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Rent the Runway, Inc. (RENT)·Q2 2026 Earnings Summary

Executive Summary

  • Revenue was $80.9M (+2.5% YoY; +16.2% QoQ), with Gross Margin compressing to 30.0% and Adjusted EBITDA margin at 4.4% (vs 17.4% YoY), as revenue share costs and carrier rate increases weighed on margins . Active subscribers grew 13.4% YoY to 146,373, with improved engagement metrics and the highest subscription NPS in three years .
  • Q2 revenue slightly exceeded the high end of prior Q2 guidance ($76–$80M), delivering $80.9M; management reiterated a growth focus with positive QoQ EBITDA inflection versus Q1 (from -1.9% to 4.4%) .
  • Guidance: Q3 revenue $82–$84M; Adjusted EBITDA margin -2% to +2%. FY25 free cash flow now expected “lower than $(40)M” due to recap costs; double-digit growth in ending active subscribers reiterated .
  • Strategic catalyst: Transformative recapitalization reduces debt from ~$340M to ~$120M and extends maturity to 2029; management sees lower interest expense and improved financial flexibility, targeting deal close by Dec 31, 2025 .

What Went Well and What Went Wrong

What Went Well

  • Subscriber momentum and engagement: Ending active subscribers +13.4% YoY to 146,373; new inventory drove share of views (+84% YoY), hearts per style (+15% YoY), and new units at home (+57% YoY). “The numbers speak for themselves… engagement with our new inventory overperforming across every key metric.” — CEO Jennifer Hyman .
  • Organic media and community reactivation: “Engagement with our social media channels is up 796%… views up 175% YoY,” supported by 11 new social series and events that were 3x over-subscribed .
  • QoQ profitability inflection: Adjusted EBITDA turned positive QoQ to $3.6M (4.4% margin), versus Q1’s $(1.3)M (-1.9%), reflecting scale benefits and higher sales of inventory .

What Went Wrong

  • Margin compression: Gross Margin fell to 30.0% (from 41.1% YoY) and Net Loss margin widened to (32.6)% due to higher revenue share and fulfillment costs (carrier rate increases, warehouse processing) .
  • Losses and cash burn: Net Loss increased to $(26.4)M YoY (vs $(15.6)M) with Q2 free cash flow at $(26.5)M vs $(4.5)M YoY, driven by lower EBITDA and higher rental product purchases under the inventory strategy .
  • Balance sheet leverage (pre-recap): Long-term debt net was $343.9M at quarter-end; cash and equivalents declined to $43.6M, highlighting urgency and importance of recapitalization execution .

Financial Results

MetricQ4 2025Q1 2026Q2 2026
Revenue ($USD Millions)$76.4 $69.6 $80.9
Diluted EPS ($USD)$(3.44) $(6.58) $(6.55)
Gross Profit ($USD Millions)$28.8 $21.9 $24.3
Gross Margin %37.7% 31.5% 30.0%
Adjusted EBITDA ($USD Millions)$17.4 $(1.3) $3.6
Adjusted EBITDA Margin %22.8% (1.9)% 4.4%
Net Loss ($USD Millions)$(13.4) $(26.1) $(26.4)
Net Loss Margin %(17.5)% (37.5)% (32.6)%

Segment revenue breakdown:

SegmentQ2 2024Q1 2026Q2 2026
Subscription & Reserve Rental ($USD Millions)$68.5 $62.0 $69.2
Other Revenue ($USD Millions)$10.4 $7.6 $11.7
Total Revenue ($USD Millions)$78.9 $69.6 $80.9

Key KPIs:

KPIQ4 2025Q1 2026Q2 2026
Ending Active Subscribers119,778 147,157 146,373
Average Active Subscribers126,148 133,468 146,765
Ending Total Subscribers164,004 182,209 185,102

