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 174,511 ending total subscribers 1 (active and paused) as of October 31, 2024. We had 132,518 active subscribers as of October 31, 2024. The majority of our revenue is highly recurring and is generated by our subscribers. For the nine months ended October 31, 2024 and 2023, respectively, 88% and 88% 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 182,209 ending Total Subscribers 1 (active and paused) as of April 30, 2025. We had 147,157 Active Subscribers as of April 30, 2025. The majority of our revenue is highly recurring and is generated by our subscribers. For the three months ended April 30, 2025 and 2024, respectively, 88% and 88% of our total revenue (including Reserve and Resale revenue) was generated by subscribers while they were active or paused.

Previous wording

The variety, breadth and quantity of products we carry is important to our business, and we strategically manage the capital efficient acquisition of a high volume of items every year. We have successfully disproved the myth that fashion apparel items and accessories only last one season as we are able to rent or “turn” our products multiple times over many years. We price our items at a fraction of their retail or comparable value, creating an attractive price and value proposition for our subscribers and customers.

Current wording

The variety, breadth and quantity of products we carry is important to our business, and we strategically manage the capital efficient acquisition of a high volume of items every year. We have successfully disproved the myth that fashion apparel items and accessories only last one season as we are able to rent or “turn” our products multiple times over many years. We price our rental items at a fraction of their retail or comparable value, creating an attractive price and value proposition for our subscribers and customers.

Previous wording

Additional Key Fiscal Third Quarter and Recent Business Highlights:

Current wording

Key Fiscal First Quarter and Recent Business Highlights:

Previous wording

1 Ending total subscribers represents the number of subscribers with an active or paused membership as of the last day of the period and excludes subscribers who had an active or paused subscription during the period, but ended their subscription prior to the last day of the period.

Current wording

1 Ending Total Subscribers represents the number of subscribers with an active or paused membership as of the last day of the period and excludes subscribers who had an active or paused subscription during the period, but ended their subscription prior to the last day of the fiscal period.

Previous wording

•132,518 and 131,725 ending Active Subscribers 2 (excluding paused subscribers), respectively, representing growth of 1% year-over-year;

Current wording

•147,157 and 145,837 ending Active Subscribers 2, respectively, representing an increase of 1% year-over-year;

Previous wording

•130,796 and 134,646 Average Active Subscribers 3, respectively, representing a change of (3)% year-over-year;

Current wording

•133,468 and 135,896 Average Active Subscribers 3, respectively, representing a change of (2)% year-over-year;

Previous wording

•174,511 and 175,901 ending Total Subscribers (including paused subscribers), respectively, representing a change of (1)% year-over-year;

Current wording

•182,209 and 185,346 ending Total Subscribers (including paused subscribers), respectively, representing a change of (2)% year-over-year;

Previous wording

•Gross Profit was $87.1 million and $89.8 million, respectively, representing a gross margin of 37.9% and 40.4%, respectively;

Current wording

•Gross Profit was $21.9 million and $28.4 million, respectively, representing a gross margin of 31.5% and 37.9%, respectively;

Previous wording

•Net Loss was $(56.5) million and $(88.4) million, respectively. Net Loss as a percentage of revenue was (24.6)% and (39.7)%, respectively, and included $0.2 million of restructuring and related charges for the nine months ended October 31, 2024;

Current wording

•Net Loss was $(26.1) million and $(22.0) million, respectively. Net Loss as a percentage of revenue was (37.5)% and (29.3)%, respectively, and included $0.2 million of restructuring and related charges for the three months ended April 30, 2024;

Previous wording

•Adjusted EBITDA was $9.3 million and $3.5 million, respectively, representing an Adjusted EBITDA Margin of 12.3% and 4.8%, respectively.

