Rent the Runway, Inc.

2. Summary of Significant Accounting Policies

Basis of Presentation

The consolidated financial statements include the accounts of the Company and its subsidiary. All intercompany accounts and transactions have been eliminated in consolidation. The Company’s consolidated financial statements were prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). Certain amounts in the financial statements have been reclassified to conform to the current presentation. As further discussed in the Reverse Stock Split section below, all per share amounts and common shares amounts have been adjusted on a retroactive basis to reflect the Reverse Stock Split (as defined below) which became effective in April 2024. The Company adjusted the weighted-average shares used in computing net income (loss) per share for all periods presented in the Consolidated Statements of Operations to reflect the bonus element from the rights offering completed in October 2025. See “Note 15 - Net Income (Loss) per Share Attributable to Common Stockholders” for additional information.

Reverse Stock Split

The Company’s Amended and Restated Certificate of Incorporation as of October 29, 2021 authorizes the Company to issue 300,000,000 shares of Class A common stock, par value $0.001 per share,50,000,000 shares of Class B common stock, par value $0.001 per share and 10,000,000 shares of preferred stock, par value $0.001 per share.

In March 2024, the Company’s stockholders approved, and the Company’s Board of Directors selected, a 1-for-20 reverse stock split of outstanding shares of Class A common stock and Class B common stock (the “Reverse Stock Split”). The 1-for-20 Reverse Stock Split became effective on April 2, 2024 and began trading on the Nasdaq Capital Market on a post-split basis on April 3, 2024. See “Note 13 - Stockholders’ Equity” for additional information.

Fiscal Year

The Company’s fiscal year ends on January 31 of the next calendar year. For example, references to “fiscal year 2026” refer to the fiscal year ending January 31, 2027, references to “fiscal year 2025” refer to the fiscal year ended January 31, 2026, and references to “fiscal year 2024” refer to the fiscal year ended January 31, 2025.

RENT THE RUNWAY, INC.Notes to Consolidated Financial Statements

Segment Information

Operating segments are defined as components of an entity for which discrete financial information is available that is regularly reviewed by the chief operating decision maker (“CODM”) in deciding how to allocate resources and in assessing performance. The Company’s Chief Executive Officer is the Company’s CODM. The Company hasone operating and reportable segment as the CODM reviews financial information on a consolidated basis for purposes of making operating decisions, allocating resources, and evaluating financial performance.

The key measure of segment profit or loss that the CODM uses to make operating decisions, allocate resources, and evaluate financial performance is the Company’s net income (loss) as reported in the Company’s consolidated statements of operations.

Significant expenses within net income (loss) include fulfillment, technology, marketing, and general and administrative expenses, rental product depreciation and revenue share, and other depreciation and amortization. These operating expenses are each separately presented in the consolidated statements of operations. Other segment items within net income (loss) include a Gain on Debt Restructuring, interest income (expense), net, other income (expense), net and income tax benefit (expense). The CODM evaluates financial performance by comparing consolidated expenses against the budget and forecasted expenses to inform decision-making.

All revenue is attributed to customers based in the United States and substantially all the Company’s long-lived assets are located in the United States.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. The Company bases its estimates on historical experience, market conditions, and on various other assumptions that are believed to be reasonable. Actual results could differ from those estimates. Significant items subject to such estimates and assumptions include the useful life and salvage value of rental product, incremental borrowing rate (“IBR”) to determine lease liabilities, valuation of share-based compensation, and recoverability of long-lived assets.

As of January 31, 2026, the effects of the macroeconomic environment on the Company’s business, results of operations, and financial condition continue to evolve. As a result, many of the Company’s estimates and assumptions required increased judgment and carry a higher degree of variability and volatility. As additional information becomes available, the Company’s estimates may change materially in future periods.

Concentrations of Credit Risks

Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents. The Company places its cash investments with high credit quality financial institutions. The Company believes no significant credit risk exists with respect to these financial instruments.

