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What changed in Rent the Runway, Inc.'s 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of Rent the Runway, Inc.'s 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+513 added−533 removedSource: 10-K (2025-04-15) vs 10-K (2024-04-11)

Top changes in Rent the Runway, Inc.'s 2025 10-K

513 paragraphs added · 533 removed · 406 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

62 edited+11 added−24 removed67 unchanged
Biggest changeOur Customer Value Proposition Through our platform, we have helped approximately 3 million lifetime customers discover the transformative power of utilizing our Closet in the Cloud across all of our offerings. Our customer base is diverse and spans age, household income distribution and U.S. geography. Subscribers are customers who access our Closet in the Cloud via our monthly Subscription offering.
Biggest changeOur customer base is diverse and spans age, household income distribution and U.S. geography. Subscribers are customers who access our Closet in the Cloud via our monthly Subscription offering. The portion of our customers who are subscribers accounted for 88% of our revenue in fiscal year 2024.
When subscribers place an order, we aim to deliver their order within two to three business days of shipping from our fulfillment centers in our reusable garment bags, cleaned and ready to wear. Subscribers keep items for as long as they would like and may choose to return some or all of their items with each new shipment.
When subscribers place an order, we aim to deliver their order within three business days of shipping from our fulfillment centers in our reusable garment bags, cleaned and ready to wear. Subscribers keep items for as long as they would like and may choose to return some or all of their items with each new shipment.
We believe that our differentiated business model enables us to collect substantially more data than others in our space and we use this data to continuously improve the customer experience. Customers learn that providing data enhances their experience on the platform over time, which enables us to collect even more data from them.
We believe that our differentiated business model enables us to collect substantially more data than others in our space and we use this data to improve the customer experience. Customers learn that providing data enhances their experience on the platform over time, which enables us to collect even more data from them.
Because we source directly from brands, we also can better control our assortment and acquire styles in the volumes and sizes we want, we have access to current season items and all of our items are guaranteed authentic without the cost or infrastructure of traditional authentication platforms.
Because we source directly from brands, we also can control our assortment and acquire styles in the volumes and sizes we want, we have access to current season items and all of our items are guaranteed authentic without the cost or infrastructure of traditional authentication platforms.
We deliver significant financial value to customers, with our average subscriber wearing clothes worth more than 25 times what she pays for a monthly RTR Subscription on an annualized basis. • Self-Confidence. According to our March 2023 Subscriber Survey, 83% of our subscribers say RTR makes them the most confident version of themselves at work or in social settings.
We deliver significant financial value to customers, with our average subscriber wearing clothes worth more than 26 times what she pays for a monthly RTR Subscription on an annualized basis. • Self-Confidence. According to our March 2023 Subscriber Survey, 83% of our subscribers say RTR makes them the most confident version of themselves at work or in social settings.
We also partner with other service providers in certain markets in order to serve our customers effectively. 11 Table of Contents Our 2024 Strategy Our belief is that we can drive future growth by investing in and improving the customer experience. Unlike traditional e-commerce companies, we are an experience-based company that our subscribers engage with multiple times a week.
We also partner with other service providers in certain markets in order to serve our customers effectively. 11 Table of Contents Our 2025 Strategy Our belief is that we can drive future growth by investing in and improving the customer experience. Unlike traditional e-commerce companies, we are an experience-based company that our subscribers engage with multiple times a week.
In the third and fourth fiscal quarters, our Reserve business historically (prior to COVID-19) benefited from increased wedding and holiday events but this seasonality has varied since the onset of COVID-19. In fiscal year 2022, we believe that a price increase of our Subscription programs in April 2022 affected traditional seasonal patterns.
In the third and fourth fiscal quarters, our Reserve business historically (prior to COVID-19) benefited from increased wedding and holiday events but this seasonality has varied since the onset of COVID-19. For example, in fiscal year 2022, we believe that a price increase of our Subscription programs in April 2022 affected traditional seasonal patterns.
We have the flexibility to optimize prices based on the business needs. • Lower Cost Product: We leverage our data to create highly desirable Exclusive Designs in collaboration with our brand partners, influencers and celebrities that we manufacture to be more durable at significantly lower cost. • Longer Product Life: Our feedback to brands helps us customize for higher longevity of our products - we understand how to clean and care for garments to maximize multi-year monetization and incremental turns per unit.
We have the flexibility to optimize prices based on the business needs. • Lower Cost Product: We leverage our data to create highly desirable Exclusive Designs in collaboration with our brand partners that we or our brand partners manufacture to be more durable at significantly lower cost. • Longer Product Life: Our feedback to brands helps us customize for higher longevity of our products - we understand how to clean and care for garments to maximize multi-year monetization and incremental turns per unit.
Item 1. Business Overview Our mission is to power women to feel their best every day. Since our f ounding in November 2009, we have built the world’s first and largest shared designer closet with thousands of styles by hundreds of brand partners.
Item 1. Business Overview Our mission is to power women to feel their best every day. Since our f ounding in November 2009, we have built the world’s first shared designer closet with thousands of styles by hundreds of brand partners.
Our expertise in vertically integrated just-in-time reverse logistics and garment science allows us to achieve multi-year monetization on our garments. We have also built a custom front-end platform that supports all of our consumer-facing offerings on our website and app.
Our expertise in vertically integrated just-in-time reverse logistics and garment science allows us to achieve multi-year monetization on our garments. We have also built a custom platform that supports all of our consumer-facing offerings on our website and app.
Exclusive Designs We leverage our data to create highly desirable Exclusive Designs in collaboration with select brand partners, celebrities and influencers that we manufacture through third-party partners to be more durable and at approximately 50% lower cost than Wholesale.
Exclusive Designs We leverage our data to create highly desirable Exclusive Designs in collaboration with select brand partners that we manufacture through third-party partners to be more durable and at approximately 50% lower cost than Wholesale.
According to our June 2021 Rent the Runway Brand Survey, approximately 91% of our brand partners work with us because we introduce them to new, desirable customers and deepen awareness of their brands. Over the last 14 years, we have fostered strong relationships with our brand partners and have experienced extremely limited voluntary attrition.
According to our June 2021 Rent the Runway Brand Survey, approximately 91% of our brand partners work with us because we introduce them to new, desirable customers and deepen awareness of their brands. Over the last 15 years, we have fostered strong relationships with our brand partners and have experienced limited voluntary attrition.
We source our products directly from or in partnership with, our brand partners that include many of the most renowned and relevant names in the fashion industry. The transformative nature of our customer value proposition means our customers are typically younger and different from other audiences our brands are exposed to.
We source virtually all of our products directly from or in partnership with our brand partners that include many of the most renowned and relevant names in the fashion industry. The nature of our customer value proposition means our customers are typically younger and/or different from other audiences our brands are exposed to.
Information on our website does not constitute part of this Annual Report on Form 10-K or any other report we file or furnish with the SEC. 15 Table of Contents
Information on our website does not constitute part of this Annual Report on Form 10-K or any other report we file or furnish with the SEC. 14 Table of Contents
As we learn more about a customer, our personalized features give us greater ability to direct her towards the items that optimize both customer lifetime value and rental product return on investment for us. Our data advantage benefits brand partners in numerous ways: • Understanding the Garment Life Cycle: We help partners grow their business through the data we provide.
As we learn more about a customer, our personalized features give us greater ability to direct her towards the items that optimize both customer lifetime value and rental product return on investment for us. 8 Table of Contents Our data advantage benefits brand partners in numerous ways: • Understanding the Garment Life Cycle: We help partners grow their business through the data we provide.
We have observed that the original retail prices set by the brands are often at an approximately 2.5x mark-up to the wholesale price. As we continue to expand our selection and grow the share of our assortment acquired from a designer, we benefit from greater discounts on product acquisition. Wholesale represented 39% of our product acquisition in fiscal year 2023.
