)Includes debt discount amortization of $6.4 million in the three months ended April 30, 2024 and $1.6 million in the three months ended April 30, 2023.

Current wording

(1)Includes debt discount amortization of $6.7 million in the three months ended July 31, 2024, $1.8 million in the three months ended July 31, 2023, $13.1 million in the six months ended July 31, 2024 and $3.4 million in the six months ended July 31, 2023.

Previous wording

(5)Reflects restructuring charges primarily related to severance and related costs in connection with the January 2024 restructuring plan.

Current wording

(6)Reflects restructuring charges primarily related to severance and related costs in connection with the January 2024 restructuring plan.