No single customer accounted for more than 5% of the Company’s revenue during the years ended January 31, 2026, 2025, and 2024.

RENT THE RUNWAY, INC.Notes to Consolidated Financial Statements

Fair Value Measurements and Financial Instruments

Fair value accounting is applied for all financial assets and liabilities and non-financial assets and liabilities that are recognized or disclosed at fair value in the consolidated financial statements. These measurements are conducted on an ongoing basis, at least annually. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

Assets and liabilities recorded at fair value in the consolidated financial statements are categorized based upon the level of judgment associated with the inputs used to measure their fair value. Hierarchical levels, which are directly related to the amount of subjectivity, associated with the inputs to the valuation of these assets or liabilities, are as follows:

Level 1: Observable inputs, such as quoted prices in active markets for identical assets and liabilities.

Level 2: Inputs other than the quoted prices in active markets that are observable either directly or indirectly.

Level 3: Unobservable inputs, in which there is little or no market data which require the Company to develop its own assumptions.

Observable inputs are based on market data obtained from independent sources. Unobservable inputs reflect the Company’s assessment of the assumptions market participants would use to value certain financial instruments. This hierarchy requires the Company to use observable market data, when available, and to minimize the use of unobservable inputs when determining fair value. The categorization of financial instruments within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement.

Cash, Cash Equivalents and Restricted Cash

The Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. Cash and cash equivalents include funds in transit from banks for customer credit card transactions that settle in less than seven days. These funds totaled $3.5 million and $1.7 million as of January 31, 2026 and 2025, respectively.

The Company had restricted cash balances for cash collateralized standby letters of credit as of January 31, 2026 and 2025 of $8.7 million and $9.1 million, respectively, primarily to satisfy security deposit requirements on its leases, as well as for rental product purchases and credit card transactions.

The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the Company’s Consolidated Balance Sheets, which sum to the total of the same amounts shown in the Company’s Consolidated Statements of Cash Flows (in millions):

RENT THE RUNWAY, INC.Notes to Consolidated Financial Statements

Rental Product, Net

The Company considers rental product to be a long-term productive asset and, as such, classifies it as a noncurrent asset on the Consolidated Balance Sheets.

Rental product is stated at cost, less accumulated depreciation. The Company depreciates rental product, less an estimated salvage value, over the estimated useful lives of the assets using the straight-line method. The useful life is determined based on historical trends and an assessment of any future changes. The salvage value considers the historical trends and projected liquidation proceeds for the assets. The estimated useful lives and salvage values are described below:

In accordance with its policy, the Company reviews the estimated useful lives and salvage values of rental product on an ongoing basis.

The Company offers its customers an opportunity to purchase items in rentable condition prior to the end of their useful life. In such instances, the Company considers the disposal of rental product to be a sale and, as such, records the proceeds as other revenue and the net book value of the items at the time of sale as rental product depreciation in the consolidated statements of operations within Rental product depreciation and revenue share. Write-offs for losses on lost, damaged, and unreturned apparel and accessories are also recorded within Rental product depreciation and revenue share.

Once it is no longer considered rentable, rental product in a sellable condition is classified as held for sale and written down to salvage value. The value of rental product held for sale as of January 31, 2026 and 2025 was$1.8 million and $2.0 million, respectively. The accelerated depreciation related to rental product held for sale was$5.1 million, $5.7 million, and $4.9 million for the years ended January 31, 2026, 2025, and 2024, respectively. The accelerated depreciation is presented on the consolidated statements of operations within Rental product depreciation and revenue share.

When rental product is liquidated, the Company records the gain or loss calculated as proceeds, net of the remaining salvage value and costs to sell, within general and administrative expenses on the consolidated statement of operations. The gain or loss from the liquidation of rental product is included as an adjustment to reconcile net income (loss) to net cash used by operating activities in the consolidated statements of cash flows.

