Rent the Runway, Inc.

Q1 2026 revenue was $89.9 million, up $20.3 million or 29.2% year over year and down 2% quarter over quarter. Gross margin was 25.9% versus 31.5% a year ago, and adjusted EBITDA was negative $0.8 million, or negative 0.9% of revenue, versus negative $1.3 million, or negative 1.9%, in Q1 2025. Free cash flow was negative $13.6 million versus negative $6.4 million last year. Ending active subscribers were 155,692, up 5.8% year over year, and average active subscribers were 149,744, up 12.2% year over year. For Q2 2026, management guided to revenue of $91 million to $95 million, up 12% to 17% year over year, and adjusted EBITDA of 5% to 8% of revenue. For full-year 2026, the company reiterated double-digit revenue growth, adjusted EBITDA margin of 4% to 7%, and rental product acquired of $45 million to $50 million.

Teri Bariquit struck an upbeat, transition-focused tone, saying the company is at an "inflection point" and that the 2025 inventory transformation is now showing up in the results. She emphasized the core strategy of "Right Brands, Right Quantities," while saying the next major opportunity is improving discovery through AI so customers can more easily find and rent what they want. She also highlighted early-stage growth initiatives in marketplace, advertising/media, and B2B dry cleaning, framing them as additional revenue streams with scale potential.

Sid Thacker emphasized that Q1 was strong, with nearly 30% revenue growth driven by higher average revenue per subscriber, higher active subscribers, stronger add-ons, and better retail revenue. He pointed to 25.9% gross margin, negative $0.8 million adjusted EBITDA, and negative $13.6 million free cash flow, explaining that cash flow was pressured by timing of receipts, cash interest expense, and working capital timing even though inventory-related capex was lower. He reiterated that the April 2026 debt amendment allows interest to be paid in kind through April 2027 and said full-year free cash flow should improve as timing effects normalize.

There was no live analyst Q&A in the transcript. Management did, however, address the main investor concern directly: slower year-over-year ending active subscriber growth, which Sid said was mainly due to tougher comparisons from normalized marketing spend and last year’s promotional activity tied to the inventory build. He also flagged uncertainty around fuel surcharges, transportation costs, consumer confidence, and the reserve business, noting that Q2 guidance assumes continued reserve declines and some risk from passing fuel surcharges through to customers.