We have observed that the original retail prices set by the brands are often at an approximately 2.5x mark-up to the wholesale price. As we continue to expand our selection and grow the share of our assortment acquired from a designer, we benefit from greater discounts on product acquisition. Wholesale represented 30% of our product acquisition in fiscal year 2024.
As of January 31, 2024, our at-home pickup offering covered 86% of our subscriber base. Reserve When customers want to rent items a-la-carte for an upcoming event, they book styles for four or eight days through our Reserve offering. After selecting pieces, they typically select a delivery date one to two days before their event.
As of January 31, 2025, our at-home pickup offering covered 92% of our subscriber base. Reserve When customers want to rent items a-la-carte for an upcoming event, they book styles for four or eight days through our Reserve offering. After selecting pieces, they typically select a delivery date one to two days before their event.
Random storage allows for efficient putaway of garments and dynamically created pick paths that save labor cost. 10 Table of Contents • RFID: We tag each unit and all reusable garment bags with RFID tags, which increases throughput, reduces cost, improves rental product control and enables new forms of automation.
Random storage allows for efficient putaway of garments and dynamically created pick paths that save labor cost. • RFID: We tag each unit of apparel and all reusable garment bags with RFID tags, which increases throughput, reduces cost, improves rental product control and enables new forms of automation.
These include pieces of the customer experience and service tools and enterprise resource planning capabilities. Logistics Infrastructure Within our warehouses, we have integrated best-in-class garment care equipment, internally and externally developed software and proprietary cleaning programs to deliver high-end garment processing at massive scale.
These include pieces of the customer experience and service tools and enterprise resource planning capabilities. Logistics Infrastructure Within our warehouses, we have integrated superior garment care equipment, internally and externally developed software and proprietary cleaning programs to deliver high-end garment processing at massive scale.
Share by RTR represented 33% of our product acquisition in fiscal year 2023. Increases (or decreases) in the proportion of total items acquired via Share by RTR as well as the usage of Share by RTR items will increase (or decrease) variable expenses recorded in the Rental product depreciation and revenue share line item on our consolidated statement of operations.
Share by RTR represented 48% of our product acquisition in fiscal year 2024. Increases (or decreases) in the proportion of total items acquired via Share by RTR as well as the usage of Share by RTR items will increase (or decrease) variable expenses recorded in the Rental product depreciation and revenue share line item on our consolidated statement of operations.
In fiscal year 2024, we plan to increase our efforts to drive brand awareness and grow traffic through brand campaigns, new marketing channels and focusing on full funnel marketing efforts and enhanced lifecycle marketing. The majority of our new customers have historically come to Rent the Runway organically, a trend that continued in fiscal year 2023.
In fiscal year 2024, we increased our efforts to drive brand awareness and grow traffic through brand campaigns, new marketing channels and focusing on full funnel marketing efforts and enhanced lifecycle marketing. The majority of our new customers have historically come to Rent the Runway organically, a trend that continued in fiscal year 2024.
We believe this partnership will enable us to continue serving our customers with premium delivery and return service, and to further expand our elevated returns and delivery experience like At-Home Pick Up and Saturday Delivery.
We believe this partnership enables us to continue serving our customers with premium delivery and return service, and to further expand our elevated returns and delivery experience like At-Home Pick Up and Saturday Delivery.
Seasonality We experience seasonality in our business, which has been impacted and may in the future change due to the effects of COVID-19, the macro environment, and business decisions.
Seasonality We experience seasonality in our business, which has been impacted due to the effects of COVID-19, the macro environment, and business decisions and may in the future continue to evolve.
In fiscal year 2023, we believe that changes in rental product in-stock levels and changes to promotional prices also disrupted typical seasonality. Given continued business changes, our future seasonality may not resemble historical trends. We also experience seasonality in the timing of expenses and capital outlays.
In fiscal year 2023, we believe that changes in rental product in-stock levels and changes to promotional prices also disrupted typical seasonality. However, in fiscal year 2024, we observed more typical seasonal patterns. Given continued business changes, our future seasonality may not resemble historical trends. We also experience seasonality in the timing of expenses and capital outlays.
We register our brand names and product names, taglines and logos in the United States to the extent we determine appropriate and cost-effective. As of January 31, 2024, we had a total of 25 registered trademarks in the United States and 68 registered trademarks in non-U.S. jurisdictions, as well as certain pending trademark applications.
We register our brand names and product names, taglines and logos in the United States to the extent we determine appropriate and cost-effective. As of January 31, 2025, we had a total of 23 registered trademarks in the United States and 74 registered trademarks in non-U.S. jurisdictions, as well as certain pending trademark applications.
We believe that the process improvements we have made have enabled us to expand our capacity to handle at least 4x our active subscriber count at the end of fiscal year 2023 in our two current facilities with minimal additional investment. • Transportation Management: In August 2023, we completed a new transportation deal with a major national carrier to lock in competitive rates and consolidate the vast majority of our shipping needs.
We believe that the process improvements we have made have enabled us to expand our capacity to handle at least 4x our active subscriber count at the end of fiscal year 2024 in our two current facilities with minimal additional investment. • Transportation Management: Since August 2023, we have partnered with a major national carrier to provide us with competitive shipping rates and consolidate the vast majority of our shipping needs.
All of the styles are exclusive to rent on RTR for a period of time, after which brands may monetize these exclusive designs through other channels, typically subject to a royalty fee payment to Rent the Runway, which we have not begun to earn to date.
All of the styles are exclusive to rent on RTR for a period of time, after which brands may monetize these exclusive designs through other channels, which in some cases is subject to a royalty fee payment to Rent the Runway (that we have not begun to earn to date).
Our customers are deeply engaged, as evidenced by the 43.0 million customer reviews posted as of January 2024. We continue to make enhancements to our review process designed to allow customers to make smarter choices and feel good about their selections.
Our customers are deeply engaged, as evidenced by the 56.5 million customer reviews posted as of January 2025. We continue to make enhancements to our review process designed to allow customers to make smarter choices and feel good about their selections.
As of January 31, 2024, we had five issued patents in the United States that expire between 2031 and 2038 and three issued foreign patents. While we believe our patents in the aggregate generally enhance our competitive position, no single patent is material to us as a whole.
As of January 31, 2025, we had five issued patents in the United States that expire between 2031 and 2037 and three issued foreign patents. While we believe our patents in the aggregate generally enhance our competitive position, no single patent is materi al to us as a whole.
We leverage these personalization scores across the business to: rank products on our subscriber personalized storefront and in search results, recommend a specific size within a style on product pages, compute general product relevance at the subscriber level and inform product acquisition, inform sizing of new apparel designs with our brand partners and more. 9 Table of Contents • Retention Predictive Model: We leverage a retention predictive model to understand the relative importance of various drivers of loyalty and long-term value, at the single customer level to understand which interventions have the highest probability of improving customer retention.
We leverage these personalization scores across the business to: rank products on our subscriber personalized storefront and in search results, recommend a specific size within a style on product pages, compute general product relevance at the subscriber level and inform product acquisition, inform sizing of new apparel designs with our brand partners and more. • Retention Predictive Model: We leverage a retention predictive model and analytics to identify and understand the relative importance of various drivers of loyalty and prioritize the interventions that have the highest probability of improving customer retention.
As of January 31, 2024, our technology team consisted of 140 employees, across engineering, data analytics, IT, product, software quality assurance, user experience and design, including a team of 59 in Galway, Ireland, primarily in engineering and data analytics.
As of January 31, 2025, our technology team consisted of 131 employees, across engineering, data analytics, IT, product, software quality assurance, user experience and design, including a team of 58 in Galway, Ireland, primarily in engineering and data analytics.
We also identify and tag approximately 75 detailed attributes per style. By mapping our interactions with our products’ inherent attributes, we create a feedback loop which allows us to optimize the supply of products in ways we believe that would be difficult for traditional retailers to achieve or replicate. This is one of our biggest competitive advantages.