The purchases of rental product as well as the proceeds from the sale and liquidation of rental product are classified as cash flows from investing activities on the consolidated statements of cash flows because the predominant activity of the rental product purchased is to generate rental revenue and such classification is consistent with the classification of long-term asset activity. Proceeds from the liquidation of rental product, net of costs to sell, were $2.6 million, $5.4 million, and $4.6 millionfor the years ended January 31, 2026, 2025, and 2024, respectively. Proceeds from the sale of rental product were$28.4 million, $28.1 million, and $23.3 million for the years ended January 31, 2026, 2025, and 2024, respectively.

The Company mitigates residual value risk of its rental product primarily by utilizing specific cleaning, repair and restoration methods relying on its years of process know-how to maintain the condition of the rental product over its useful life, and by employing various in-house and third-party liquidation strategies to maximize liquidation value and overall return on rental product. The Company also utilizes technology in combination with its customer service department to recover rental items from delinquent customers.

RENT THE RUNWAY, INC.Notes to Consolidated Financial Statements

Revenue Recognition

Subscription and a-la-carte rental fees (“Subscription and Reserve rental revenue”) are recognized in accordance with Leases, Topic 842 (“ASC 842”). Other revenue, primarily related to the sale of rental product, is recognized under Revenue from Contracts with Customers, Topic 606 (“ASC 606”) at the date of delivery of the product to the customer. Other revenue represented 13%,13%, and 11% of total revenue for the years ended January 31, 2026,2025, and 2024, respectively. Sales of rental product to customers within Other revenue represented 13%,13%, and 11% of total revenue for the years ended January 31, 2026,2025, and 2024.

Revenue is presented net of promotional discounts, customer credit issuances and refunds and recognized in accordance with either ASC 842 or ASC 606. The Company recognizes discounts on subscription and reserve fees ratably over the subscription or rental period. Discounts on sales of rental product to customers are recognized upon delivery. Refunds and customer credit issuances are recognized over the subscription or rental period or when returned items are received. Revenue is presented net of taxes that are collected from customers and remitted to governmental authorities.

The Company issued gift cards and customer credits during the years ended January 31, 2026 and 2025. In the year ended January 31, 2026, the Company modified its arrangement with its third-party gift card partner. Under the current model, the partner maintains the legal obligation to the holder and holds the associated cash until the customer applies the gift card to their Rent the Runway account. Upon application, the gift card is converted into a customer credit, at which point the Company recognizes a liability and corresponding receivable from the partner. In the year ended January 31, 2025, the Company operated under a different model with the same third-party gift card partner where the Company received cash and recognized a liability at the time of gift card issuance. The gift cards issued during the years ended January 31, 2026 and 2025 were immaterial to the Company’s consolidated financial statements. During the year ended January 31, 2024, the Company did not issue any gift cards but customers were able to redeem gift cards sold in previous years. Upon redemption of the gift card or credit, revenue is recognized in line with the customer’s rental or item purchase. The Company’s gift card liability and customer credit liability are presented within Customer credit and gift card liabilities on the Consolidated Balance Sheets. During the year ended January 31, 2026, $0.9 million of credits included in the customer credit liability as of January 31, 2025 were redeemed. Gift cards and customer credits do not have expiration dates. Over time, a portion of these instruments is not redeemed. The Company recognizes breakage income related to these instruments based on the redemption pattern method. The Company continues to maintain the full liability for the unredeemed portion of the gift cards and credits when the Company has any legal obligation to remit such credits to government authorities in relevant jurisdictions.

Subscription and Reserve Rental Revenue

Subscription fees are recognized ratably over the subscription period, commencing on the date the subscriber enrolls in the rental program. The fees are collected upon enrollment. The subscription automatically renews on a monthly basis until cancelled or paused by the customer. Subscribers can pause or cancel their subscriptions at any time.

