Rent Runway Reports Record Subscribers Amid Q1 Revenue Decline

Rent the Runway reported a 7.2% year-over-year revenue decline to $69.6 million in Q1 2025 but achieved its highest quarter-ending active subscriber count in company history at over 147,000, representing a 1% increase. CEO Jennifer Hyman emphasized that the company's aggressive inventory expansion strategy—planned to increase by 134% throughout 2025—and focus on customer engagement have driven improved retention and a 23% rise in product views, reflecting renewed subscriber loyalty. Despite subscriber growth, profitability metrics weakened, with gross margin dropping to 31.5% from 37.9% the previous year, adjusted EBITDA turning negative $1.3 million, and net loss increasing to $26 million, largely due to higher fulfillment and inventory costs. Free cash flow was also negative $6.4 million, impacted by increased inventory investments to support growth. The company is confident that its strategic pivot to boost inventory and enhance the customer experience will fuel double-digit subscriber growth and long-term value creation, even as shares experienced mixed reactions from investors. Analysts currently hold a cautious 'Hold' rating for Rent the Runway stock, with price targets suggesting significant upside potential if growth strategies succeed.