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Jul 31, 2025
Rent the Runway Q2 2025 Earnings Report
Rent the Runway reported its second quarter 2025 earnings, highlighting a transformative recapitalization plan and continued business growth.
Key Takeaways
Rent the Runway announced a significant recapitalization plan to reduce its debt from $340 million to $120 million, extending maturity to 2029. The company reported a 2.5% year-over-year revenue increase to $80.9 million and a 13.4% increase in ending active subscribers. However, gross profit and Adjusted EBITDA saw declines compared to the prior year.
Rent the Runway announced a transformative recapitalization plan, reducing debt from $340 million to $120 million and extending maturity to 2029.
Revenue for Q2 2025 increased by 2.5% year-over-year, reaching $80.9 million.
Ending active subscribers grew by 13.4% year-over-year to 146,373, and average active subscribers increased by 6.8%.
Gross Profit decreased by 25.0% to $24.3 million, and Adjusted EBITDA fell to $3.6 million from $13.7 million in the prior year.
Revenue by Segment
Forward Guidance
For the fiscal third quarter of 2025, Rent the Runway expects revenue between $82 million and $84 million and Adjusted EBITDA Margin between (2)% and +2%. For fiscal year 2025, the company reiterates guidance for double-digit growth in ending Active Subscribers but expects Free Cash Flow to be lower than $(40) million due to recapitalization costs.
Positive Outlook
- Expected revenue growth for Q3 2025, with a range of $82 million to $84 million.
- Reiterated guidance for double-digit growth in ending Active Subscribers for fiscal year 2025.
- Anticipated positive Adjusted EBITDA Margin for Q3 2025, with a range of (2)% to +2%.
- The recapitalization plan is expected to strengthen the balance sheet and provide financial flexibility.
- Continued deployment of bold inventory strategy and increased customer engagement are expected to drive future growth.
Challenges Ahead
- Free Cash Flow for fiscal year 2025 is expected to be lower than $(40) million.
- Costs related to the recapitalization transactions will negatively impact Free Cash Flow.
Revenue & Expenses
Visualization of income flow from segment revenue to net income
Historical Earnings Impact
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Avg. Return Before/After Earnings
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