Rent the Runway (RENT) Grew Revenue 20.8%. Can Higher Spending Produce Sustainable Cash Flow?

Rent the Runway, Inc. (NASDAQ: RENT ) reported on September 11 that revenue for the quarter ended July 31 increased 20.8% to $97.7 million. Quarter-end active subscribers fell 3.8% to 140,826. The active count excludes paused memberships.

Average active subscribers increased 1% to 148,259, based on the mean of beginning and ending counts. Revenue growth is encouraging, but sustainable cash generation depends on retaining customers and funding the clothing assortment.

Rent the Runway, Inc. (NASDAQ:RENT) reported 81% growth in add-on bookings. Some 33% of subscribers used an add-on during the quarter, versus 29% a year earlier, supporting the opportunity to earn more from existing customers.

Revenue per subscriber also benefited from the August 2025 subscription-price increase and a shipping charge introduced in June 2026 that management expects to be temporary. Sustaining growth requires customer engagement alongside these pricing contributions.

Gross margin improved to 36.1% from 30.0%. Company-defined non-GAAP adjusted EBITDA rose to $12.6 million from $3.6 million. This measure adjusts net loss for interest, taxes, rental-product depreciation, other depreciation and amortization, share-based compensation, liquidated-asset write-offs, specified nonrecurring costs, legal and executive-transition expenses, and other income, expenses, gains and losses.

The GAAP net loss narrowed to $12.9 million from $26.4 million. Management reaffirmed double-digit fiscal 2026 revenue growth and an adjusted EBITDA margin of 4% to 7%.

The company also paused its marketplace pilot and on-site advertising to concentrate resources on rental and selling businesses. That focus could improve execution and spending discipline.

A weaker ending active subscriber base leaves growth more dependent on spending by remaining customers. Third-quarter guidance points to revenue of $87 million to $90 million and an adjusted EBITDA margin between negative 6% and negative 3%.

First-half operating cash outflow widened to $5.0 million from $2.2 million. Net investing outflows declined to $16.6 million from $30.7 million, including rental-product purchases falling to $27.7 million from $42.0 million. Company-defined non-GAAP free cash flow, combining operating and investing cash flows, improved to negative $21.6 million from negative $32.9 million. Reduced investing outflows drove that improvement.

Management increased fiscal 2026 Rental Product Acquired guidance to $53 million to $55 million, from $45 million to $50 million. This measures the cost of owned products received and can differ from cash purchases because of payment timing. The larger commitment must support repeat spending and retention.