RENT - Rent the Runway touts AI progress with its earnings report

2023-06-07 16:13:57 ET

Rent the Runway ( NASDAQ: RENT ) fell sharply in Wednesday's extended trading after setting Q2 revenue guidance below expectations.

The New York-based fashion platform posted Q1 revenue slightly ahead of the consensus estimate on 11% growth. Of note, Rent the Runway ( RENT ) saw a 7.6% increase in ending active subscribers during the quarter to 145,220 vs. the consensus estimate of 144,059. The company had a total of 185,720 subscribers.

Gross margin jumped to 42.3% of sales vs 33.5% a year ago. Adjusted EBITDA margin improved to 6.1% from -13.1% last year.

On the balance sheet, Rent the Runway ( RENT ) ended the quarter with a cash position of $151.4M.

Rent the Runway ( RENT ) said it took a first and important step in leveraging AI models to improve the RTR search & discovery experience by developing an AI-driven search beta. Expected to launch in the coming weeks, the feature will allow customers to leverage RTR’s existing search tools and product catalog using common phrases or fashion terms, which is intended to make the process of discovering products more intuitive and natural.

Looking ahead, Rent the Runway ( RENT ) expects Q2 revenue to land in the range of $77.0M to $79.0M and an adjusted EBITDA Margin of 7% to 8%.

Shares of Rent the Runway ( RENT ) fell 2.88% immediately after the print to cut into the 12.90% rally during the regular session.

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