The Company recognizes fees for a-la-carte rentals ratably over the rental period, which starts with the date of delivery of rental product to the customer. A-la-carte rental orders can be placed up tofour months prior to the rental start date (increased fromtwo months prior to the rental start date beginning in June 2024) and the customer’s payment form is charged upon order confirmation. The Company defers recognizing the fees and any related promotions for a-la-carte rentals until the date of delivery, and then recognizes those fees ratably over thefour- oreight-day rental period. Additionally, the Company receives consideration from late fees associated with its Subscription and Reserve rental programs, which are considered variable lease payments.

RENT THE RUNWAY, INC.Notes to Consolidated Financial Statements

The Company accrues for credits and refunds issued subsequent to the balance sheet date that relate to rentals prior to the balance sheet date. These amounts werenot material as of January 31, 2026 and 2025.

For lessors, ASC 842 provides a practical expedient to elect not to evaluate whether certain sales taxes and other similar taxes imposed by a governmental authority on a specific lease revenue-producing transaction are the primary obligation of the lessor as owner of the underlying leased asset. This practical expedient was applied by the Company and it excludes these taxes from the measurement of lease revenue and the associated expense. Additionally, the Company has elected the practical expedient under ASC 842 to not separate nonlease components from associated lease components for all asset classes. The Company considers the rental product as the lease component and shipping services performed during the lease term as nonlease components.

Other Revenue

Other revenue consists primarily of revenue from the sale of rental product. The Company recognizes revenue from the sale of rental product in accordance with ASC 606. Sale of rental product occurs when a customer purchases rental product at a discounted price, calculated as a percentage of retail value. Payment is due upon order confirmation and there is no financing component. The single performance obligation associated with rental product sales is generally satisfied upon delivery of the rental product to the customer. The Company doesnot have any material contractual receivables, assets or liabilities with respect to other revenue as of January 31, 2026 and 2025.

From time to time, other revenue may include revenue generated from pilots and other growth initiatives which may cause quarterly fluctuations in the Other revenue line.

Lease - Lessee Accounting

Refer to the Subscription and Reserve Rental Revenue section above for the Company’s accounting policy related to lessor accounting.

The Company determines whether a contract is or contains a lease at contract inception. Right-of-use (“ROU”) assets and lease liabilities are measured and recognized at the lease commencement date based on the present value of lease payments over the expected lease term. As most of the Company’s leases do not provide an implicit rate, the Company uses its IBR as of the effective date or the commencement date of the lease, whichever is later, to determine the present value of lease payments. The Company considers its credit risk, term of the lease, total lease payments and adjusts for the impacts of collateral, as necessary, when calculating its IBR.

Lease payments are based on fixed amounts explicit in the lease agreements. Certain real estate leases include payments at variable amounts based on operating expenses of the lessor, such as common area charges, real estate taxes and insurance. Most equipment leases include variable sales tax payments based on state sales tax rates. Additionally, the Company procures a portion of its rental product from brand partners under revenue share arrangements, which are considered lease payments. See “Note 6– Leases – Lessee Accounting” for additional details.

For lessees, the guidance provides a practical expedient, by class of underlying asset, to elect a combined single lease component presentation. This practical expedient was applied by the Company as a lessee to all asset classes.

RENT THE RUNWAY, INC.Notes to Consolidated Financial Statements

With respect to ROU assets, operating lease ROU assets are presented as a separate line item on the Company’s Consolidated Balance Sheets, while finance lease ROU assets are included in Fixed assets, net on the Consolidated Balance Sheets. With respect to lease liabilities, operating lease liabilities are presented as separate line items, while finance lease liabilities are included in Accrued expenses and other current liabilities and Other liabilities on the Consolidated Balance Sheets, based on the remaining term of the underlying lease agreements. The Company does not recognize ROU assets or lease liabilities for short-term leases (i.e., those with a term of twelve months or less) and recognizes the related lease expense on a straight-line basis over the lease term, as applicable.

Fixed and Intangible Assets, Net

Fixed and intangible assets are stated at cost less accumulated depreciation and amortization.

Depreciation and amortization of fixed and intangible assets are calculated on a straight-line basis over the estimated useful lives of the assets.

