Rent the Runway reported third‑quarter 2025 revenue of $87.6 million, a 15.4% year‑over‑year increase that exceeded the consensus estimate of $80.6 million. The upside was driven by stronger demand in its core subscription segment, higher average revenue per user, and a pricing adjustment that took effect in August. The company’s inventory strategy—adding a record amount of new items—also helped sustain demand during a period of broader retail softness.
Net income for the quarter was $76.5 million, largely attributable to a one‑time $96.3 million gain from debt restructuring. Excluding that gain, the company would have posted a net loss, underscoring the importance of the recapitalization for its financial health. The gain reflects the successful completion of a debt‑reduction program that closed on October 28, 2025.
Active subscribers ended the quarter at 148,916, up 12.4% year‑over‑year. The growth was supported by a 2.5% increase in average monthly revenue per subscriber and a modest expansion of the “Share by RTR” inventory‑share program, which has attracted new users and reduced churn.
The recapitalization reduced total debt to $120 million, cutting the balance by an estimated $199–$268 million and extending maturities to 2029. The lower leverage and longer debt horizon provide the company with greater flexibility to invest in inventory and technology while improving cash‑flow stability.
Gross margin contracted to 29.6% from 34.7% in the same quarter a year earlier. The compression is largely due to higher revenue‑share costs associated with the company’s inventory‑light model, which has increased the proportion of cost‑of‑goods sold relative to revenue. Despite the margin squeeze, the company’s operating leverage remains strong, and management expects margin improvement as the inventory strategy matures.
For the fourth quarter, Rent the Runway guided revenue of $85–$87 million and an adjusted EBITDA margin of 11–13%. The guidance reflects confidence in continued subscriber growth and the expectation that the inventory‑share model will deliver higher gross margins as the cost base stabilizes.
CEO Jennifer Hyman said the recapitalization “positions us for sustained growth” and that the company is “repositioning ourselves for sustained growth.” CFO Sid Thacker noted that the higher revenue‑share costs are a temporary headwind and that free‑cash‑flow burn will normalize as the company scales its inventory strategy.
Investors reacted positively to the earnings, citing the revenue beat, robust subscriber growth, and the successful debt restructuring as key drivers of confidence in the company’s long‑term trajectory.
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