By mapping our interactions with our products’ inherent attributes, we create a feedback loop which allows us to optimize the supply of products in ways we believe that would be difficult for traditional retailers to achieve or replicate. We believe this is one of our biggest competitive advantages.
We deliver significant financial value to customers, with our average subscriber wearing clothes worth more than 25 times what she pays for a monthly RTR Subscription on an annualized basis (more than $45,000 in designer retail value in fiscal year 2023 1 ). Our tremendous selection is enabled by our designer brand partnerships.
We deliver significant financial value to customers, with our average subscriber wearing clothes worth more than 26 times what she pays for a monthly RTR Subscription on an annualized basis (more than $49,000 in designer retail value in fiscal year 2024 1 ). Our evolving selection of products is enabled by our designer brand partnerships.
Our Share by RTR arrangements with brands target deliverin g 75% to 100% of comparable Wholesale cost to the brand in the first year; however there is no minimum commitment other than the upfront payment if applicabl e. Nearly all Share by RTR deals consummated after September 2020 include a cap on total potential payments to the brand partner.
Our Share by RTR arrangements with brands target deliveri ng 75% to 100% of co mparable Wholesale cost to the brand in the first year; however there is no minimum commitment other than the upfront payment if applicab le. Nearly all Share by RTR deals consummated after September 2020 include a cap on total potential payments to the brand partner.
Merchandising and Product Control Our proprietary product catalog system is the backbone of our rental product management. A flexible taxonomy supports myriad types of products which goes well beyond women’s fashion, and allows us to ingest and manage items at the SKU level, functionality that does not typically exist in off-the-shelf inventory management systems.
A flexible taxonomy supports myriad types of products which goes well beyond women’s fashion, and allows us to ingest and manage items at the SKU level, functionality that does not typically exist in off-the-shelf inventory management systems.
We also have a small number of products bearing our trademarks, which are non-exclusive designs produced by third party partners at a significantly lower average cost than Wholesale to strategically fill assortment gaps. Exclusive Designs accounted for 28% of our product acquisition in fiscal year 2023.
We also have a small number of products bearing our trademarks, which are non-exclusive designs produced by third party partners at a significantly lower average cost than Wholesale to strategically fill assortment gaps.
Proprietary and Third-Party Software and Systems We have purpose-built technology to support three key areas of our business: • Customer Facing e-Commerce (including 2-Way e-Commerce) • Rental Reverse Logistics • Merchandising & Products Control Customer Facing e-Commerce (including 2-Way e-commerce) We have a 2-way relationship with our customers — in that nearly every item is returned and the customer provides feedback.
Our proprietary software and key integrations with third-parties leverage our vast and unique dataset to optimize key outcomes for RTR. 9 Table of Contents Proprietary and Third-Party Software and Systems We have purpose-built technology to support three key areas of our business: • Customer Facing e-Commerce (including 2-Way e-Commerce) • Rental Reverse Logistics • Merchandising & Products Control Customer Facing e-Commerce (including 2-Way e-commerce) We have a 2-way relationship with our customers — in that nearly every item is returned and the customer provides feedback.
The laws and regulations govern many issues related to our business practices, including those regarding consumer protection, worker classification, wage and hour, sick pay and leaves of absence, anti-discrimination and harassment, whistleblower protections, background checks, privacy, cybersecurity, intellectual property, health and safety, environmental, competition, fees and payments, pricing, product liability and disclosures, property damage, communications, employee benefits, taxation, unionization and collective bargaining, contracts, arbitration agreements, class action waivers, terms of service, and accessibility of our mobile app or website. 13 Table of Contents These laws and regulations are constantly evolving and may be interpreted, applied, created, superseded, or amended in a manner that could harm our business.
The laws and regulations govern many issues related to our business practices, including those regarding consumer protection, worker classification, wage and hour, sick pay and leaves of absence, anti-discrimination and harassment, whistleblower protections, background checks, privacy, cybersecurity, intellectual property, health and safety, environmental, competition, fees and payments, pricing, product liability and disclosures, property damage, communications, employee benefits, taxation, unionization and collective bargaining, contracts, arbitration agreements, class action waivers, terms of service, and accessibility of our mobile app or website.
Each plan now starts with five items, or “spots,” per shipment, and varies based on how often the subscriber wishes to receive new shipments, each a “swap.” Today, our subscribers onboard into plans that offer one, two, three or four shipments per month for $94, $144, $193 or $235 per month, respectively. Customize.
Each plan now starts with five items, or “spots,” per shipment, and varies based on how often the subscriber wishes to receive new shipments, each a “swap.” Today, our subscribers onboard into plans that offer multiple shipments with pricing ranging from $94 to $235 per month. Customize.
Our fulfillment engine dynamically prioritizes customer orders based on promised delivery date, transportation departure schedules and available capacity. • Transportation Innovation: We have invested in an outbound and inbound network that allows our customers to receive packages and return items efficiently via national returns logistics providers, including through our convenient at-home pickup program.
Our fulfillment engine dynamically prioritizes customer orders based on promised delivery date, transportation departure schedules and available capacity. • Transportation Innovation: We have invested in an outbound and inbound network that allows our customers to receive packages and return items efficiently via national returns logistics providers, including through our convenient at-home pickup program. 10 Table of Contents Merchandising and Product Control Our proprietary product catalog system is the backbone of our rental product management.
Our Data Approach One of our significant differentiators is the vast amount of quality, actionable data that we are able to collect on our customers and our products.
Our Data Approach One of our significant differentiators is the vast amount of quality, actionable data that we are able to collect on our customers and our products. We leverage this data to create benefits for our customers, our brand partners and our business.
As our community has grown, Rent the Runway has also benefited from powerful virality and word-of-mouth marketing. 80% of subscribers have shared RTR with at least five people; 43% have shared with over 10 people and 75% of our customers posted themselves wearing Rent the Runway on social media, as indicated by our March 2023 Subscriber Survey. 6 Table of Contents • Sustainability.
Rent the Runway has also benefited from virality and word-of-mouth marketing over the years. 80% of subscribers have shared RTR with at least five people; 43% have shared with over 10 people and 75% of our customers posted themselves wearing Rent the Runway on social media, as indicated by our March 2023 Subscriber Survey. 6 Table of Contents Our Unique Brand Partner Approach We acquire our products through three channels: Wholesale, Share by RTR and Exclusive Designs.
We have served approximately 3 million lifetime customers across all of our offerings and we had 173,247 total subscribers (active and paused) as of January 31, 2024. We had 125,954 active subscribers as of January 31, 2024. In fiscal year 2023, 88% of our total revenue was generated by subscribers, compared to 86% in fiscal year 2022.
We have served approximately 3 million lifetime customers across all of our offerings and we had 164,004 total subscribers (active and paused) as of January 31, 2025. We had 119,778 active subscribers as of January 31, 2025. In fiscal year 2024, 88% of our total revenue was generated by subscribers, unchanged from fiscal year 2023.
As we have scaled, we have seen the value of the Rent the Runway brand grow and become a significant point of differentiation with consumers and brand partners.
Over a majority of our customers over the last 15 years have been acquired organically. As we have scaled, we have seen the value of the Rent the Runway brand grow and become a significant point of differentiation with consumers and brand partners.
We believe we are able to compete effectively because there are numerous trends in our favor that support the continued growth and success of online fashion rental.
Additionally, we experience competition for consumer discretionary spending from other product and experiential categories. We believe we are able to compete effectively because there are numerous trends in our favor that support the continued growth and success of online fashion rental.
Our Unique Brand Partner Approach We acquire our products through three channels: Wholesale, Share by RTR and Exclusive Designs. The portion of our products sourced through Share by RTR and Exclusive Designs - our more capital-efficient sources - has grown from approximately 26% in fiscal year 2019 to approximately 61% in fiscal year 2023.
