Rent the Runway NASDAQ: RENT reported record second-quarter revenue and expanded profitability as the fashion rental platform emphasized its core rental, resale and customer-experience initiatives while pausing several noncore pilots.
The company generated $97.7 million in second-quarter revenue, up 20.8% from a year earlier and 8.7% sequentially. Interim CFO and Treasurer Dave Loretta said the result represented an all-time revenue record for the company, supported by higher revenue per subscriber, increased add-on bookings and the effect of subscription price increases implemented in August 2025.
Rent the Runway also announced a leadership transition. Paige Thomas will become chief executive officer, president and a board member effective Sept. 14. Thomas joined the company in June 2026 as chief commercial officer and previously held leadership positions at Signet Jewelers, Saks OFF 5TH and Nordstrom.
Interim CEO Teri Bariquit will become non-executive chair of the board on Sept. 14. “The strategy is set, the team is in place, and the work is underway,” Bariquit said.
Revenue Growth and Margin Expansion
Rental revenue increased $14.6 million, or 21% year over year, during the quarter. Loretta attributed the increase primarily to higher average revenue per subscriber and a greater volume of add-on bookings, partly offset by lower Reserve revenue compared with the prior-year period.
Other revenue, which includes resale, rose $2.2 million, or 18.8%, from the second quarter of 2025. Loretta said resale revenue grew significantly and described the category as a substantial growth opportunity, citing demand for resale apparel and the company’s ability to create room for new inventory while improving gross margins.
Gross profit margin rose to 36.1% from 30% a year earlier, a 609-basis-point increase. The company said the improvement reflected lower rental product depreciation and revenue-share costs as a percentage of revenue, along with better fulfillment-cost leverage.
- Fulfillment costs were $23.5 million, compared with $22.5 million a year earlier.
- Fulfillment costs declined to 24.1% of revenue from 27.8% of revenue.
- Operating expenses fell 2% year over year, driven by lower general and administrative expenses.
- Total operating expenses represented 42% of revenue, compared with 51.7% in the prior-year quarter.
- Adjusted EBITDA increased to $12.6 million, or 12.9% of revenue, from $3.6 million, or 4.4% of revenue.
Year-to-date free cash flow was negative $21.6 million, improving from negative $32.9 million in the comparable 2025 period. The company said the improvement was driven by lower inventory-related capital expenditures and increased operating income, partially offset by reduced working-capital benefits.
Subscriber Trends and Customer Experience Efforts
Rent the Runway ended the quarter with 140,826 active subscribers, down 3.8% from a year earlier. Average active subscribers increased 1% to 148,259 during the quarter.
Loretta said the decline in ending active subscribers was primarily tied to a higher rate of subscription pauses and fewer subscriber acquisitions compared with the prior year, when the company used stronger promotional activity. The company has reduced promotional activity this year as it seeks to attract customers it believes will be profitable.
The company is focusing its operating strategy on customer growth, profit expansion and operational execution. Bariquit said the company is seeking to improve merchandise availability, product discovery and reliability in fulfillment, including ensuring garments arrive clean, on time and in expected condition.
During the quarter, Rent the Runway expanded its beach-coverup offering from 12 brand partners to 25, increasing the category by 75% from the prior year. It also added brands including Line + Dot and Jenni Kayne, while refreshed Marimekko prints generated above-average utilization, according to Bariquit.
The company also continued to invest in product-discovery tools. Its outfit-generation feature, piloted in May and rolled out to all customers by the end of June, has produced 35% engagement in the company’s app. During the pilot, customers who received the outfit experience added products to their bags 12% more often than those who did not, Bariquit said.
Rent the Runway launched avatars within the outfit experience in August and began piloting virtual try-on capabilities. Over the past five months, the company has also introduced personalized carousels and updated imagery.
Focus on Core Operations and Funding Plans
Bariquit said Rent the Runway paused its marketplace initiative, on-site advertising and monetization efforts, and the pursuit of new business-to-business dry-cleaning partners. The company will continue serving its existing dry-cleaning partner.
The decisions are intended to concentrate resources on improving rental and selling execution, Bariquit said. The marketplace could become meaningful in the future once its experience is fully integrated, she added.
The company also announced plans for a $15 million rights offering to holders of its Class A common stock. The offering will be backstopped by Story3 Capital Partners, Nexus Capital Management and Ares Principal Strategies, which led the company’s prior recapitalization.
Separately, the company’s liquidity position was strengthened by a $10 million term loan under an amendment to its credit agreement, Loretta said.
Guidance Reaffirmed
Rent the Runway reiterated its outlook for double-digit revenue growth for fiscal 2026 and adjusted EBITDA of 4% to 7% of revenue. The company also said it expects free cash flow to improve from 2025 levels.
For the third quarter, the company forecast revenue of $87 million to $90 million, representing growth ranging from flat to 3% from the year-earlier period. Rent the Runway expects active subscribers to be roughly flat in the second half of 2026, while resale revenue and Reserve orders are expected to grow.
The company projected third-quarter adjusted EBITDA of negative 3% to negative 6% of revenue, citing seasonal increases in subscription pauses and the expected product-cost effect of receiving more revenue-share inventory during the period.
Rent the Runway raised its expected fiscal 2026 rental product investment range to $53 million to $55 million from prior guidance of $45 million to $50 million. The outlook remains below the $75 million invested in fiscal 2025 and reflects plans to maintain flexibility in inventory sourcing while increasing stock for fall events and new product launches.
About Rent the Runway (NASDAQ:RENT)
Rent the Runway NASDAQ: RENT operates an online marketplace and subscription service that provides designer apparel and accessory rentals to consumers. The company offers both one-time rentals and tiered subscription plans, enabling members to borrow items on a recurring basis rather than purchasing them outright. Rent the Runway's inventory spans a wide range of brands and styles, including evening gowns, everyday wear, handbags and jewelry, positioning the company within the broader sharing-economy and circular-fashion movements.
Founded in 2009 by Jennifer Hyman and Jennifer Fleiss, Rent the Runway was built on the premise of making high-end fashion more accessible and sustainable.
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