1. Investment Snapshot
2. Thesis
3. Valuation & Price Target
4. Business & Product Moat
5. People & Governance
6. Market & Macro
7. Financial Quality
8. Risk Register
9. Prediction Market
10. 𝕏 Posts
Discussion
1. Investment Snapshot
2. Thesis
3. Valuation & Price Target
4. Business & Product Moat
5. People & Governance
6. Market & Macro
7. Financial Quality
8. Risk Register
9. Prediction Market
10. 𝕏 Posts
Discussion
1. Investment Snapshot
2. Valuation
Discussion
Symbol
RENT
Event Date
2021-11-03
IPO Date (Actual)
2021-10-27
Sector
Consumer
Subsector
Specialty Retail
Offer Range
$21.00-$21.00
Shares Offered
17M
63.93M
$1.2B
26.6%
Implied Upside vs Midpoint
Description
Our mission is to power women to feel their best every day. Since our founding, we have disrupted the trillion-dollar fashion industry and changed the way women get dressed by creating the world’s first Closet in the Cloud: a dream closet filled with a massive selection of designer styles to rent, wear and return (or keep!). We built the world’s first and largest shared designer closet — what we call the Closet in the Cloud — with over 18,000 styles by over 750 designer brands that has transformed the way women get dressed by letting them wear whatever they want, without having to own it. We give customers ongoing access to our “Unlimited Closet” through our Subscription offerings 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. Our Closet in the Cloud offers a wide assortment of items for every occasion, from evening wear and accessories to ready-to-wear, workwear, denim, casual, maternity, outerwear, blouses, knitwear, loungewear, jewelry, handbags, activewear, ski wear, home goods and kidswear. We have served over 2.5 million lifetime customers across all of our offerings and we had 126,841 ending total subscribers(1) (active and paused) as of July 31, 2021. In the first six months of fiscal year 2021, 83% of our total revenue was generated by subscribers (including their Reserve and Resale revenue) while they were active or paused. We have created a two-sided discovery engine: customers are finding new brands they love and brand partners are finding new customers they need. For customers, we unlock freedom of self-expression through access to our “Unlimited Closet” that has a constantly rotating supply of styles for all occasions, seasons, moods and price points. This leads to deep engagement with our platform as customers discover new brands they love. Brand partners are able to tap into our large, engaged community to discover new customers and get unparalleled data insights. All of this helps them grow their businesses and encourages them to partner more closely with us over time. When our customers use Rent the Runway, they experience the magic of accessing an “Unlimited Closet” while saving money and time and reducing clothing waste. We deliver significant financial value to customers, with our average subscriber wearing clothes worth more than 20 times what she pays for a monthly RTR subscription on an annualized basis (more than $37,000 in designer retail value annualized for the first six months of fiscal year 2021)(2). We have become an everyday utility; our average subscriber wears Rent the Runway 83 days per year. We believe that the convenience of our service and access to a broad assortment of designer brands, categories and styles helps drive our strong customer engagement. Our tremendous selection is enabled by our designer brand partnerships. We source our products directly from over 750 brand partners that include many of the most renowned and relevant names in the fashion industry. Our platform continues to be a valued launching pad for new and emerging brands and a business builder for existing brands. The transformative nature of our customer value proposition means our customers are different from other audiences our brands are exposed to. Approximately 91% of our brand partners work with us because we introduce them to new, desirable customers and deepen awareness of their brands. Over the last 12 years, we have fostered strong relationships with our brand partners and we have retained nearly 100% of our brand partners. Our Closet in the Cloud connects our deeply engaged customers and our differentiated brand partners on a powerful platform built around our brand, data, logistics and technology advantages. • Brand Partner Advantage. Our assortment contains thousands of new, current season styles procured from our brand partners that luxury competitors simultaneously carry - all available for subscription, a-la-carte rental, and resale at much lower prices. We believe our engaged and loyal customer base paired with the data that we provide to our brand partners makes us an essential destination for many of the world’s most important brands. As we have grown, our commercial relationships with our brand partners have evolved to balance our margins and the capital needs of our business. Today, we acquire our products through three channels: Wholesale, Share by RTR and Exclusive Designs. Through Share by RTR, we acquire items directly from brand partners on consignment, at zero or low upfront cost and revenue share with our brands each time an item is rented. We leverage our data to create highly desirable Exclusive Designs in collaboration with select brand partners that we manufacture through third-party partners to be more durable and at significantly lower cost. The portion of our products sourced through Share by RTR and Exclusive Designs - our more asset-light sources - has grown from approximately 26% in fiscal year 2019 to approximately 54% in fiscal year 2020. We anticipate a similar acquisition mix to fiscal year 2020 for the full year of fiscal year 2021. • Data Advantage. We capture a vast amount of unique, actionable data on our customers and products. We leverage this data to create benefits for our customers (deep personalization of styles