Current wording

•Adjusted EBITDA was $(1.3) million and $6.5 million, respectively, representing an Adjusted EBITDA margin of (1.9)% and 8.7%, respectively;

Previous wording

•Net cash used in operating activities plus net cash used in investing activities as a percentage of revenue was (4.0)% and (21.3)%, respectively; and

Current wording

•Net cash (used in) provided by operating activities as a percentage of revenue was 11.9% and 6.1% and net cash used in investing activities as a percentage of revenue was (21.1)% and (8.0)%, 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 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.

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 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 an upfront fee and, in most cases, minimal revenue share payments to our brand partners over time.

Previous wording

Our three product acquisition methods are strategic levers to manage our capital efficiency, profitability and product risk. Our Exclusive Designs channel uses data insights to acquire items at a lower cost, which are designed to generate higher profitability over time. Share by RTR meaningfully reduces our purchases of rental product and de-risks our investment since we pay brands primarily based on item performance. Our Share by RTR arrangements with brands target delivering 75% to 100% of comparable Wholesale cost to the brand in the first year; however there is no minimum commitment other than the upfront payment, if applicable. Nearly all Share by RTR deals consummated after September 2020 include a cap on total potential payments to the brand partner.

Current wording

Our three product acquisition methods are strategic levers to manage our capital efficiency, profitability and product risk. Our Exclusive Designs channel partners with brands to acquire RTR-exclusive items at a lower cost, which are designed to generate higher profitability over time. Share by RTR meaningfully reduces our upfront purchases of rental product and de-risks our investment since we pay brands primarily based on item performance. Our Share by RTR arrangements with brands target delivering 75% to 100% of comparable Wholesale cost to the brand in the first year; however there is no minimum commitment other than the upfront payment, if applicable. Nearly all Share by RTR deals consummated after September 2020 include a cap on total potential payments to the brand partner.

Previous wording

In fiscal year 2023, 39% of new items were acquired through Wholesale, 33% through Share by RTR and 28% through Exclusive Designs, compared to 42% Wholesale, 27% Share by RTR and 31% Exclusive Designs in fiscal year 2022. In total, approximately 61% of new items were acquired through Share by RTR and Exclusive Designs, our more capital-efficient channels in fiscal year 2023 and approximately 58% in fiscal year 2022. Both our purchasing power and the diversification into Share by RTR and Exclusive Designs have led to a decrease in rental product capital expenditures (or Purchases of Rental Product as presented in the Condensed Consolidated Statement of Cash Flows) as a percentage of revenue over time. We plan to further decrease the percentage of units acquired through Wholesale and increase the percentage of units acquired through our more capital-efficient channels, Exclusive Designs and Share by RTR over time. We expect to incur considerably lower Purchases of Rental Product in fiscal year 2024 relative to fiscal year 2023 due to fiscal year 2023 being impacted by the need to make rental product depth adjustments.

Current wording

In fiscal year 2024, 30% of new items were acquired through Wholesale, 48% through Share by RTR and 22% through Exclusive Designs, compared to 39% Wholesale, 33% Share by RTR and 28% Exclusive Designs in fiscal year 2023. In total, approximately 70% of new items were acquired through Share by RTR and Exclusive Designs, our more capital-efficient channels in fiscal year 2024 and approximately 61% in fiscal year 2023. Both our purchasing power and the diversification into Share by RTR and Exclusive Designs have led to a decrease in rental product capital expenditures (or Purchases of Rental Product as presented in the Condensed Consolidated Statement of Cash Flows) as a percentage of revenue over time. We expect the total percentage of units acquired through our more capital-efficient channels to be unchanged in fiscal year 2025 versus fiscal year 2024, with an increase in the percentage of units acquired through our Share by RTR program versus fiscal year 2024. We plan to further decrease the percentage of units acquired through Wholesale and increase the percentage of units acquired through our more capital-efficient channels over the longer term. We expect to incur higher purchases of rental product in fiscal year 2025 relative to fiscal year 2024 in connection with our strategy to approximately double the new rental product added to our site and made available to our customers in fiscal year 2025.

