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1. Company Snapshot

1.a. Company Description

Rent the Runway, Inc.rents designer wear for women through its stores and online retail.The company offers ready-to-wear, workwear, denim, casual, maternity, outerwear, blouses, knitwear, loungewear, jewelry, handbags, activewear, ski wear, home goods, evening wear, and kids wear, as well as accessories.


It also engages in the software development and support activities.The company was incorporated in 2009 and is headquartered in Brooklyn, New York.

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1.b. Last Insights on RENT

Rent the Runway's recent momentum is driven by its transformative recapitalization plan, which has strengthened its balance sheet and injected capital into the business. The company's Q3 results showed a 12.4% year-over-year increase in active subscribers and 15.4% revenue growth. According to a recent report, Rent the Runway is "rated 'Buy' due to its massive valuation discount and recent operational improvements" (Rent The Runway: On The Brink Of Profitability In An Unforgiving Industry). Management expects to break even in FY2025, marking a potential first-ever profit.

1.c. Company Highlights

2. Rent the Runway's Strategic Recapitalization and Growth Drive Earnings Beat

Rent the Runway's Q3 2025 earnings report showcased a significant improvement in financial performance, with revenue growth accelerating to 15.4% year-over-year, up from negative 7.2% in Q1. The company's adjusted EBITDA margins also expanded, although gross margins were impacted by investments in inventory. The actual EPS loss of $3.54 was narrower than the estimated loss of $4.87. Revenue for the quarter was not explicitly stated, but the company guided for Q4 2025 revenue between $85 million and $87 million, indicating continued growth momentum.

Publication Date: Dec -20

📋 Highlights
  • Debt Reduction & Extended Maturity:: Total debt decreased from $319M to $120M, with maturity extended to 2029, enhancing financial flexibility.
  • Revenue Growth Acceleration:: Q4 revenue growth improved to 11-14% YoY (up from 1% in Q4 2024), with FY2025 revenue guidance at $323.1M–$325.1M.
  • Subscriber Growth & Retention:: Active subscribers grew 12% YoY, with a 43% increase in Q3 subscription NPS and 17% higher subscription add-on rate.
  • Inventory Strategy Impact:: Inventory investments drove 15.4% Q3 revenue growth (vs. -7.2% in Q1), though contributing to lower gross margins.
  • Q4 2025 Financial Outlook:: Revenue guidance of $85M–$87M and adjusted EBITDA margins of 11–13%, reflecting improved operational efficiency.

Operational Highlights Drive Growth

The company's focus on customer experience and inventory is driving growth and customer satisfaction. Active subscribers grew 12% year-over-year, and despite a price increase in August, the company saw improvement in both acquisition and retention versus the prior year. The company has improved retention, with a 43% increase in Q3 subscription Net Promoter Score year-over-year and a 17% year-over-year increase in subscription add-on rate, as highlighted by Jennifer Hyman, "the company's focus on customer experience and inventory is driving growth and customer satisfaction."

Recapitalization and Debt Reduction

The recapitalization had a significant impact on Rent the Runway's balance sheet, reducing total debt from approximately $319 million to $120 million and extending the maturity to 2029, giving the company additional runway. This move is expected to provide the company with the necessary flexibility to continue investing in growth initiatives.

Valuation and Outlook

With a P/S Ratio of 0.12 and an EV/EBITDA ratio of 0.85, the market appears to have tempered expectations for the company's growth prospects. Analysts estimate next year's revenue growth at -4.2%, indicating some concerns about the sustainability of the current growth momentum. However, the company's guidance for fiscal year 2025 revenue between $323.1 million and $325.1 million suggests that the current growth trajectory is expected to continue, at least in the near term.

Return Metrics and Leverage

Rent the Runway's return metrics, such as ROE and ROIC, remain negative, indicating that the company still has work to do to achieve profitability. However, the Net Debt / EBITDA ratio has improved to -0.23, reflecting the company's reduced debt burden following the recapitalization.

3. NewsRoom

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Rent the Runway (NASDAQ:RENT) Stock Price Passes Above 200 Day Moving Average – Here’s Why

Feb -03

Source: defenseworld.net

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Critical Comparison: Rent the Runway (NASDAQ:RENT) & Hennes & Mauritz (OTCMKTS:HNNMY)

Feb -02

Source: defenseworld.net

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Rent The Runway: On The Brink Of Profitability In An Unforgiving Industry

Jan -08

Source: seekingalpha.com

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Rent the Runway (NASDAQ:RENT) Shares Cross Above Two Hundred Day Moving Average – Should You Sell?

