Rent the Runway — Second Quarter 2026 Earnings Summary

Financial Performance

• Total revenue reached $97.7 million, a 20.8% year-over-year increase from $80.9 million in Q2 2025.
• Gross profit was $35.3 million, up 45.3% from $24.3 million in Q2 2025; gross margin expanded to 36.1% from 30.0% in the prior year period.
• Net loss narrowed to $(12.9) million, or (13.2)% of revenue, compared to $(26.4) million, or (32.6)% of revenue, in Q2 2025.
• Adjusted EBITDA was $12.6 million, or 12.9% of revenue, compared to $3.6 million, or 4.4% of revenue, in Q2 2025.
• Net cash used in operating activities was $(5.0) million, compared to $(2.2) million in Q2 2025.
• Net cash used in investing activities was $(16.6) million, compared to $(30.7) million in Q2 2025.
• Cash and cash equivalents stood at $29.0 million as of July 31, 2026, down from $43.6 million in Q2 2025.
• Long-term debt, net, was $157.5 million as of July 31, 2026, compared to $156.6 million at January 31, 2026.
• Deferred revenue was $13.0 million as of July 31, 2026, up from $12.0 million at January 31, 2026.

Guidance and Future Outlook

• For Q3 2026, the company expects revenue between $87 million and $90 million and an Adjusted EBITDA margin between negative 3% and negative 6%.
• For fiscal year 2026, the company reaffirms double-digit revenue growth versus fiscal year 2025.
• FY26 Adjusted EBITDA margin is reaffirmed between 4% and 7%.
• Rental Product Acquired for FY26 is updated to a range of $53-55 million, compared to $74.9 million in FY25.
• Outlook assumes current conditions and does not incorporate unknowns such as fuel surcharges, tariffs, or other macroeconomic developments that could materially affect results.

Business Segments and Product Lines

• Subscription and Reserve rental revenue was $83.8 million, up from $69.2 million in Q2 2025.
• Other revenue was $13.9 million, up from $11.7 million in Q2 2025.
• Add-on bookings increased 81% year-over-year in Q2, with 33% of subscribers using an add-on, up from 29% in the prior year.
• AI-powered outfits generation was rolled out to all customers by the end of June 2026; engagement is approximately 35%, and users added items to their bag 12% more often during the pilot.
• Avatars were rolled out to all customers in August 2026 to show recommended looks on various figures, and virtual try-on tools are being piloted.
• Resources were concentrated on core rental and selling businesses; the online marketplace pilot, on-site advertising, and new B2B dry cleaning opportunities were paused.
• The Reserve business continues to carry the strongest satisfaction scores.

Market and Competitive Landscape

• The company operates in the fashion rental and resale industry, described as a trillion-dollar market.
• The company has been named to CNBC's "Disruptor 50" five times in ten years and Fast Company's Most Innovative Companies list four times.
• Management notes a highly competitive and rapidly changing global fashion industry.

Risks and Challenges

• Macroeconomic unknowns, including fuel surcharges, tariffs, and the war in the Middle East, could materially affect actual results.
• Risks include the ability to drive future growth, manage growth effectively, and accurately forecast customer demand.
• The company faces risks related to debt covenants, potential non-compliance with Nasdaq Marketplace Rule 5606(c)(2)(A) regarding audit committee members, and material weaknesses in internal control over financial reporting.
• Risks also include reliance on third-party vendors, shipping logistics, supply chain issues, and AI technology performance.

Management Commentary and Tone

• Paige Thomas was appointed Chief Executive Officer and President, effective September 14, 2026, succeeding Interim CEO Teri Bariquit.
• Teri Bariquit was appointed non-executive Chair of the Board; Dhiren Fonseca stepped down as Executive Chairman.
• Interim CFO Dave Loretta stated that results reflect an all-time high for revenue and profit margin expansion driven by operating discipline.
• CEO Paige Thomas emphasized a focus on listening to customers, doubling down on fashion, and executing with operational excellence, describing the new direction as an acceleration of the existing foundation.
• Interim CEO Teri Bariquit expressed confidence in the company's foundation and the incoming leadership.

Other Key Points

• Active Subscribers ended the quarter at 140,826, a 3.8% decrease from 146,373 in Q2 2025; Average Active Subscribers increased 1.0% to 148,259.
• Total Subscribers ended the quarter at 186,019, a 0.5% increase from 185,102 in Q2 2025.
• The company incurred $1.8 million in executive transition costs related to the CEO and Executive Chair role changes.
• The company incurred $6.1 million in securities litigation expenses in Q2 2026.
• A conference call and webcast were held on September 11, 2026, to discuss results.