Previous 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 have focused on increasing customer awareness of the Rent the Runway brand through brand campaigns, live events, and other initiatives. We have 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.

Current wording

We provide a flexible offering that allows our subscribers to customize their subscription as their everyday life changes, choosing to pause and reactivate their membership as needed. We have also historically seen that many subscribers who cancel their subscription will return and resubscribe when membership again makes sense for their everyday life. Customer acquisition is dependent on organic growth, the effectiveness of our paid marketing strategy and the availability of and satisfaction with our rental product. Our acquisitions are also reliant on new customer promotions. 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 in fiscal year 2025, 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. Through the nine months ending October 31, 2024, we have experienced better in-stock rates versus the prior fiscal year and we continue to expect average in-stock rates to be higher for fiscal year 2024 versus fiscal year 2023. Depending on customer demand, units sold, and other factors, in-stock rates in the fourth quarter of fiscal year 2024, while higher than those experienced during the majority of fiscal year 2023, may be below the higher in-stock rates achieved in the fourth quarter of fiscal year 2023. 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 for the first three quarters of fiscal year 2024.

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 the depth of our rental product purchases to improve rental product in-stock levels. We increased the depth of our rental product further in fiscal year 2024 and experienced better customer retention for fiscal year 2024 versus fiscal year 2023. In fiscal year 2025, we plan to focus on significantly increasing the quantity and desirability of rental product purchases, which we believe will increase customer satisfaction and improve retention further. We are also focused on new product features as well as more personal customer service and styling.

Previous wording

Ability to Acquire, Manage and Monetize Products Efficiently. Our ability to deliver an elevated experience for our subscribers and customers that keeps them loyal to RTR depends on us having the right assortment. For example, beginning in fiscal year 2023, we focused on enhancing the availability of rental product on our site by increasing the depths of our buys (i.e. acquiring more units of particular styles) and have continued to pursue this strategy in fiscal year 2024. Due to our deep partnerships with brands, flexibility in our buying timelines and ability to react to advantageous retail purchasing environments, we can acquire products directly from brands in multiple cost effective ways. Our expertise in reverse logistics and garment restoration also provides us with the ability to monetize our products effectively over their useful life. Diversifying our product acquisition away from 100% Wholesale has driven higher overall product return on investment and reduced the capital needs of the business. In fiscal year 2023, approximately 61% of new items were acquired through our more capital efficient non-Wholesale channels, compared to 58% in fiscal year 2022 and 55% in fiscal year 2021. We plan to further increase the percentage of units acquired through Exclusive Designs and Share by RTR on a combined basis in fiscal year 2024. We continuously evaluate our product acquisition mix to maximize our strategic priorities.

Current wording

Ability to Acquire, Manage and Monetize Products Efficiently. Our ability to deliver an elevated experience for our subscribers and customers that keeps them loyal to RTR depends on us having the right assortment. Due to our deep partnerships with brands, flexibility in our buying timelines and ability to react to advantageous retail purchasing environments, we can acquire products directly from brands in multiple cost effective ways. Our expertise in reverse logistics and garment restoration also provides us with the ability to monetize our products effectively over their useful life. Diversifying our product acquisition away from 100% Wholesale has driven higher overall product return on investment and reduced the capital needs of the business. See “—Our Product Acquisition Strategy” above for a description of the three ways in which we procure products. We continuously evaluate our product acquisition mix to maximize our strategic priorities.