The portion of our products sourced through Share by RTR and Exclusive Designs - our more capital-efficient sources - has grown from approximately 26% in fiscal year 2019 to approximately 70% in fiscal year 2024.
Our principal executive offices are located at 10 Jay Street, Brooklyn, New York 11201 and our website address is www.renttherunway.com. We provide free access to various reports that we file with, or furnish to, the United States Securities and Exchange Commission (the “SEC”) through our website, as soon as reasonably practicable after they have been filed or furnished.
We provide free access to various reports that we file with, or furnish to, the United States Securities and Exchange Commission (the “SEC”) through our website, as soon as reasonably practicable after they have been filed or furnished.
These changes may occur immediately or develop over time through judicial decisions or as new guidance or interpretations are provided by regulatory and governing bodies, such as federal, state and local administrative agencies.
These laws and regulations are constantly evolving and may be interpreted, applied, created, superseded, or amended in a manner that could harm our business. These changes may occur immediately or develop over time through judicial decisions or as new guidance or interpretations are provided by regulatory and governing bodies, such as federal, state and local administrative agencies.
Our Marketing Strategy Our brand and deeply engaged consumer base have historically allowed us to acquire customers efficiently. Since our founding, we have spent les s tha n 10% of total revenue on marketing, and our growth has been mostly organic. Over 80% of our customers over the last 14 years have been acquired organically.
Exclusive Designs accounted for 22% of our product acquisition in fiscal year 2024. 7 Table of Contents Our Marketing Strategy Our brand and deeply engaged consumer base have historically allowed us to acquire customers efficiently. Since our founding, we have spent les s tha n 10% of total revenue on marketing, and our growth has been mostly organic.
Our culture is underpinned by our Core Values, including that we are all Founders of Rent the Runway, and we all Dream BIG and go after it, adapt and learn from everything we do and debating, honest conversations and collaborating make the company stronger. See “Our ESG (Environmental, Social and Governance) Impact Strategy” for more information about our goals.
Our culture is underpinned by our Core Values, including that we are all Founders of Rent the Runway, and we all Dream BIG and go after it, adapt and learn from everything we do and debating, honest conversations and collaborating make the company stronger. Corporate Information We were incorporated as Rent the Runway, Inc. in Delaware on March 3, 2009.
We strive to make Rent the Runway a diverse, inclusive, and safe workplace, with opportunities for our employees to grow and develop in their careers, supported by competitive compensation and benefits programs.
None of our employees are represented by a labor union or covered by collective bargaining agreements and we have not experienced any work stoppages. We strive to make Rent the Runway an inclusive and safe workplace, with opportunities for our employees to grow and develop in their careers, supported by competitive compensation and benefits programs.
We leverage this data to create benefits for our customers, our brand partners and our business. 8 Table of Contents We capture thousands of unique data points per subscriber per year and over 20 unique data points per item each time it is rented across four channels including website data, post-wear data, operations data and customer data.
We capture thousands of unique data points per subscriber per year and over 20 unique data points per item each time it is rented across four channels including website data, post-wear data, operations data and customer data. We also identify and tag approximately 75 detailed attributes per style.
In fiscal year 2023, we made improvements across our technology stack, including continued improvements to our cloud infrastructure, to enable greater scale, enhanced resiliency and faster site speed. We continue to focus on improving the performance of our website and mobile application, including increasing site speed and reliability to improve the customer experience and keep pace with industry standards.
We continue to focus on improving the performance of our website and mobile application, including increasing reliability to improve the customer experience and keep pace with industry standards.
We also place limitations on the use of our proprietary technology and intellectual property through provisions in our terms of service.
We also place limitations on the use of our proprietary technology and intellectual property through provisions in our terms of service. We intend to adopt additional measures to establish and protect our intellectual property rights to the extent we believe it would be beneficial and cost effective.
Many of our subscribers started as customers in Reserve and Resale and we continue to see activation from Reserve and Resale customers into subscribers for many years. • Variety and Discovery.
As of January 31, 2025, we had 119,778 Active Subscribers and 164,004 total subscribers including paused subscribers, and during fiscal year 2024, we had 132,574 Average Active Subscribers. Many of our subscribers started as customers in Reserve and Resale and we continue to see activation from Reserve and Resale customers into subscribers for many years. • Variety and Discovery.
We intend to adopt additional measures to establish and protect our intellectual property rights to the extent we believe it would be beneficial and cost effective. 14 Table of Contents Employees and Human Capital Resources As of January 31, 2024, we had a total of 938 full-time employees and 166 part-time employees in the United States and Ireland, the majority of whom are based in our fulfillment centers in New Jersey and Texas.
Employees and Human Capital Resources As of January 31, 2025, we had a total of 912 full-time employees and 141 part-time employees in the United States and Ireland, the majority of whom are based in our fulfillment centers in New Jersey and Texas.
We believe our engaged and loyal customer base paired with the data that we offer to our brand partners makes us an essential destination for many of the world’s most important brands. In addition, as of June 2021, 67% of our brand partners believe that RTR is an important part of their business’s sustainability strategy.
We believe our engaged and loyal customer base paired with the data that we offer to our brand partners makes us an essential destination for many of the world’s most important brands. Over time, our commercial relationships with our brand partners have evolved towards more capital efficient forms of rental product acquisition. • Data Advantage.
Our goal is to make customers’ time spent with Rent the Runway as efficient and delightful as possible and plan to continue to invest in our customer experience.
Our goal is to make customers’ time spent with Rent the Runway as efficient and delightful as possible and to continue to invest in our customer experience. Our plans for fiscal year 2025 are focused on improving customer retention and acquisition by significantly increasing the availability and desirability of rental products on our website and app.
We control access to and use of our proprietary technology and other confidential information through the use of internal and external controls, including contractual protections with employees, contractors, customers, and partners.
We also register domain names for certain websites that we use in our business, such as www.renttherunway.com, as well as similar variations to protect our brands and marks from cybersquatters. 13 Table of Contents We control access to and use of our proprietary technology and other confidential information through the use of internal and external controls, including contractual protections with employees, contractors, customers, and partners.
Our ability to remain competitive depends on the continued shift from an ownership to an access model. While other competitors may change their business models and endeavor to expand into the rental and resale space, online fashion rental and resale presents unique operational and technical challenges.
While other competitors may change their business models and endeavor to expand into the rental and resale space, online fashion rental and resale presents unique operational and technical challenges. 12 Table of Contents We compete primarily on the basis of brand recognition, customer and brand partner experience, product mix and quality, quality of our e-commerce experiences and services, and price.
Over time, our commercial relationships with our brand partners have evolved towards more capital efficient forms of rental product acquisition. • Data Advantage. We capture a vast amount of unique, actionable data on our customers and products.
We capture a vast amount of unique, actionable data on our customers and products.
A Subscription is not required for purchase. Our subscribers also have the option to purchase items they already have at home, opening a spot in their next shipment. We plan to increase the focus on our Resale business as a lever to drive customer value.
A Subscription is not required for purchase. Our subscribers also have the option to purchase items they already have at home. Our Customer Value Proposition Through our platform, we have helped approximately 3 million lifetime customers discover the transformative power of utilizing our Closet in the Cloud across all of our offerings.
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The portion of our customers who are subscribers accounted for 88% of our revenue in fiscal year 2023. As of January 31, 2024, we had 125,954 Active Subscribers and 173,247 total subscribers including paused subscribers, and during fiscal year 2023, we had 135,211 Average Active Subscribers.
Added
For these collaborations, we provide a data blueprint to brands and, based on this data, they design new collections for us that carry their brand name. For fiscal year 2025, we have introduced another approach to our Exclusive Designs in which certain brands design, source and manufacture the rental product directly in partnership with us.
