Rent the Runway, Inc. Class A Common Stock 2027 Q2 Earnings Call

Hello, everyone, and thanks for dialing in today. We would like to remind you that this call will include forward-looking statements. These statements include guidance and underlying assumptions for the third fiscal quarter of 2026 and the fiscal year 2026, and statements regarding our business strategies and initiatives, inventory plans, execution and progress against our goals, and leadership transition. These statements are subject to various risks, uncertainties, and assumptions that could cause our actual results to differ materially. These risks, uncertainties, and assumptions are detailed in today's press release in our Form 10-Q. We have no obligation to update any forward-looking statements or information except as required by law. During this call, we will also reference certain non-GAAP financial information. The presentation of this non-GAAP financial information is not intended to be considered in isolation or as a substitute for financial information presented in accordance with GAAP.

Reconciliations of GAAP to non-GAAP measures can be found in our press release and in our SEC filings. With that, I'll turn it over to Teri Bariquit, our Interim CEO.

Thank you, Cara, and thank you all for joining today. Before we turn to the quarter, I want to share an important update on our leadership. This morning, we announced that Paige Thomas has been appointed as Rent the Runway's Chief Executive Officer, President, and a member of our board of directors effective September 14th. Paige brings 30 years of retail leadership experience with a track record of driving growth at premium and off-price brands alike. She joined Rent the Runway in June of 2026 as our Chief Commercial Officer after serving as Chief Merchant and Product Innovation Officer at Signet Jewelers and as President and CEO of Saks OFF 5TH. Earlier, she spent more than a decade at Nordstrom, including five years leading Nordstrom Rack. The bar we set for this role was high, and it was specific.

Someone who understands the premium customer and fashion brands she loves, someone who has operated at scale, and someone who will lead and accelerate the strategy this team is already executing. That is Paige. With Paige stepping in as our permanent CEO, I will move into the role of non-executive chair of our board, also effective September 14th. Paige and I will work closely together as we transition into our new roles, ensuring the strategy and momentum we've built continues. I also want to thank Dhiren Fonseca for his service as executive chairman through this period of transition. He's been a steady partner to me and to the board, and the company is better for it. Now to the business. Through all of this change, our foundation holds. It starts with the customer at the center and the core rental business she comes to us for.

Over the past few months, we've listened to her feedback, analyzed the data, and evaluated how we work. As a result, we've refined how we serve her, and we're clearer than ever on our strategy. Rent the Runway is a premium fashion service platform. We exist to give her access to premium fashion, whether she is renting or buying, guided by styling intelligence that helps her find and wear what fits her life. We give brands and partners exposure to highly valued, highly engaged customers. Our strategy is supported by three operating objectives. Total customer growth, profit expansion, and operational excellence. First, total customer growth is built on being a fashion authority and delivering an experience she trusts. In practice, that means the best merchandise offer from everyday workwear to the aspirational brands she asks for by name, realized through strong brand partnerships.

It means an even more seamless experience, availability, discovery, and access to product on her terms. She subscribes to expand her closet for everyday wear. She reserves for the moments that matter most in her life. Increasingly, she wants to buy from us. She experiences all of it as one relationship with one company, and we are building the business to match. Second, margin expansion is about bringing more discipline to how we drive profitable revenue. That includes how we use pricing and promotions and how we manage inventory to turn it faster and earn the greatest return on our largest investment, the product itself. Third, operational excellence is about disciplined execution, delivering the plan we set and the promise she is paying us for. This is what separates the retailers that last from the ones that do not.

It is the garment arriving clean, on time, and in the condition she expects every single time across the hundreds of thousands of items moving through our operations. We hold ourselves to that standard on every order. Now to the quarter. Our customer's feedback has been consistent, and we aim to always deliver on the promise she comes to us for. The right merchandise, easy to find, in stock when she needs it, and in the condition she expects. So we are concentrating our resources toward improving our execution on rental and selling. That focus means we have paused select pilots that do not directly serve those priorities today. First, we paused marketplace, and we believe that it can be meaningful in our future once the experience is fully integrated.

We paused on-site advertising and monetization to prioritize a premium experience. We are not pursuing new B2B dry cleaning partners, though we will continue to serve the one we have. These are choices about focus and sequencing, and by concentrating our resources, we expect to improve execution and results. For the second quarter, we delivered $98 million in revenue, ahead of the range we communicated in June. We also delivered meaningful margin improvements as we focused on operational efficiencies and alternative inventory models. Dave will take you through the financials in more detail shortly. Total customer growth depends on fashion authority, brand trust, and a seamless customer experience. To strengthen our fashion authority in the quarter, we introduced new brands and went deeper into the categories she requests most.

To deliver a relevant summer offer, for example, we expanded beach coverups from 12 brand partners to 25, growing the category 75% over last year. She continues to respond to newness with recent additions like Line + Dot, Jenni Kayne, alongside refreshed prints from Marimekko, all delivering above average utilization. Looking to fall, she will experience a diverse assortment, including new brands and new collaborations. We have more heavily than last year toward the brands and categories she requests most, whether she's heading into the office, working from home, or getting ready for a fall wedding. She has told us how much the Reserve experience matters. It's where she comes to us for the key moments in her life. It carries the highest satisfaction scores, and we are investing in it, including category expansion. We will share more on those results at the next call.

The goal is simple, more of what she wants with even more newness throughout the season. At the start of 2026, we said we would deliver features to improve her discovery experience, and we have been delivering. In May, we piloted outfit generation, and by the end of June, it was live for every customer. She no longer has to imagine what to wear together. We show her the complete look. Engagement with this feature in our app is running at 35%, ahead of our expectations, and it is changing how she engages with us. During the pilot, customers with the outfit experience added to their bag 12% more often than those without it, and 77% of the time, she opened another item within the look.

In August, we rolled out avatars within the outfit experience so that she can see recommended looks on a range of figures. We began piloting virtual try-ons so that she can see how a specific item will look before she rents or buys. Over the past five months, we've launched personalized carousels, updated imagery, outfit generation, and virtual try-on. Together, they represent a real shift in how she discovers product. She can find an item, picture herself in it, and see the whole look together. Looking forward, we are building our 2027 plan now, guided by transformation and focus. We have more clarity than ever before about our customer, the services and experiences she wants, and the value that we offer to both her and to our brand partners.

We have a deep conviction that there is meaningful opportunity to grow revenue and profit by deepening our relationship with the customer we already have, by growing new customers, and through disciplined execution. As a reminder, last fall, we recapitalized the business in a transaction led by Story3 Capital Partners, Nexus Capital Management, and Ares Principal Strategies. These investors continue to have confidence in our strategy and growth plan, and we are actively working with them on the funding to support it. Today, we announced our plan to launch a rights offering to holders of our Class A common stock, backstopped by these investors for $15 million to support the company's operational plans and liquidity. This is the plan Paige is coming in to lead. The strategy is set, the team is in place, and the work is underway.

I am proud of the work to date and excited about the work ahead. We have made real progress securing more of the assortment that she wants, building discovery experiences that help her see herself in a product, and improving the consistency of her experience throughout. We will keep pushing on all three of these. Serving as interim CEO and President has been truly a privilege, and I could not be more confident in our strategy, in this team, and in Paige as the leader to carry it forward. With that, I will turn it over to Dave Loretta. This is Dave's first earnings call with us, and in the three months he's been here, he has brought a true rigor into this business that I have valued enormously.