Previous wording

Purchases of rental product includes the cost of wholesale products acquired in the period and other ancillary costs such as freight, where applicable. Many factors impact the purchases of rental product including our depth and acquisition mix strategy, the proportion of subscribers to total customers, timing of when those subscribers are acquired, the formality of styles, brand assortment, opportunities in the market and timing of when the rental product is received and paid for. Purchases of rental product as a percentage of revenue in fiscal year 2023 was 26% as a result of lower sales and the impact of the adjustment to our rental product depth in fiscal year 2023. Purchases of rental product as a percentage of revenue was 21% and 15% in fiscal year 2022 and 2021, respectively. We anticipate this percentage to decrease in fiscal year 2024 compared with fiscal year 2023 due to higher sales projections and the impact of increasing rental product depth in fiscal year 2023. Due to seasonality factors, we track our progress on purchases of rental product as a percentage of revenue on a full year basis, as quarterly expenditures are not necessarily reflective of full year trends. In addition, we intend to comply with the mutually agreed upon quarterly and annual spend levels for rental product capital expenditures during fiscal year 2024 in our 2023 Amended Temasek Facility.

Current wording

Purchases of rental product includes the cost of Wholesale products acquired in the period and other ancillary costs such as freight, where applicable. Many factors impact the purchases of rental product including our depth and acquisition mix strategy, the proportion of subscribers to total customers, timing of when those subscribers are acquired, the formality of styles, brand assortment, opportunities in the market and timing of when the rental product is received and paid for. Purchases of rental product as a percentage of revenue in fiscal year 2024 was 16% as a result of a greater proportion of rental product acquired through our Share by RTR channel combined with fewer units of rental product purchased compared to fiscal year 2023. Purchases of rental product as a percentage of revenue was 26% and 21% in fiscal year 2023 and 2022, respectively. We anticipate this percentage to increase in fiscal year 2025 compared with fiscal year 2024, despite a greater proportion of Share by RTR units, due to a significant increase in units of rental product purchased. Due to seasonality factors, we track our progress on purchases of rental product as a percentage of revenue on a full year basis, as quarterly expenditures are not necessarily reflective of full year trends. As of April 30, 2025, the quarterly and annual spend levels for rental product capital expenditures for fiscal year 2025 under our 2025 Amended Facility have not yet been finalized. The deadline to agree on such levels was extended from March 31, 2025 to May 30, 2025 and then further extended to July 31, 2025.

Previous wording

Ability to Achieve Leverage in our Cost Structure. Improving operational efficiency of our platform is imperative to increasing profitability. We expect certain of our operating costs to increase as order volume increases and as we make investments to grow subscribers and revenue and to enhance the customer experience. In September 2022, we announced a restructuring plan that reduced operating expenses by approximately $27 million in the four quarters following the restructuring compared to the annualized run rate for the second quarter of fiscal year 2022. In January 2024, we announced a restructuring plan 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. Though we anticipate quarterly fluctuations in operating leverage, with these reductions and continuous improvements to our cost structure, we expect our fixed costs to decrease as a percentage of total revenue in fiscal year 2024, and over time we anticipate that our operating costs will grow more slowly than our total revenue on an annual basis. In addition, we intend to comply with the mutually agreed upon quarterly and annual spend levels relating to our operating costs (i.e., fixed operating expenditures and marketing expenditures) during fiscal year 2024 in our 2023 Amended Temasek Facility.

Current wording

Ability to Achieve Leverage in our Cost Structure. Improving operational efficiency of our platform is imperative to increasing profitability. We expect certain of our operating costs to increase as order volume increases and as we make investments to grow subscribers and revenue and to enhance the customer experience. In September 2022, we announced a restructuring plan that reduced operating expenses by approximately $27 million in the four quarters following the restructuring compared to the annualized run rate for the second quarter of fiscal year 2022. In January 2024, we announced a restructuring plan that generated total annual operating expense savings of approximately $12 million, which primarily included 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. Though we anticipate quarterly fluctuations in operating leverage, we expect our fixed costs to decrease as a percentage of total revenue in fiscal year 2025, and over time we anticipate that our operating costs will grow more slowly than our total revenue on an annual basis. As of April 30, 2025, the quarterly and annual spend levels for rental product capital expenditures for fiscal year 2025 under our 2025 Amended Facility have not yet been finalized. The deadline to agree on such levels was extended from March 31, 2025 to May 30, 2025 and then further extended to July 31, 2025.