Removed
Renting on the RTR platform results in net environmental savings across water, energy and carbon emissions when compared to purchasing new garments even when accounting for two-way shipping, cleaning and other operations. 2 See “Our ESG (Environmental, Social, and Governance) Impact Strategy” below for our Impact Strategy goals.
Added
Our Exclusive Designs collections enable our brand partners to innovate their businesses and enter into new product lines at reduced cost to them.
Removed
Our business model aims for customers to substitute purchases with rentals and we have been successful in doing so, as 87% of our subscribers have bought less fast fashion since using RTR 3 and 82% buy fewer clothes than they used to prior to joining RTR 4 .
Added
Our marketing strategy in fiscal year 2025 is focused on three key areas. First, we expect our marketing to highlight to our customers the significant increase in the quantity and desirability of rental product expected this fiscal year. Second, we expect to focus on driving new customers to Rent the Runway through enhanced search placements and email marketing.
Removed
We provide a data blueprint to brands and, based on this data, they design new collections for us that carry their brand name. 2 According to the Life Cycle Assessment Study (the “LCA Study”) we commissioned in 2021 with Green Story and SgT, third-party consultants specializing in apparel life cycle assessments. 3 Per our March 2023 Subscriber Survey. 4 Per our November 2022 Subscriber Survey. 7 Table of Contents Our Exclusive Designs collections enable our brand partners to innovate their businesses and enter into new product lines at reduced cost to them.
Added
Finally, we aim to increase our focus on paid influencers and on our organic social media channels to drive awareness with new customers. We expect that our marketing efforts in conjunction with improved paid marketing efficiency will enhance our ability to acquire new customers.
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We plan to continue to drive organic growth by focusing on social-first, mid-funnel strategies. Our current marketing initiatives are focused on growing our base of new customers, re-engaging lapsed customers, and retaining existing customers.
Added
In fiscal year 2024, we continued to make improvements across our technology stack, including continued improvements to our cloud infrastructure, to enable greater scale, enhanced resiliency and faster site speed. Additionally, we have enhanced our core platforms to improve search, merchandising, and product discovery, aimed at creating a more seamless and personalized customer experience.
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Additionally, we are focused on investing in the customer experience, including optimization of our funnel and the Subscription experience, as a way to re-engage and retain subscribers. We also view paid marketing as an important way to supplement our growth.
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We also expect to devote substantial attention to product enhancements and features like customer onboarding, inventory in-stock notification, styling services, personalized text-based customer service, and a loyalty program. Our aim is for these features to improve customer retention.
Removed
Our paid efforts have included both middle-of-the-funnel prospecting and bottom-of-the-funnel direct response campaigns which also benefit from our top-of-the-funnel brand marketing efforts that drive awareness. To date, our primary channels for paid marketing have been focused on social media marketing, influencers and our brand ambassadors, programmatic directed spend and affiliate marketing.
Added
In addition, our marketing efforts are expected to focus on highlighting to customers both the rental product increases and product enhancements we expect to make in fiscal year 2025. Our marketing efforts are also focused on developing a paid influencer strategy and on improving the performance of our organic social channels.
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We are currently focused on enhancing our current processes and approach to paid marketing and have deployed, and expect to continue to deploy technology to track and improve the effectiveness and efficiency of our paid marketing efforts.
Added
Finally, we expect to balance greater customer growth with a continued focus on fixed cost efficiency and by increasing our percentage of Share by RTR items to achieve our profitability goals.
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Our proprietary software and key integrations with third-parties leverage our vast and unique dataset to optimize key outcomes for RTR.
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Our ability to remain competitive depends on the continued shift from an ownership to an access model.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

190 edited+45 added−47 removed368 unchanged
Biggest changeOur business, financial condition, and results of operations could be adversely affected if the cost per claim, premiums, the severity of claims, or the number of claims significantly exceeds our historical experience and coverage limits; we experience a claim in excess of our coverage limits; our insurance providers fail to pay on our insurance claims; we experience a claim for which coverage is not provided; or the number of claims under our deductibles or self-insured retentions differs from historical averages. 54 Table of Contents Risks Related to Ownership of Our Class A Common Stock The dual class structure of our common stock and stockholders’ agreement among us and certain stockholders has the effect of concentrating voting control with those stockholders who held our capital stock prior to the listing of our Class A common stock on Nasdaq, including our Co-Founders, and their affiliates, which will limit an investor’s ability to influence the outcome of important transactions, including a change of control .
Biggest changeOur business, financial condition, and results of operations could be adversely affected if the cost per claim, premiums, the severity of claims, or the number of claims significantly exceeds our historical experience and coverage limits; we experience a claim in excess of our coverage limits; our insurance providers fail to pay on our insurance claims; we experience a claim for which coverage is not provided; or the number of claims under our deductibles or self-insured retentions differs from historical averages.
Any significant technology disruption or failure, cyberattack or data security incident could adversely affect our business, financial condition and operations . Our ability to effectively manage our business, particularly our product management, order and fulfillment operations, depends significantly on the reliability and capacity of the Internet and our IT Systems.
Any significant technology disruption or failure, cyberattack or data security incident could adversely affect our business, financial condition and operations . Our ability to effectively manage our business, particularly our product management, order and fulfillment operations, and financial systems, depends significantly on the reliability and capacity of the Internet and our IT Systems.
In addition to other risk factors discussed in this Annual Report, factors that may contribute to the variability of our quarterly and annual results include: • our success in attracting and retaining customers and subscribers; • maintaining successful relationships with brand partners and our ability to acquire products at acceptable prices and offer a compelling mix of products that are available for Subscription, Reserve or Resale at any given time; • the amount and timing of our fulfillment costs, operating expenses and capital expenditures; • the timing and success of product launches, including pricing changes, new services and features we may introduce; • the success of our marketing and promotional efforts; • adverse economic and market conditions and other adverse global events that negatively impact commerce and consumer behavior and that could lead to inflationary pressures and supply chain disruptions; • disruptions or defects in our software or operations, such as privacy or data security incidents, outages, or other incidents that impact the availability, reliability, or performance of our business; • the impact of competitive developments and our response to those developments; • our ability to manage our business and future growth; • our ability to recruit and retain employees including fulfillment center labor to process, itemize, list, pack and ship our products; and • changes to financial accounting standards and the interpretation of those standards, which may affect the way we recognize and report our financial results.
In addition to other risk factors discussed in this Annual Report, factors that may contribute to the variability of our quarterly and annual results include: • our success in attracting and retaining customers and subscribers; • maintaining successful relationships with brand partners and our ability to acquire products at acceptable prices and offer a compelling mix of products that are available for Subscription, Reserve or Resale at any given time; • the amount and timing of our fulfillment costs, operating expenses and capital expenditures; • the timing and success of product launches, including pricing changes, new services and features we may introduce; • the success of our marketing and promotional efforts; • adverse economic and market conditions and other adverse global events that negatively impact commerce and consumer behavior and that could lead to inflationary pressures and supply chain disruptions; • disruptions or defects in our software or operations, such as privacy or data security incidents, outages, or other incidents that impact the availability, reliability, or performance of our business; • the impact of competitive developments and our response to those developments; • our ability to manage our business and future growth; • our ability to recruit and retain employees including fulfillment center labor to process, itemize, list, pack and ship our products; • the seasonality of our business; and • changes to financial accounting standards and the interpretation of those standards, which may affect the way we recognize and report our financial results.
If we are unable to remediate the material weaknesses in a timely manner, identify additional material weaknesses in the future or otherwise fail to maintain effective internal control over financial reporting, which may result in material misstatements of our consolidated financial statements or cause us to fail to meet our periodic reporting obligations, our ability to comply with applicable laws and regulations and our access to the capital markets to be impaired .
If we are unable to remediate the material weaknesses in a timely manner, identify additional material weaknesses in the future or otherwise fail to maintain effective internal control over financial reporting, which may result in material misstatements of our consolidated financial statements or cause us to fail to meet our periodic reporting obligations, our ability to comply with applicable laws and regulations and our access to the capital markets could be impaired .
