Rent the Runway (RENT) Q2 2025 Earnings Call: Subscribers Rise 13.4%, Debt Recap Planned
Source Tradingkey
Key Takeaways
- Q2 2025 revenue increased 2.5% year over year to $80.9 million and rose 16.2% from Q1 2025.
- Ending Active Subscribers reached 146,373, up 13.4% year over year but slightly below the 147,157 recorded at the end of Q1 2025.
- Adjusted EBITDA fell to $3.6 million, or 4.4% of revenue, from $13.7 million and 17.4% a year earlier, primarily due to higher revenue share expenses.
- Free cash flow was negative $26.5 million, compared with negative $4.5 million in Q2 2024, reflecting lower adjusted EBITDA and increased rental product purchases.
- Rent the Runway announced a recapitalization plan intended to reduce total debt from more than $340 million to approximately $120 million, add new capital and extend debt maturity to 2029.
- For Q3 2025, management expects revenue of $82 million to $84 million and an adjusted EBITDA margin between negative 2% and positive 2%.
Key Financial Data
| Metric | Q2 2025 | Change | Management commentary |
|---|---|---|---|
| Total revenue | $80.9 million | +2.5% YoY; +16.2% QoQ | Growth included higher subscription and reserve rental revenue and a 12.5% increase in other revenue. |
| Ending Active Subscribers | 146,373 | +13.4% YoY | Growth was driven by stronger acquisition, higher promotional activity and improved retention. |
| Average Active Subscribers | 146,765 | +6.8% YoY | Up from 137,455 in Q2 2024. |
| Subscription and reserve rental revenue | — | +1.0% YoY | Higher average subscribers were partly offset by lower average revenue per subscriber. |
| Fulfillment costs | $22.5 million | Up from $20.6 million YoY | Costs equaled 27.8% of revenue, reflecting carrier rate increases and higher warehouse processing costs. |
| Gross margin | 30.0% | Down from 41.1% YoY | The decline reflected higher revenue share and fulfillment costs as percentages of revenue. |
| Adjusted EBITDA | $3.6 million | Down from $13.7 million YoY | Margin fell to 4.4% from 17.4%, primarily because of higher revenue share expenses. |
| Free cash flow | -$26.5 million | Down from -$4.5 million YoY | Lower adjusted EBITDA and greater rental product purchases weighed on cash flow. |
Business and Operating Performance
Disclaimer: For information purposes only. Past performance is not indicative of future results.
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