Previous wording

We use technology and customer data to drive efficiency across products, fulfillment expenses and operating costs. Our data has allowed us to build a differentiated and proprietary rental reverse logistics platform with a vertically integrated cleaning and restoration process. We have invested in technology and automation in order to drive operating leverage and higher margins as we grow and scale our business.

Current wording

We use technology and customer data to drive efficiency across products, fulfillment expenses and operating costs. Our data has allowed us to build a differentiated and proprietary rental reverse logistics platform with a vertically integrated cleaning and restoration process. We have invested in technology and automation in order to drive operating leverage and higher margins as we focus on growing and scaling our business.

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. The 2023 Amended Facility reduced our cash interest payments during fiscal year 2024 and reduced our cash interest payments during fiscal year 2025 relative to the original agreement, which we expect to improve our overall liquidity.

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 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.

Current wording

We experience seasonality in our business, which has been impacted due to the effects of COVID-19, the macro environment, and business decisions and may in the future continue to evolve. 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. For example, 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. However, in fiscal year 2024, we observed more typical seasonal patterns. Given continued business changes, our future seasonality may not resemble historical trends.

Previous wording

There remains significant uncertainty in the current macroeconomic and consumer environment, driven by several factors, including inflationary pressures, higher interest rates, potential risk of recession, ongoing industry-wide supply chain issues, instability in the financial system, the wars in Ukraine and the Middle East and COVID-19. These factors have impacted, and are expected to continue to impact, consumer discretionary spending and purchasing behavior, price sensitivity, wage rates, transportation costs, and other costs associated with our business.

Current wording

There remains significant uncertainty in the current macroeconomic and consumer environment, driven by several factors, including inflationary pressures, global trade policies and tariffs, higher interest rates, potential risk of recession, ongoing industry-wide supply chain issues, instability in the financial system, and the wars in Ukraine and the Middle East. These factors have impacted, and are expected to continue to impact, consumer discretionary spending and purchasing behavior, price sensitivity, wage rates, transportation costs, rental product costs, and other costs associated with our business.

Previous wording

We continue to take actions to adjust to the changing business environment and related inflationary pressure. For example, in light of potential pricing sensitivity in the current macro-economic environment, we are focused on investing in our customer and delivering even more value to her, and emphasizing the value proposition of our offering in our marketing materials. In addition, we increased wage rates during fiscal year 2023 and the first quarter of fiscal year 2024 to attract and retain talent at our fulfillment centers and we expect to continue to be impacted by rising labor costs in the future. We also expect transportation costs to decrease as a percentage of sales in fiscal year 2024 on an annual basis due to transportation efficiencies and the impact of our September 2023 transportation contract with a major national carrier, notwithstanding an anticipated increase in the fourth quarter of fiscal year 2024. While we expect to be able to reduce transportation costs as a percentage of sales for fiscal year 2024, we plan to continue to mitigate longer-term rising costs by seeking to optimize shipping methods and improve contractual and pricing terms. Although we continue to face a challenging environment, we plan to invest in our customers, manage our staffing and further leverage our transportation partners to help to drive growth and efficiencies in our business.

Current wording

We continue to take actions to adjust to the changing business environment and related inflationary pressure. For example, in light of potential pricing sensitivity in the current macro-economic environment, we are focused on investing in our customer and delivering even more value to her, and emphasizing the value proposition of our offering in our marketing materials. In addition, we increased wage rates during the first quarter of fiscal year 2025 to attract and retain talent at our fulfillment centers. We expect to continue to be impacted by rising labor costs in the future. Transportation costs decreased as a percentage of revenue in fiscal year 2024 due to higher revenue per order and the benefits of our September 2023 transportation contract with a major national carrier. While we expect to be able to reduce transportation costs as a percentage of revenue for fiscal year 2025, we plan to continue to mitigate longer-term rising costs by seeking to optimize shipping methods and improve contractual and pricing terms; however, unpredictable changes in global trade policies and tariffs or other significant macroeconomic or geopolitical developments may negatively impact our ability to meet our current expectations and objectives. Although we continue to face a challenging and unpredictable environment, we plan to invest in our customers, manage our staffing and further leverage our transportation partners to help to drive growth and efficiencies in our business.