The estimated useful lives of fixed and intangible assets are described below:

The Company capitalizes third-party and internally-developed software costs in connection with its proprietary systems and its enterprise resource planning system that are incurred during the application development stage. Costs related to preliminary project activities and post implementation operating activities are expensed as incurred.

Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets consist primarily of shipping rebates, accounts receivable, net, interest receivable, prepaid insurance, prepaid technology expenses, and prepaid taxes. Shipping rebates were $4.5 million and $4.0 million as of January 31, 2026 and 2025, respectively.

Other Assets

Other assets consist primarily of capitalized implementation costs incurred in cloud computing arrangements, deposits for periods that exceed one year from the balance sheet date, prepaid bonuses, and sublease rent receivables, amortized over the period of future benefit.

Expenses

Fulfillment

Fulfillment expenses consist of fulfillment costs to receive, process and fulfill customer orders, including fulfillment labor payroll and related costs, third-party shipping expenses, cost of packaging materials, cleaning expenses, and other fulfillment related costs.

RENT THE RUNWAY, INC.Notes to Consolidated Financial Statements

Technology

Technology expenses consist of technology payroll and related costs, professional services, and third-party software and license fees.

Marketing

Marketing expenses include online and mobile marketing, search engine optimization and email costs, marketing payroll and related expenses, agency fees, printed collateral, consumer research, and other related costs. Advertising costs amounted to $24.0 million, $25.4 million, and $28.5 million for the years ended January 31, 2026, 2025, and 2024, respectively. Costs associated with advertising campaigns are expensed when the advertising first appears in the media, and other advertising costs are expensed as incurred.

General and Administrative

General and administrative expenses are comprised of all other employee payroll and related expenses, including customer service costs, occupancy costs (including warehouse-related), professional services, credit card fees, general warehouse and corporate expenses, and other administrative costs.

Rental Product Depreciation and Revenue Share

Rental product depreciation and revenue share expenses are comprised of depreciation and write-offs of rental product, and payments under revenue share arrangements with brand partners.

Other Depreciation and Amortization

Other depreciation and amortization expenses are comprised of depreciation and amortization amounts for fixed assets, intangible assets, and financing right-of-use assets.

The classification of expenses varies across industries. Accordingly, the Company’s categories of expenses may not be comparable to those of other companies.

Share-Based Compensation

The Company recognizes all employee share-based compensation as an expense in the consolidated financial statements. Equity classified awards are measured at the grant date fair value of the award. The Company estimates grant date fair value of stock options using the Black-Scholes option pricing model. The fair value of stock options is recognized as compensation expense on a straight-line basis over the requisite service period of the award. Determining the fair value of options at the grant date requires judgment, including the expected term that stock options will be outstanding prior to exercise, the associated volatility, and the expected dividend yield. The fair value of common stock is based on the closing price of the common stock on the date of grant as reported on Nasdaq. Upon grant of awards, the Company also estimates an amount of forfeitures that will occur prior to vesting. There were no stock options granted during the years ended January 31, 2026 and 2025.

The Company has granted two types of restricted stock units (“RSUs”), RSUs denominated in shares of Class A common stock and RSUs denominated in shares of Class B common stock. The Company has granted RSUs which vest upon satisfaction of time-based service conditions. The Company has approved performance-based RSUs (“PSUs”) which will vest upon satisfaction of time-based service and performance-based conditions. The Company records share-based compensation expense for these RSUs on a straight-line basis over the requisite service period. Stock-based compensation expense for PSUs will be recognized based on estimated performance against established performance targets and revisions will be recorded as a cumulative adjustment to earnings in the period of the revision. The Company also estimates an amount of forfeitures that will occur prior to vesting. See “Note 14– Share-based Compensation Plans” for a description of the accounting for share-based awards.

