Rent the Runway, Inc.

RENT THE RUNWAY, INC.Notes to Condensed Consolidated Financial Statements

3. Liquidity

The Company has incurred net losses of $(12.9) million and $(31.8) million for the three and six months ended July 31, 2026, respectively. The Company has incurred significant recurring net operating losses since inception and has an accumulated deficit of $(1,132.2) million as of July 31, 2026. The Company has historically relied on debt and equity financing to fund its operations. The Company’s principal sources of liquidity are existing cash and cash equivalents and cash flows from operating activities. There is no remaining borrowing availability under the Company’s New Credit Agreement, as defined below. The Company’s cash flows (used in) provided by operations for the six months ended July 31, 2026 were $(5.0) million compared to $(2.2) million for the six months ended July 31, 2025. Cash out flows from investing activities for the six months ended July 31, 2026 were $(16.6) million compared to $(30.7) million for the six months ended July 31, 2025. The decrease in cash flows (used) in investing activities during the six months ended July 31, 2026 as compared to the six months ended July 31, 2025 was due to a strategic, intentional increase in rental product purchases during fiscal year 2025. As of July 31, 2026, the Company held cash and cash equivalents of $29.0 million and long-term debt of $157.5 million with a maturity date in October 2029.

The Company experienced net operating losses for the last three years and an increase in such losses during the year ended January 31, 2026 as compared to the year ended January 31, 2025. The Company also experienced positive cash flows from operations in fiscal years 2025 and 2024, though it continued to have cash outflows related to its investing activities. To the extent the Company is impacted by macroeconomic trends, or other factors, including, but not limited to, lower demand for our business, increased rental product costs, or tariffs, the Company plans to preserve liquidity by reducing fixed and variable costs, which may include additional reductions to labor, operating expenses, and/or capital expenditures. However, these actions may not provide sufficient incremental liquidity to fund the Company’s long-term obligations.

See “Note 6 - Long-Term Debt” for a description of the Company’s Recapitalization Transactions completed in October 2025. On January 28, 2026, the Company entered into the First Amendment to the New Credit Agreement (the “First Amendment”), which permanently removed the minimum liquidity maintenance covenant. The Second Amendment to the New Credit Agreement (the “Second Amendment”) was executed on April 1, 2026 and provides the Company with the ability to capitalize interest in lieu of cash payments until May 3, 2027. On September 1, 2026, the Company entered into the Third Amendment to the New Credit Agreement (the “Third Amendment”). The Third Amendment provides an additional $10.0 million of new term loans from the Investor Group (as defined below) to support the Company’s working capital needs and other general corporate purposes and improve its overall liquidity. The Company expects that its existing resources and future cash flows from operations and cash and cash equivalents, will provide it with sufficient liquidity to meet its obligations for at least the next twelve months from the issuance date of these financial statements. The Company plans to explore additional funding sources to increase liquidity and strengthen its balance sheet. However, there can be no assurance plans will be completed.