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 October 31, 2024, we had 132,518 Active Subscribers, up from 131,725 as of October 31, 2023. The increase in active subscribers was driven by improved subscriber retention during the quarter compared to the same quarter last year. The increase was partially offset by slightly lower acquisitions.

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 April 30, 2025, we had 147,157 Active Subscribers, slightly higher year-over-year. The increase in Active Subscribers was driven primarily by increased promotional activity and an improvement in retention during the first quarter of fiscal year 2025 as compared to the prior year as we focused on improving our customer experience through increased rental product and the rollout of multiple product improvements.

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 October 31, 2024, we had 130,796 Average Active Subscribers, down from 134,646 as of October 31, 2023. The decline in average active subscribers was primarily due to a change in promotional strategy during the second quarter of fiscal year 2024 versus the same quarter last year.

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 April 30, 2025, we had 133,468 Average Active Subscribers, a decrease from 135,896 as of April 30, 2024. The year over year decline in Average Active Subscribers was primarily due to the lower base of Ending Active Subscribers at the end of fiscal year 2024 compared to fiscal year 2023.

Previous wording

Gross Profit was $26.3 million for the three months ended October 31, 2024 compared to $25.2 million for the three months ended October 31, 2023, representing Gross Margins of 34.7% and 34.8%, respectively. Gross Profit was $87.1 million for the nine months ended October 31, 2024 compared to $89.8 million for the nine months ended October 31, 2023 representing Gross Margins of 37.9% and 40.4%, respectively. Gross Profit and Gross Margin for the three and nine months ended October 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.

Current wording

Gross Profit was $21.9 million for the three months ended April 30, 2025 compared to $28.4 million for the three months ended April 30, 2024, representing Gross Margins of 31.5% and 37.9%, respectively. Gross Profit and Gross Margin for the three months ended April 30, 2025 decreased primarily due to the impact of higher revenue share costs and fulfillment costs as a percentage of sales, partially offset by lower rental product depreciation as a percentage of sales.

Previous wording

We believe we have the opportunity to improve Adjusted EBITDA and offset cost increases as we increase revenue and drive fulfillment and operational efficiency gains and operating expense leverage. In particular, we expect our January 2024 restructuring plan to significantly reduce fixed costs and improve operating expense leverage in fiscal year 2024 compared to fiscal year 2023.

Current wording

We believe we have the opportunity to improve Adjusted EBITDA and offset cost increases as we increase revenue and drive operating expense leverage.

Previous wording

General and Administrative. General and administrative (“G&A”) expenses consist of all other personnel and related costs for customer service, finance, tax, legal, human resources, fashion and photography and fixed operations costs. General and administrative expenses also includes occupancy costs (including warehouse-related), professional services, credit card fees, general corporate and warehouse expenses, other administrative costs, and gains and losses associated with asset disposals and operating lease terminations. We expect to incur lower fixed cost G&A expense dollars and as a percentage of total revenue in the short term as a result of our restructuring plan. Over the longer term, these expenses may increase as we grow our infrastructure to support the overall growth of the business. Rent expense and other facilities-related costs may increase in the future due to inflation or to support overall business growth and fulfillment efficiencies. While these expenses may vary from period to period as a percentage of total revenue, we expect them to decrease as a percentage of total revenue over the longer term.