and fit), brand partners (understanding of customer demand patterns and garment lifecycle) and our business (higher subscriber lifetime value and better product return on investment). • Technology and Logistics Advantage. We have developed a proprietary operating system for the sharing economy of physical goods that pairs proprietary intelligent software with differentiated infrastructure and hardware. Our expertise in vertically integrated just-in-time reverse logistics and garment science allows us to achieve multi-year monetization on our garments. We have also built a custom front-end platform that supports subscription, a-la-carte rental and resale in one easy experience for the customer. Since our inception, organic growth, or word-of-mouth marketing, has been a key advantage for RTR. Because of the self-confidence they feel when they rent, the majority of our customers publicly share their love of the Rent the Runway experience on social media and in their personal lives, which helps drive brand awareness and new customer acquisition. Our "Unlimited Closet" inspires women to experiment with fashion and rent bold, colorful, dynamic pieces that become natural conversation starters with their friends and family and create strong virality for the platform. As a result, since our founding, we have spent less than 10% of total revenue on marketing, and our growth has been mostly organic. Approximately 88% of our customers over the last 12 years have been acquired organically. Our brand and deeply engaged community have allowed us to acquire customers efficiently even as we have scaled. We believe our platform is powering a new frontier for fashion, one in which women buy less and wear more, disrupting a centuries old industry and contributing to a more sustainable future. Using the data from our life cycle analysis, we estimate that our rental model has displaced the production of approximately 1.3 million total new garments since 2010, resulting in the savings of 67.0 million gallons of water, 98.6 million kWh of energy and 44.2 million pounds of CO2 emissions. We generate revenue from our Subscription, Reserve and Resale offerings. The majority of revenue comes from our Subscription offering, which is highly recurring and drives customer engagement. We have achieved the following operating and financial results for fiscal year 2019 and 2020, respectively: • We had 147,866 and 95,245 ending total subscribers, respectively, and 133,572 and 54,797 ending active subscribers(3) (excluding paused subscribers), respectively; • Revenue was $256.9 million and $157.5 million, respectively; • Gross Profit was $53.6 million and $15.5 million, respectively; • Net Loss was $(153.9) million and $(171.1) million, respectively; • Adjusted EBITDA was $(18.0) million and $(20.3) million, respectively; • Adjusted EBITDA as a percentage of revenue was (7.0)% and (12.9)%, respectively; • Net cash used in operating activities plus net cash used in investing activities was $(176.2) million and $(101.2) million, respectively; and • Net cash used in operating activities plus net cash used in investing activities as a percentage of revenue was (68.6)% and (64.3)%, respectively. We have achieved the following operating and financial results for the six months ended July 31, 2020 and 2021, respectively: • We had 108,752 and 126,841 ending total subscribers, respectively, and 54,228 and 97,614 ending active subscribers (excluding paused subscribers), respectively; • Revenue was $88.5 million and $80.2 million, respectively; • Gross Profit was $8.7 million and $26.3 million, respectively; • Net Loss was $(88.0) million and $(84.7) million, respectively; • Adjusted EBITDA was $(10.6) million and $(8.1) million, respectively; • Adjusted EBITDA as a percentage of revenue was to (12.0)% and (10.1)%, respectively; • Net cash used in operating activities plus net cash used in investing activities was $(71.7) million and $(16.1) million, respectively; and • Net cash used in operating activities plus net cash used in investing activities as a percentage of revenue was (81.0)% and (20.1)%, respectively. (1) Ending total subscribers represent the number of subscribers with an active or paused membership as of the last day of the fiscal period and excludes subscribers who had an active or paused subscription during the fiscal period, but ended their subscription prior to the last day of the fiscal period. (2) We calculate designer retail values using original retail and/or comparable value prices. An original retail price is the price at which the manufacturer suggested that retailers in the marketplace, including department stores and specialty retailers, sell the item in new condition. A comparable value price is used for our Exclusive Designs and is based on an evaluation of prices for new comparable merchandise sold elsewhere in the marketplace. (3) Ending active subscribers is defined as ending total subscribers as of period end, excluding paused subscribers. --- We were incorporated as Rent the Runway, Inc. in Delaware on March 3, 2009. Our principal executive offices are located at 10 Jay Street, Brooklyn, New York 11201. Our telephone number is (212) 524-6860. Our website address is www.renttherunway.com.
Rent the Runway, Inc. annual income statement and balance sheet, FY 2023 to FY 2026, as reported in SEC filings.
| Metric | FY 2023 | FY 2024 | FY 2025 | FY 2026 |
|---|---|---|---|---|
| Revenue | $296M | $298M | $306M | $330M |
| Gross profit | $204M | $212M | $223M | $241M |
| Operating income | ($104M) | ($80.0M) | ($47.5M) | ($57.5M) |
| Net income | ($139M) | ($113M) | ($69.9M) | $22.6M |
| Metric | FY 2023 | FY 2024 | FY 2025 | FY 2026 |
|---|---|---|---|---|
| Total assets | $336M | — | $240M | $221M |
| Total liabilities | $372M | — | $423M | $257M |
| Total equity | ($35.3M) | ($122M) | ($183M) | ($36.1M) |
| Cash & equivalents | $155M | $84.0M | $77.4M | $50.4M |