RENT THE RUNWAY, INC.Notes to Consolidated Financial Statements

Interest Income and Expense

Interest income and expense consist primarily of interest on the Company’s debt facility, debt discount (premium) amortization, and financing lease interest expense offset by interest income earned. The Company recognized interest and debt discount (premium) amortization expense of $21.8 million, $27.2 million, and $38.9 million for the years ended January 31, 2026, 2025, and 2024, respectively.

Other Income and Expense

Other income and expense consist primarily of monetizing tax credits associated with growth.

Income Taxes

Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The measurement of deferred tax assets is reduced, if necessary, by a valuation allowance for any tax benefits for which future realization is not considered more likely than not. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. The Company recognizes interest and penalties related to unrecognized tax benefits in income tax expense.

The Company recognizes the effect of income tax positions only if those positions are more likely than not to be sustained. Recognized income tax positions are measured at the amount that is greater than 50% likely of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs.

The Financial Accounting Standards Board (“FASB”) Staff Q&A Topic No. 5, Accounting for Global Intangible Low-Taxed Income (“GILTI”), states that an entity can make an accounting policy election to either recognize deferred taxes for temporary differences that are expected to reverse as GILTI in future years or provide for the tax expense related to GILTI resulting from those items in the year the tax is incurred. The Company has elected to recognize the resulting tax on GILTI as a period expense in the period the tax is incurred.

Long-Lived Asset Impairment

Long-lived assets, such as rental product, fixed assets, intangible assets, and right-of-use lease assets, are reviewed for impairment when events or changes in circumstances indicate the carrying value of such assets may not be recoverable. If circumstances require a long-lived asset or asset group be tested for possible impairment, the Company first compares the undiscounted cash flows expected to be generated by that asset or asset group to its carrying amount. If the carrying amount of the long-lived asset or asset group is not recoverable on an undiscounted cash flow basis, an impairment is recognized to the extent that the carrying amount exceeds its fair value. Fair value is determined using various valuation techniques including discounted cash flow models, quoted market values, and third-party independent appraisals, as necessary.

RENT THE RUNWAY, INC.Notes to Consolidated Financial Statements

During the years ended January 31, 2026 and 2025, the Company evaluated whether events or circumstances had changed such that it would indicate it is more likely than not that the carrying value of its long-lived assets may not be recoverable (triggering event). Given the Company’s stock price decline during fiscal year 2025 and the fourth quarter of fiscal year 2024, the Company concluded triggering events had occurred and performed impairment analyses of its long-lived asset groups as of January 31, 2026 and 2025. As of January 31, 2026 and 2025, the Company’s long-lived asset groups consisted of its sole reporting unit and the ROU asset related to the subleased ninth floor of its corporate headquarters in Brooklyn, NY. In connection with the commencement of the sublease in December 2024, the Company concluded the ROU asset for the subleased ninth floor to be its own asset group. Refer to “Note 6 - Leases – Lessee Accounting” for further details. The Company performed quantitative assessments using the undiscounted future cash flows expected to be generated by the use and/or eventual disposition for each of the Company’s long-lived asset groups. The assessments for the Company’s sole reporting unit included consideration of key factors including projected enterprise cash flows, market capitalization and the fair value of the Company’s debt facility. The assessments for the ninth floor sublease of the Company’s corporate headquarters in Brooklyn, NY included consideration of the undiscounted future cash flows expected to be generated by the sublease. Based on the quantitative assessments, the undiscounted cash flows expected to be generated by the use and/or eventual disposition, as applicable, of the Company’s long-lived assets exceeded their carrying values. Therefore, no impairment was recognized as a result of these analyses for the years ended January 31, 2026 and 2025.

In connection with the January 2024 restructuring plan as described in “Note 5, Restructuring and Related Charges”, the Company recorded asset impairment charges of $1.1 million during the year ended January 31, 2024 related to the discontinuation of a software implementation project.

Net Income (Loss) per Share Attributable to Common Stockholders

The Company computes net income (loss) per share attributable to common stockholders under the two-class method required for multiple classes of common stock and participating securities. Basic net income (loss) per share attributable to common stockholders is calculated by dividing the net income (loss) attributable to common stockholders by the weighted-average number of shares of common stock outstanding during the period.