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Revenue ($USD Millions)Q3 2025N/A$82–$84 New
Adjusted EBITDA Margin %Q3 2025N/A(2)% to +2% New
Free Cash Flow ($USD Millions)FY 2025$(30) to $(40) Lower than $(40) Lowered
Ending Active Subscribers (YoY)FY 2025Double-digit growth Double-digit growth reiterated Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4 2025, Q1 2026)Current Period (Q2 2026)Trend
Recapitalization & balance sheetStrategy to enable growth; targeting capital-light inventory and lower cash burn Debt reduced from ~$340M to ~$120M; maturity extended to 2029; expected close by Dec 31, 2025; interest expense expected to decline Accelerating; execution underway
Inventory depth & brand partnershipsLargest-ever inventory acquisition; Share by RTR ~62% of units; exclusive designs at ~40–50% lower cost 2,200 new styles; 56 brands YTD; revenue share units up 119% YoY; engagement metrics sharply up Strengthening
Pricing & tariffsMonitoring tariff uncertainty; value of renting emphasized First pricing adjustment in three years (avg +$2 per item; 2-SWAP $144→$164); implemented Aug 1, impact in line with expectations New pricing action
Organic social & communityAuthentic, transparent branding; 163% engagement uplift in early 2025 +796% engagement; 175% views; 12 member events with demand 3x capacity Strong momentum
Product & AI/personalizationBack-in-stock notifications; concierge and stylist support; retention focus Personalized home screen; rewards; upcoming AI review summaries and fit improvements Expanding personalization
Fulfillment & logistics costsCarrier rate increases; Q1 fulfillment 29.3% of revenue Fulfillment 27.8% of revenue in Q2; costs up YoY from carrier rates; warehouse processing Cost headwind persists

Management Commentary

  • “Reducing our debt from $340 million to $120 million while extending maturity to 2029 gives us the financial flexibility we need to fully execute on our turnaround.” — CEO Jennifer Hyman .
  • “We are feeling better about the health of our balance sheet, and look forward to re-introducing Rent the Runway to many investors and building trust in our future vision.” — CFO Sid Thacker .
  • “Q2 gross margins reflect higher revenue share costs… and higher fulfillment costs as a percentage of revenue.” — CFO Sid Thacker .
  • “On average, the cost has increased by $2 per item… our most popular plan… went from $144 a month to $164 a month, a 14% increase.” — CEO Jennifer Hyman .

Q&A Highlights

  • The Q2 2026 transcript does not include a Q&A section; call concluded after prepared remarks .
  • Prior quarter context (Q4 2025): Analysts probed FY25 cash flow drivers (inventory CapEx $70–$75M; Share by RTR utilization) and tariff uncertainty; management emphasized renting’s value and inventory-led retention uplift .

Estimates Context

  • S&P Global consensus estimates for Q2 2026 EPS and revenue were not available; formal beat/miss analysis versus Street consensus cannot be determined at this time (Values retrieved from S&P Global).* The company did exceed its prior Q2 revenue guidance range ($76–$80M) with $80.9M actual .

Key Takeaways for Investors

  • Near-term: Revenue exceeded internal guidance, and Adjusted EBITDA inflected positive QoQ; however, margin pressure from revenue share and logistics costs remains a key watch item .
  • Medium-term: Recapitalization materially de-levers and extends maturities, positioning for lower interest expense and greater investment capacity; closing by year-end is an important catalyst .
  • Growth driver: Inventory strategy is working—subscriber growth (+13.4% YoY), engagement metrics, and brand partnerships (revenue share units +119% YoY) are strong leading indicators .
  • Pricing: August 1 price increases may support ARPU and unit economics; monitor retention impact against improved assortment and personalized experiences .
  • Cash flow: FY25 free cash flow outlook was lowered to “less than $(40)M” given recap costs; expect consumption near term as inventory base steps up, with management targeting future fixed-cost leverage .
  • Execution risks: Fulfillment and tariff uncertainty persist; tangible mitigation includes cost discipline and continued shift toward capital-light inventory acquisition .
  • Trading lens: Stock likely sensitive to recap completion milestones, subscriber trajectory into Q3/Q4, and early read-throughs on pricing/retention and margin stabilization .