We depend on search engines, social media platforms, mobile application stores, content-based and cross-context behavioral online advertising and other online sources to attract consumers to and promote our website and our mobile application, which may be affected by third-party actions or interference beyond our control and, as we grow, our marketing and/or customer acquisition costs will continue to rise .
We depend on search engines, social media platforms, mobile application stores, content-based and cross-context behavioral online advertising and other online sources to attract consumers to and promote our website and our mobile application, which may be affected by third-party actions or interference beyond our control and, as we grow, our marketing and/or customer acquisition costs may continue to rise .
We believe that our success and future growth depend largely upon the continued services of our senior management team, including our Co-Founder, Chief Executive Officer and Chair, Jennifer Y. Hyman. From time to time, there have been and may be future changes in our executive management team resulting from the hiring or departure of these executives.
We believe that our success and future growth depend largely upon the continued services of our senior management team, including our Co-Founder, Chief Executive Officer, President and Chair, Jennifer Y. Hyman. From time to time, there have been and may be future changes in our executive management team resulting from the hiring or departure of these executives.
Our efforts to attract consumers and convert them into customers also rely heavily on the use of cookies and similar tracking technologies, and our ability to use and benefit from such technologies may be restricted or prohibited by changes in the law, market practice, or technology, or third parties who are not under our control.
Our efforts to attract consumers and convert them into customers also rely on the use of cookies and similar tracking technologies, and our ability to use and benefit from such technologies may be restricted or prohibited by changes in the law, market practice, or technology, or third parties who are not under our control.
If unauthorized parties gain access to our Confidential Information, IT Systems or other information, or those of our third-party service providers or business partners, they may be able to steal, publish, sell, delete, use inappropriately or modify private and sensitive information, including credit card information and personally identifiable information or proprietary business information, any or all of which could harm our business, financial condition and results of operations. 27 Table of Contents In particular, ransomware attacks, including those from organized criminal threat actors, nation-states and nation-state supported actors, are becoming increasingly prevalent and can lead to significant interruptions, delays, or outages in our operations, loss of data, loss of income, significant extra expenses to restore data or systems, reputational loss and the diversion of funds.
If unauthorized parties gain access to our Confidential Information, IT Systems or other information, or those of our third-party service providers or business partners, they may be able to steal, publish, sell, delete, use inappropriately or modify private and sensitive information, including credit card information and personally identifiable information or proprietary business information, any or all of which could harm our business, financial condition and results of operations. 26 Table of Contents In particular, ransomware attacks, including those from organized criminal threat actors, nation-states and nation-state supported actors, are becoming increasingly prevalent and can lead to significant interruptions, delays, or outages in our operations, loss of data, loss of income, significant extra expenses to restore data or systems, reputational loss and the diversion of funds.
If we are not able to improve our website and mobile app performance, keep pace with technological changes, enhance our current offerings, and develop new offerings in a timely way to respond to the changing needs of partners and customers, our business, financial performance, and growth may be harmed .
If we are not able to continue to improve our website and mobile app performance, keep pace with technological changes, enhance our current offerings, and develop new offerings in a timely way to respond to the changing needs of partners and customers, our business, financial performance, and growth may be harmed .
If a court were to find either exclusive-forum provision in our Amended Charter to be inapplicable or unenforceable in an action, we may incur further significant additional costs associated with resolving the dispute in other jurisdictions, all of which could seriously harm our business.
If a court were to find either exclusive forum provision in our Amended Charter to be inapplicable or unenforceable in an action, we could incur further significant additional costs associated with resolving the dispute in other jurisdictions, all of which could seriously harm our business.
If we are viewed as less financially viable by third-party providers, including as a result of our Nasdaq listing compliance and status, we may receive less favorable terms and conditions, including requiring upfront payments or other demonstrations of credit. 29 Table of Contents In addition, we must keep up to date with competitive technology trends, including the use of new or improved technology, checkout and payment options, creative user interfaces, virtual and augmented reality and other e-commerce marketing tools such as paid search and mobile applications, among others, which may increase our costs and which may not increase sales or attract customers.
If we are viewed as less financially viable by third-party providers, including as a result of our Nasdaq listing compliance and status, we may receive less favorable terms and conditions, including requiring upfront payments or other demonstrations of credit. 28 Table of Contents In addition, we must keep up to date with competitive technology trends, including the use of new or improved technology, checkout and payment options, creative user interfaces, virtual and augmented reality and other e-commerce marketing tools such as paid search and mobile applications, among others, which may increase our costs and which may not increase sales or attract customers.
Overall growth of our revenue will depend on a number of factors, including our ability to: • change traditional consumer buying habits and normalize clothing subscription, rental and resale; • price our Subscription, Reserve and Resale offerings so that we are able to attract new customers, and retain and expand our relationships with existing customers; • ensure that we maintain an adequate depth and breadth of available products to meet customer demand and respond swiftly and appropriately to new and changing styles, trends or desired consumer preferences; 16 Table of Contents • accurately forecast our revenue and plan our fulfillment, operating expenses and capital expenditures; • provide customers with a high-quality, seamless user experience and order fulfillment, as well as customer service and support that meets their needs; • acquire customers into varying levels of subscription programs at different price points; • improve our website and app performance and successfully identify and acquire, partner or invest in products, technologies, or businesses that we believe could complement or expand our business; • successfully maintain and grow our relationships with existing and new brand partners, including continuing to maintain and grow our Share by RTR and Exclusive Design offerings; • avoid disruptions in acquiring and distributing our products and offerings; • be effective and efficient in our paid marketing; • maintain and enhance our reputation and the value of our brand; • hire, integrate and retain talented personnel across all levels of our organization; • successfully compete with other companies that are currently in, or may in the future enter, the industry or the markets in which we operate, and respond to developments from these competitors such as pricing changes and the introduction of new offerings; • comply with existing and new laws and regulations applicable to our business; • successfully expand into new and penetrate existing geographic markets in the United States; • successfully develop new offerings and innovate and enhance our existing offerings and their features, including in response to new trends, competitive dynamics or the needs of customers and subscribers; • effectively manage growth of our business, personnel, and operations, including expanding our shipping and distribution capabilities and fulfillment center operations, as well as our logistics footprint and the number of facilities we operate in the future; • effectively manage our costs related to our business and operations; and • avoid or manage interruptions in our business from information technology downtime, cybersecurity incidents and other factors that could affect our physical and digital infrastructure.
Overall growth of our revenue will depend on a number of factors, including our ability to: • change traditional consumer buying habits and normalize clothing subscription, rental and resale; • price our Subscription, Reserve and Resale offerings so that we are able to attract new customers, and retain and expand our relationships with existing customers; • ensure that we maintain an adequate depth and breadth of available products to meet customer demand and respond swiftly and appropriately to new and changing styles, trends or desired consumer preferences; • accurately forecast our revenue and plan our fulfillment, operating expenses and capital expenditures; 15 Table of Contents • provide customers with a high-quality, seamless user experience and order fulfillment, as well as customer service and support that meets their needs; • acquire customers into varying levels of subscription programs at different price points; • improve our website and app performance and successfully identify and acquire, partner or invest in products, technologies, or businesses that we believe could complement or expand our business; • successfully maintain and grow our relationships with existing and new brand partners, including continuing to maintain and grow our Share by RTR and Exclusive Design offerings; • avoid disruptions in acquiring and distributing our products and offerings; • effectively manage our customer acquisition funnel to avoid disruption to our Subscription, Reserve, and Resale offerings; • be effective and efficient in our paid marketing; • maintain and enhance our reputation and the value of our brand; • hire, integrate and retain talented personnel across all levels of our organization; • successfully compete with other companies that are currently in, or may in the future enter, the industry or the markets in which we operate, and respond to developments from these competitors such as pricing changes and the introduction of new offerings; • comply with existing and new laws and regulations applicable to our business; • successfully expand into new and penetrate existing geographic markets in the United States; • successfully develop new offerings and innovate and enhance our existing offerings and their features, including in response to new trends, competitive dynamics or the needs of customers and subscribers; • effectively manage growth of our business, personnel, and operations, including expanding our shipping and distribution capabilities and fulfillment center operations, as well as our logistics footprint and the number of facilities we operate in the future; • effectively manage our costs related to our business and operations; and • avoid or manage interruptions in our business from information technology downtime, cybersecurity incidents and other factors that could affect our physical and digital infrastructure.