Diluted net income (loss) per share attributable to common stockholders is computed by giving effect to all potentially dilutive securities outstanding for the period. For purposes of this calculation, stock options to purchase common stock, warrants to purchase common stock, and RSUs are considered potentially dilutive securities for the year ended January 31, 2026. They have been excluded from the calculation of diluted net loss per share attributable to common stockholders for the years ended January 31, 2025 and 2024 as their effect is anti-dilutive.

Commitments and Contingencies

Liabilities for loss contingencies arising from claims, assessments, litigation, and other sources are recorded when it is probable that a liability has been incurred and the amount can be reasonably estimated. Legal costs incurred in connection with loss contingencies are expensed as incurred.

RENT THE RUNWAY, INC.Notes to Consolidated Financial Statements

Foreign Currency

The functional currency of the Subsidiary is the U.S. dollar, which is the functional currency of the Company. The local currency of the Subsidiary is the euro. Monetary assets and liabilities of the Subsidiary are remeasured at the rate of exchange in effect on the balance sheet date; income and expenses are remeasured at the average exchange rates throughout the year. The related remeasurement adjustments are included in general and administrative expenses in the consolidated statements of operations.

Recently Issued and Adopted Accounting Pronouncements

Recently Issued Accounting Pronouncements

Interim Reporting (Topic 270): Narrow Scope Improvements

In December 2025, the FASB issued ASU 2025-11, Interim Reporting (Topic 270): Narrow Scope Improvements, to improve the navigability of required interim disclosures and clarify when the guidance is applicable. The amendments provide additional guidance on what disclosures should be provided in interim reporting periods and adds a principle that requires entities to disclose events since the end of the last annual reporting period that have a material impact on the entity. This standard is effective for interim reporting periods within annual reporting periods beginning after December 15, 2028, and early adoption is permitted. The Company is currently evaluating the impact that the adoption of this standard will have on the consolidated financial statements.

Intangibles—Goodwill and Other—Internal-Use Software

In September 2025, the FASB issued ASU 2025-06, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software. The amendments modernize the accounting for software costs accounted for under ASC 350-40. The amendments remove all references to software development stages and require entities to start capitalizing software costs when management has authorized and committed to funding the software project and it is probable that the project will be completed and the software will be used to perform the intended function. This standard is effective for annual reporting periods beginning after December 15, 2027, including interim periods within those annual periods. Early adoption is permitted. The amendments are to be applied retrospectively, prospectively, or a modified transition approach may be used based on the status of the project and whether software costs were capitalized before the date of adoption. The Company is currently evaluating the impact that the adoption of this standard will have on the consolidated financial statements.

Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures

In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40). In January 2025, the FASB issued ASU 2025-01, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date to clarify the effective date of ASU 2024-03. The amendments require disclosure of additional information about specific expense categories in the notes to the financial statements. This standard is effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods within annual reporting periods beginning after December 15, 2027. Early adoption is permitted. The amendments are to be applied either prospectively to financial statements issued for reporting periods after the effective date of this Update or retrospectively to any or all prior periods presented in the financial statements. The Company is currently evaluating the impact that the adoption of this standard will have on the consolidated financial statements.

RENT THE RUNWAY, INC.Notes to Consolidated Financial Statements

Income Taxes(Topic 740): Improvements to Income Tax Disclosures

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. The amendments primarily require enhanced disclosures and disaggregation of income tax information by jurisdiction in the annual income tax rate reconciliation and quantitative and qualitative disclosures regarding income taxes paid. These amendments are to be applied prospectively, with the option to apply the standard retrospectively, for annual periods beginning after December 15, 2025. Early adoption is permitted. The Company adopted this standard for the year ended January 31, 2026 and reflected the additional disclosures required in the standard in Note 10 - Income Taxes.