Current wording

General and Administrative. General and administrative (“G&A”) expenses consist of all other personnel and related costs for customer service, finance, tax, legal, human resources, fashion and photography and fixed operations costs. General and administrative expenses also includes occupancy costs (including warehouse-related), professional services, credit card fees, general corporate and warehouse expenses, other administrative costs, and gains and losses associated with asset disposals and operating lease terminations. We expect to incur lower fixed cost G&A as a percentage of revenue in the short term due to higher expected revenue driving operating leverage. Over the longer term, these expenses may increase as we grow our infrastructure to support the overall growth of the business. Rent expense and other facilities-related costs may increase in the future due to inflation or to support overall business growth and fulfillment efficiencies. While these expenses may vary from period to period as a percentage of total revenue, we expect them to decrease as a percentage of total revenue over the longer term.

Previous wording

Interest Income / (Expense). Interest income / (expense) consists primarily of accrued paid-in-kind interest, cash interest and debt issuance cost amortization associated with our 2023 Amended Temasek Facility going forward. The 2023 Amended Temasek Facility eliminates all interest (both payment-in-kind and cash interest) for a period of six full fiscal quarters beginning with the fourth quarter of fiscal year 2023.

Current wording

Interest Income / (Expense). Interest income / (expense) consists primarily of accrued paid-in-kind interest, cash interest and debt issuance cost amortization associated with our 2025 Amended Facility going forward. The 2023 Amended Temasek Facility eliminated all interest (both payment-in-kind and cash interest) for a period of six full fiscal quarters beginning with the fourth quarter of fiscal year 2023.

Previous wording

Total Revenue, Net. Total revenue, net was $75.9 million for thethree months ended October 31, 2024, an increase of $3.4 million, or 4.7%, compared to $72.5 million for thethree months ended October 31, 2023. This increase was primarily driven by an increase in Reserve revenue, an increase in the average selling price per unit purchased, and an increase in the 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.

Current wording

Total Revenue, Net. Total revenue, net was $69.6 million for thethree months ended April 30, 2025, a decrease of $(5.4) million, or (7.2)%, compared to $75.0 million for thethree months ended April 30, 2024. This decrease was primarily driven by lower revenue per subscriber, lower Average Active Subscribers, and lower Other Revenue. Infiscal year 2025, 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

Subscription and Reserve Rental Revenue. Subscription and Reserve rental revenue was$200.9 million for thenine months ended October 31, 2024, anincrease of$1.4 million, or 0.7%, compared to$199.5 million for thenine months ended October 31, 2023. This increase was primarily driven by an increase in Reserve revenue compared to the same period last year.

Current wording

Subscription and Reserve Rental Revenue. Subscription and Reserve rental revenue was $62.0 million for thethree months ended April 30, 2025, a decrease of $(4.1) million, or (6.2)%, compared to $66.1 million for thethree months ended April 30, 2024. This decrease was primarily driven by lower revenue per subscriber and lower Average Active Subscribers. The decrease in revenue per subscriber was driven primarily by higher promotional spending.

Previous wording

Other Revenue. Other revenue was $9.6 million for thethree months ended October 31, 2024, an increase of $1.8 million, or 23.1%, compared to $7.8 million for thethree months ended October 31, 2023. This increase was primarily driven by an increase in the average selling price per unit and an increase in the units purchased per subscriber. Other revenue represented 12.6% of total revenue, up from 10.8% in the same period last year.

Current wording

Other Revenue. Other revenue was $7.6 million for thethree months ended April 30, 2025, a decrease of $(1.3) million, or (14.6)%, compared to $8.9 million for thethree months ended April 30, 2024. This decrease was primarily driven by a decrease in the items purchased per subscriber, partially offset by an increase in the average selling price per unit. Other revenue represented 10.9% of total revenue, up from 11.9% in the same period last year.

Previous wording

Costs and Expenses. Total costs and expenses were $89.6 million for thethree months ended October 31, 2024, a decrease of $(4.8) million, or (5.1)%, comp ared to $94.4 million for thethree months ended October 31, 2023. This decrease wasprimarily driven by cost savings from the January 2024 restructuring plan, lower share-based compensation expense, 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 $89.3 million for thethree months ended April 30, 2025, a decrease of $(2.2) million, or (2.4)%, comp ared to $91.5 million for thethree months ended April 30, 2024. This decrease was primarily driven by lower General & Administrative costs partially offset by higher Rental Product Depreciation and Revenue Share costs.