Any provision in our Amended Charter, Amended Bylaws, or Delaware law that has the effect of delaying or deterring a change in control could limit the opportunity for our stockholders to receive a premium for their shares of our Class A common stock, and could also affect the price that some investors are willing to pay for our Class A common stock. 59 Table of Contents Our Amended Charter designates the Court of Chancery of the State of Delaware and the federal district courts of the United States of America as the exclusive forums for substantially all disputes between us and our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers, or employees .
Any provision in our Amended Charter, Amended Bylaws, or Delaware law that has the effect of delaying or deterring a change in control could limit the opportunity for our stockholders to receive a premium for their shares of our Class A common stock, and could also affect the price that some investors are willing to pay for our Class A common stock. 57 Table of Contents Our Amended Charter designates the Court of Chancery of the State of Delaware and the federal district courts of the United States of America as the exclusive forums for substantially all disputes between us and our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers, or employees .
We may not be successful in expanding into additional international markets or in generating revenue from foreign operations for a variety of reasons, including: • lower acceptance of our offerings and the concept of renting apparel and accessories and the need to localize our products offerings; • competition from local incumbents that understand the local market and may operate more effectively; 41 Table of Contents • regulatory requirements, taxes, trade laws, trade sanctions and economic embargoes, tariffs, export quotas, custom duties, or other trade restrictions, or any unexpected changes thereto; and • risks resulting from changes in currency exchange rates.
We may not be successful in expanding into additional international markets or in generating revenue from foreign operations for a variety of reasons, including: • lower acceptance of our offerings and the concept of renting apparel and accessories and the need to localize our products offerings; • competition from local incumbents that understand the local market and may operate more effectively; 40 Table of Contents • regulatory requirements, taxes, trade laws, trade sanctions and economic embargoes, tariffs, export quotas, custom duties, or other trade restrictions, or any unexpected changes thereto; and • risks resulting from changes in currency exchange rates.
If we are not able to maintain appropriate staffing levels or negotiate acceptable pricing and other terms with third-party vendors or they experience performance problems or other difficulties, our operating results and customers’ experience could be negatively impacted. 22 Table of Contents Our ability to receive inbound products efficiently and ship products to and from customers may be negatively affected by many events outside of our control, including inclement weather, public health crises such as the COVID-19 pandemic, governmental regulations, labor disputes and other factors.
If we are not able to maintain appropriate staffing levels or negotiate acceptable pricing and other terms with third-party vendors or they experience performance problems or other difficulties, our operating results and customers’ experience could be negatively impacted. 21 Table of Contents Our ability to receive inbound products efficiently and ship products to and from customers may be negatively affected by many events outside of our control, including inclement weather, public health crises such as the COVID-19 pandemic, governmental regulations, labor disputes and other factors.
If we are unable to acquire and manage our products effectively and plan for future expenses, our operating results could be adversely affected. We are vulnerable to demand and pricing shifts and to suboptimal selection and timing of product purchases.
If we are unable to acquire and manage our products effectively and plan for future expenses, our operating results could be adversely affected. We are vulnerable to demand and pricing shifts and to suboptimal selection and timing of rental product purchases.
While we maintain cyber insurance that may help provide coverage for these types of events, we cannot provide assurances that our insurance will be adequate to cover costs and liabilities related to these incidents or that applicable insurance will be available to us in the future on economically reasonable terms or at all. 28 Table of Contents Our e-commerce business faces distinct risks, such as fulfillment of orders, and our failure to successfully manage these risks could have a negative impact on our profitability.
While we maintain cyber insurance that may help provide coverage for these types of events, we cannot provide assurances that our insurance will be adequate to cover costs and liabilities related to these incidents or that applicable insurance will be available to us in the future on economically reasonable terms or at all. 27 Table of Contents Our e-commerce business faces distinct risks, such as fulfillment of orders, and our failure to successfully manage these risks could have a negative impact on our profitability.
While we have taken remediation measures in response to the outage, additional outages or other disruptions have occurred and may occur in the future, which could harm our ability to meet customer expectations, fulfill orders, manage our products, and achieve our objectives for operating efficiencies and profitability. 26 Table of Contents The technology underlying our platform is highly interconnected and complex, and we detect bugs, errors, and vulnerabilities from time to time in the ordinary course of business.
While we have taken remediation measures in response to the outage, additional outages or other disruptions have occurred and may occur in the future, which could harm our ability to meet customer expectations, fulfill orders, manage our products, and achieve our objectives for operating efficiencies and profitability. 25 Table of Contents The technology underlying our platform is highly interconnected and complex, and we detect bugs, errors, and vulnerabilities from time to time in the ordinary course of business.
In such cases, our ability to pursue our growth strategy will depend in part upon our ability to expand capacity with existing brand partners or develop new brand partner relationships. 23 Table of Contents We have been focused on expanding our relationships with brand partners and continuing to work to increase the proportion of our products procured under Exclusive Designs and Share by RTR arrangements, which are our more capital-efficient ways of acquiring rental product.
In such cases, our ability to pursue our growth strategy will depend in part upon our ability to expand capacity with existing brand partners or develop new brand partner relationships. 22 Table of Contents We have been focused on expanding our relationships with brand partners and continuing to work to increase the proportion of our products procured under Exclusive Designs and Share by RTR arrangements, which are our more capital-efficient ways of acquiring rental product.
Changes to our business model and accounting methods, principles, or interpretations could result in changes to our financial statements, including changes in revenue and expenses in any period, or in certain categories of revenue and expenses moving to different periods, may result in materially different financial results, and may require that we change how we process, analyze, and report financial information and our financial reporting controls. 40 Table of Contents If our estimates or judgments relating to our critical accounting policies prove to be incorrect, our results of operations could be adversely affected .
Changes to our business model and accounting methods, principles, or interpretations could result in changes to our financial statements, including changes in revenue and expenses in any period, or in certain categories of revenue and expenses moving to different periods, may result in materially different financial results, and may require that we change how we process, analyze, and report financial information and our financial reporting controls. 39 Table of Contents If our estimates or judgments relating to our critical accounting policies prove to be incorrect, our results of operations could be adversely affected .
Additionally, despite various security measures that have been implemented, our IT Systems and those of our third-party service providers and business partners as well as the Confidential Information stored thereon are vulnerable to numerous and evolving cybersecurity risks that threaten their confidentiality, integrity and availability, including security incidents, attacks by diverse threat actors (including hackers, hacktivists, and state-sponsored organizations) acts of vandalism, malware, social engineering, denial or degradation of service attacks, computer viruses, software bugs or vulnerabilities, supply chain attacks, phishing attacks, ransomware attacks, credential stuffing attacks, misplaced or lost data, human errors, malicious insiders or other similar events.
Additionally, despite various security measures that have been implemented, our IT Systems and those of our third-party service providers and business partners as well as the Confidential Information stored thereon are vulnerable to numerous and evolving cybersecurity risks that threaten their confidentiality, integrity and availability, including security incidents, attacks by a variety of threat actors (including hackers, hacktivists, and state-sponsored organizations) acts of vandalism, malware, social engineering, denial or degradation of service attacks, computer viruses, software bugs or vulnerabilities, supply chain attacks, phishing attacks, ransomware attacks, credential stuffing attacks, misplaced or lost data, human errors, malicious insiders or other similar events.