Jan -07

Source: defenseworld.net

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Rent the Runway (NASDAQ:RENT) Share Price Passes Above Two Hundred Day Moving Average – What’s Next?

Dec -30

Source: defenseworld.net

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Rent the Runway: Back In Growth Mode, But Profitability Remains The Key Question

Dec -26

Source: seekingalpha.com

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Rent the Runway (NASDAQ:RENT) Shares Pass Above 200 Day Moving Average – Time to Sell?

Dec -20

Source: defenseworld.net

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Rent the Runway, Inc. (RENT) Q3 2026 Earnings Call Prepared Remarks Transcript

Dec -12

Source: seekingalpha.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (5.00%)

6. Segments

Subscription and Reserve Rental

Expected Growth: 5%

Rent the Runway's 5% growth in Subscription and Reserve Rental is driven by increasing demand for sustainable fashion, expansion into new markets, and enhanced customer experience through personalized styling and flexible rental options. Additionally, the rise of experiential spending and growing awareness of the environmental impact of fast fashion contribute to the segment's growth.

Other

Expected Growth: 5%

Rent the Runway's 5% growth is driven by increasing adoption of subscription services, expansion into new markets, and strategic partnerships. The company's focus on sustainability and convenience resonates with environmentally-conscious and fashion-forward consumers. Additionally, investments in technology and logistics have improved operational efficiency, enabling the company to scale effectively.

7. Detailed Products

Unlimited

A monthly subscription service that allows customers to rent up to 4 items at a time, with unlimited exchanges and no late fees.

Update

A 4-day rental service that allows customers to rent up to 4 items at a time, with the option to purchase at a discounted price.

Reserve

A service that allows customers to reserve a specific item for a specific date, ensuring availability for their event or occasion.

RTR Update Membership

A monthly membership that includes 4 rentals per month, with the option to add additional rentals or purchase items at a discounted price.

8. Rent the Runway, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Rent the Runway's subscription-based model and wide range of designer brands make it difficult for customers to find substitutes, reducing the threat of substitutes.

Bargaining Power Of Customers

While customers have some bargaining power due to the availability of alternative fashion rental services, Rent the Runway's strong brand reputation and wide range of designer brands mitigate this power.

Bargaining Power Of Suppliers

Rent the Runway's strong relationships with designer brands and its ability to negotiate favorable terms reduce the bargaining power of suppliers.

Threat Of New Entrants

While there are some barriers to entry, such as building relationships with designer brands and creating a strong logistics network, new entrants could still pose a threat to Rent the Runway's market share.

Intensity Of Rivalry

The fashion rental market is highly competitive, with several players vying for market share, leading to a high intensity of rivalry.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 152.20%
Debt Cost 3.95%
Equity Weight -52.20%
Equity Cost 6.46%
WACC 2.63%
Leverage -291.58%

11. Quality Control: Rent the Runway, Inc. passed 4 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Stock-Card
Rent the Runway

A-Score: 3.6/10

Value: 9.7

Growth: 4.3

Quality: 6.8

Yield: 0.0

Momentum: 0.5

Volatility: 0.3

1-Year Total Return ->

View Full Report
Stock-Card
Zumiez

A-Score: 3.2/10

Value: 4.6

Growth: 2.1

Quality: 4.3

Yield: 0.0

Momentum: 5.0

Volatility: 3.3

1-Year Total Return ->

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Stock-Card
Allbirds

A-Score: 3.0/10

Value: 10.0

Growth: 1.6

Quality: 3.6

Yield: 0.0

Momentum: 2.0

Volatility: 1.0

1-Year Total Return ->

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Stock-Card
Victoria's Secret

A-Score: 3.0/10

Value: 4.0

Growth: 3.3

Quality: 3.8

Yield: 0.0

Momentum: 4.5

Volatility: 2.3

1-Year Total Return ->

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Stock-Card
The Children's Place

A-Score: 2.5/10

Value: 8.5

Growth: 1.0

Quality: 3.9

Yield: 0.0

Momentum: 1.0

Volatility: 0.7

1-Year Total Return ->

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Stock-Card
Duluth Holdings

A-Score: 2.5/10

Value: 6.3

Growth: 1.4

Quality: 2.3

Yield: 0.0

Momentum: 3.5

Volatility: 1.3

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

6.67$

Current Price

6.67$

Potential

-0.00%

Expected Cash-Flows