Previous wording

In fiscal year 2024, we expect fulfillment expenses as a percentage of total revenue to decrease compared to fiscal year 2023 as a result of anticipated higher revenue per order and continued transportation and processing efficiencies, notwithstanding an anticipated increase in the fourth quarter of fiscal year 2024.

Current wording

In fiscal year 2025, we expect fulfillment expenses as a percentage of total revenue to decrease compared to fiscal year 2024 as a result of anticipated higher revenue per order and continued processing efficiencies.

Previous wording

In fiscal year 2024, we expect technology expenses to decrease in dollars and as a percentage of total revenue compared to fiscal year 2023 as a result of our January 2024 restructuring plan and our continued focus on managing costs.

Current wording

In fiscal year 2025, we expect technology expenses to decrease as a percentage of total revenue compared to fiscal year 2024 as a result of improved operating leverage due to higher expected revenue.

Previous wording

General and Administrative. General and administrative (“G&A”) expenses were $21.2 million for the three months ended October 31, 2024, a decrease of $(3.2) million, or (13.1)%, compared to $24.4 million for the three months ended October 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 27.9%, compared to 33.7% 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 $1.8 million for the three months ended October 31, 2024 and was $4.0 million for the three months ended October 31, 2023. The decrease was primarily due to reduced share-based compensation in the current quarter.

Current wording

General and Administrative. General and administrative (“G&A”) expenses were $20.7 million for the three months ended April 30, 2025, a decrease of $(2.1) million, or (9.2)%, compared to $22.8 million for the three months ended April 30, 2024. This decrease was driven primarily by lower share-based compensation expense, gain on the liquidation of rental product and exchange rate and cost savings from the January 2024 restructuring plan. G&A expenses as a percentage of revenue were 29.7%, compared to 30.4% last year, as we saw increased operating leverage with a lower cost base post-restructuring. G&A related share-based compensation expense was $1.2 million for the three months ended April 30, 2025 and was $2.4 million for the three months ended April 30, 2024.

Previous wording

In fiscal year 2024, we expect G&A expenses to decrease in dollars and as a percentage of revenue compared to fiscal year 2023 as a result of lower share-based compensation expense and cost savings from the January 2024 restructuring plan.

Current wording

In fiscal year 2025, we expect G&A expenses to decrease as a percentage of revenue compared to fiscal year 2024 due to operating leverage driven by higher revenue growth.

Previous wording

Rental Product Depreciation and Revenue Share. Rental product depreciation and revenue share was $28.2 million for thethree months ended October 31, 2024, an increase of $2.4 million, or 9.3%, compared to $25.8 million for thethree months ended October 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 37.2% of revenue in the three months ended October 31, 2024, up from 35.6% 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 $27.3 million for thethree months ended April 30, 2025, an increase of $1.3 million, or 5.0%, compared to $26.0 million for thethree months ended April 30, 2024. The increase was primarily driven by higher Share by RTR units acquired and the higher base of rental product. Rental product depreciation and revenue share was 39.2% of revenue in the three months ended April 30, 2025, up from 34.7% in the same period last year primarily due tothe factors discussed above.

Previous wording

Other Depreciation and Amortization. Other depreciation and amortization was $3.0 million for thethree months ended October 31, 2024, a decrease of $(0.5) million, or (14.3)%, compared to $3.5 million for the three months ended October 31, 2023. This decrease was primarily driven by lower depreciation associated with machinery and equipment and reusable packaging.

Current wording

Other Depreciation and Amortization. Other depreciation and amortization was $2.7 million for thethree months ended April 30, 2025, a decrease of $(0.6) million, or (18.2)%, compared to $3.3 million for the three months ended April 30, 2024. This decrease was primarily driven by lower depreciation and amortization associated with machinery and equipment.