Rent the Runway (RENT) Q1 2027 earnings summary

Executive summary

• Revenue grew 29.2% year-over-year to $89.9 million for Q1 2026, driven by higher subscription, reserve rental, and add-on revenue, exceeding guidance.

• Leadership transition with the co-founder and CEO stepping down; interim CEO, CFO, and Chief Commercial Officer appointed.

• 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 costs.

• Strategic focus on customer-centricity, inventory transformation, and AI-driven discovery, including personalized carousels and imagery.

• Expansion into new revenue streams: online marketplace, advertising/media, and B2B services.

Financial highlights

• 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%), improved from $(1.3) million (margin -1.9%) year-over-year.

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

• Cash and cash equivalents were $37.1 million as of April 30, 2026; long-term debt was $157.1 million, maturing October 2029.

• Net cash used in operating activities was $(3.8) million; net cash used in investing activities was $(9.8) million.

Outlook and guidance

• Double-digit revenue growth guidance 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 FY 2025.

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

• Guidance does not account for material deterioration in macroeconomic or geopolitical factors.