Rent the Runway (RENT) Q1 2027 earnings summary

Executive summary

• Revenue grew 29.2% year-over-year in Q1 2026 to $89.9 million, exceeding guidance, driven by higher subscription, reserve rental, and add-on business revenue, with strong subscriber engagement and inventory enhancements.

• Net loss narrowed to $(18.9) million from $(26.1) million year-over-year, with net loss margin improving to (21.0)% from (37.5)% due to higher gross profit and lower interest, marketing, and technology costs.

• Adjusted EBITDA improved to $(0.8) million from $(1.3) million, reflecting better operating leverage.

• Leadership transitions included new interim CEO, CFO, and Chief Commercial Officer appointments.

• Strategic focus on AI-driven personalized discovery, new revenue streams in marketplace, advertising, B2B, and operational transformation.

Financial highlights

• Q1 2026 revenue was $89.9 million, up 29.2% year-over-year, but down 2% sequentially.

• Gross profit was $23.3 million (gross margin 25.9%), up from $21.9 million, but margin declined from 31.5% year-over-year.

• Adjusted EBITDA was $(0.8) million (margin -0.9%), an improvement from $(1.3) million (margin -1.9%) in Q1 2025.

• Free cash flow was $(13.6) million, down from $(6.4) million in Q1 2025, due to working capital and interest expense.

• Cash and cash equivalents were $37.1 million as of April 30, 2026.

Outlook and guidance

• Double-digit revenue growth reiterated for fiscal year 2026, with Q2 2026 revenue expected between $91 million and $95 million, up 12%-17% year-over-year.

• Adjusted EBITDA guidance for FY 2026 remains at 4%-7% of revenue; Q2 Adjusted EBITDA expected between 5%-8% of revenue.

• Rental product acquired expected to be $45-$50 million for FY 2026, down from $74.9 million in FY25.

• Guidance does not account for material deterioration in macroeconomic factors such as fuel surcharges or tariffs.

• The company expects sufficient liquidity for at least the next twelve months but is exploring additional funding sources.