Rent the Runway reported Q4 2025 revenue of $91.7 million, a 20% year‑over‑year increase that beat the consensus estimate of $76.6 million. The company’s net loss narrowed to $1.4 million from $13.4 million in Q4 2024, and the GAAP earnings per share were approximately –$0.04, reflecting the improved profitability despite ongoing inventory investment.
Active subscribers rose to 143,796, a 20% increase from the prior year and an 11.9% rise in Q4 alone. The growth is attributed to the company’s inventory‑investment strategy, which has expanded the product assortment and improved customer experience, driving higher subscription uptake.
Gross profit for the quarter reached $35.4 million, giving a gross margin of 38.6% versus 37.7% in Q4 2024. Adjusted EBITDA was $18.3 million, or 20% of revenue, down from 22.8% in the prior year. For the full year, adjusted EBITDA was $24.9 million, a 7.6% margin compared with 15.3% in FY2024, reflecting the impact of inventory investment and other costs.
Management guided for double‑digit revenue growth in FY2026, an Adjusted EBITDA margin of 4% to 7%, and rental‑product acquisitions of $45 million to $50 million. For Q1 2026, revenue is projected at $85 million to $87 million with an Adjusted EBITDA margin of –5% to –7%, indicating confidence in growth but acknowledging near‑term profitability challenges.
"FY25 was a pivotal year for Rent the Runway with transformational changes in both our balance sheet and customer experience. We look forward to continuing to delight our customers and to driving sustainable growth in the years ahead," said CFO Sid Thacker. "Last year, we made a calculated bet that increasing our inventory investment was the strongest lever to unlock growth. Today, that strategy has paid off, demonstrated by the significant growth in our subscribers in FY25. Having also strengthened our balance sheet through a strategic recapitalization, I believe that we are operating from our strongest financial position in years," added CEO Jennifer Hyman. "As we enter fiscal year 2026, we plan to continue to evolve, revolutionizing the customer experience by leveraging AI technologies and diversifying our revenue through new streams like our online marketplace and B2B services. We are laser‑focused on building a durable, multi‑faceted platform that defines the future of fashion," she added.
Investors reacted positively to the earnings release, citing the revenue beat, subscriber growth, and the company’s strategic pivot toward AI and new revenue streams.
The results underscore the effectiveness of Rent the Runway’s inventory‑investment strategy, which has translated into higher subscriber numbers and stronger top‑line growth. However, margin compression from inventory spending and the need to manage costs remain headwinds. The debt‑restructuring gain of $96.3 million helped turn a net loss into a net income of $22.6 million for FY2025, improving the company’s financial position and providing a stronger foundation for the platform‑centric strategy moving forward.
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