Violations of the laws and regulations described above may result in substantial civil and criminal fines and penalties, imprisonment, the loss of export or import privileges, debarment, tax reassessments, breach of contract and fraud litigation, reputational harm, investigation costs, and other consequences, any of which could have a material adverse effect on our business, financial condition, and results of operations. 42 Table of Contents From time to time, we may be subject to legal proceedings, regulatory disputes, and governmental inquiries that could cause us to incur significant expenses, divert our management’s attention, and materially harm our business, financial condition, and operating results .
Violations of the laws and regulations described above may result in substantial civil and criminal fines and penalties, imprisonment, the loss of export or import privileges, debarment, tax reassessments, breach of contract and fraud litigation, reputational harm, investigation costs, and other consequences, any of which could have a material adverse effect on our business, financial condition, and results of operations. 41 Table of Contents From time to time, we may be subject to claims, legal proceedings, regulatory disputes, and governmental inquiries that could cause us to incur significant expenses, divert our management’s attention, and materially harm our business, financial condition, and operating results .
We believe our ability to compete effectively depends on many factors within and beyond our control, including: • our ability to normalize fashion rental and change traditional retail shopping habits and norms; 17 Table of Contents • how effectively differentiated our offerings, customer experience and value proposition are from those of our competitors; • how effectively we market and communicate how to use our Subscription, Reserve and Resale offerings and attract and retain customers; • our ability to expand and maintain an appealing depth and breadth of our products to meet customer demand; • the price at which we are able to offer our Subscription, Reserve and Resale offerings; • the amount, diversity, and quality of brands that we or our competitors offer; • our ability to acquire products on favorable and efficient terms, including our ability to attract new brand partners and retain existing brand partners in our Share by RTR and Exclusive Design programs; • the speed and cost at which we can deliver products to our customers and the ease with which they can return our products; • the effectiveness of our customer service; • further developing our data science capabilities for brand partners; • the strength of our brand, including maintaining favorable brand recognition and effectively marketing our services and value proposition to customers; • the success of our reverse-logistics processes in delivering products in good condition to customers; and • anticipating and successfully responding to changing apparel trends and consumer shopping preferences.
We believe our ability to compete effectively depends on many factors within and beyond our control, including: • our ability to normalize fashion rental and change traditional retail shopping habits and norms; • how effectively differentiated our offerings, customer experience and value proposition are from those of our competitors; • how effectively we market and communicate how to use our Subscription, Reserve and Resale offerings and attract and retain customers; • our ability to expand and maintain an appealing depth and breadth of our products to meet customer demand and to merchandise it effectively; • the price at which we are able to offer our Subscription, Reserve and Resale offerings; • the amount, diversity, and quality of brands that we or our competitors offer; • our ability to acquire products on favorable and efficient terms, including our ability to attract new brand partners and retain existing brand partners in our Share by RTR and Exclusive Design programs; • the speed and cost at which we can deliver products to our customers and the ease with which they can return our products; • the effectiveness of our customer service; • further developing our data science capabilities for brand partners; • the strength of our brand, including maintaining favorable brand recognition and effectively marketing our services and value proposition to customers; • the success of our reverse-logistics processes in delivering products in good condition to customers; and • anticipating and successfully responding to changing apparel trends and consumer shopping preferences.
Additionally, adverse economic changes could reduce consumer confidence, and could thereby negatively affect our operating results. In the event of a prolonged economic downturn or acute recession, significant inflation, or increased supply chain shortages, consumer spending habits could be adversely affected, and we could experience lower than expected revenue, net income, and Adjusted EBITDA.
Additionally, adverse economic changes could reduce consumer confidence, and could thereby negatively affect our operating results. In the event of a prolonged economic downturn or acute recession, significant inflation, or increased supply chain shortages, consumer spending habits could be adversely affected, and we could experience lower than expected revenue, net income, cash flows and Adjusted EBITDA.
If existing customers no longer find our offerings and products appealing, appropriately priced or easy to use, or if we are unable to provide high-quality support to customers to help them resolve issues in a timely and acceptable manner, they may stop using our offerings, negative publicity may be generated and word-of-mouth and other referrals may be hampered.
If existing customers no longer find our offerings and products appealing, appropriately priced or easy to use, or if we are unable to provide high-quality support to customers to help them resolve issues in a timely and acceptable manner, they may stop using our offerings, we may experience negative publicity and word-of-mouth and other referrals may be hampered.
Because of the twenty-to-one voting ratio between our Class B and Class A common stock, the holders of our Class B common stock collectively continue to control a significant percentage of the combined voting power of our common stock and therefore be able to control all matters submitted to our stockholders for approval until the date of automatic conversion described below, when all outstanding shares of Class B common stock and Class A common stock will convert automatically into shares of a single class of common stock.
Because of the twenty-to-one voting ratio between our Class B and Class A common stock, the holders of our Class B common stock collectively continue to control a significant percentage of the combined voting power of our common stock and therefore are able to control all matters submitted to our stockholders for approval until the date of automatic conversion described below, when all outstanding shares of Class B common stock and Class A common stock will convert automatically into shares of a single class of common stock.
If any of our trade secrets were to be disclosed to or independently developed by a competitor, our competitive position would be harmed, possibly leaving us without an adequate remedy to make us whole. 44 Table of Contents We may be required to spend significant financial and managerial resources to monitor and protect our intellectual property rights.
If any of our trade secrets were to be disclosed to or independently developed by a competitor, our competitive position would be harmed, possibly leaving us without an adequate remedy to make us whole. 43 Table of Contents We may be required to spend significant financial and managerial resources to monitor and protect our intellectual property rights.
We are an “emerging growth company,” as defined in the Jumpstart Our Business Startups Act of 2012 (“ JOBS Act”), and we may take advantage of certain exemptions from reporting requirements that are applicable to other public companies that are not “emerging growth companies,” including: • the auditor attestation requirements of Section 404; • reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements; and • exemptions from the requirements of holding a non-binding advisory stockholder vote on executive compensation and non-binding advisory stockholder vote to approve any golden parachute payments not previously approved.
We are an “emerging growth company,” as defined in the Jumpstart Our Business Startups Act of 2012 (“ JOBS Act”), and we may take advantage of certain exemptions from reporting requirements that are applicable to other public companies that are not “emerging growth companies,” including: • the auditor attestation requirements of Section 404; • reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements; and 38 Table of Contents • exemptions from the requirements of holding a non-binding advisory stockholder vote on executive compensation and non-binding advisory stockholder vote to approve any golden parachute payments not previously approved.
Such occurrences could adversely affect our business, financial condition, and results of operations. Our insurance policies may not be adequate to compensate us for the potential losses arising from any such disruptions in or failure or security intrusion of our systems or third-party systems where information important to our business operations is stored.
Such occurrences could adversely affect our business, financial condition, and results of operations. Our insurance policies and third-party indemnification agreements may not be adequate to compensate us for the potential losses arising from any such disruptions in or failure or security intrusion of our systems or third-party systems where information important to our business operations is stored.
We may incur additional expenses and our reputation could be harmed if customers and potential customers believe that our products are not of high quality or may be damaged. 24 Table of Contents If we fail to maintain and enhance our brand, our ability to attract and retain customers will be impaired and our business, financial condition, and results of operations may suffer .
We may incur additional expenses and our reputation could be harmed if customers and potential customers believe that our products are not of high quality or may be damaged. 23 Table of Contents If we fail to maintain and enhance our brand, our ability to attract and retain customers will be impaired and our business, financial condition, and results of operations may suffer .
These seasonal effects may become more pronounced over time, which could also cause our operating results and key metrics to fluctuate. 30 Table of Contents We face risks arising from the restructuring of our operations, which could adversely affect our financial condition, results of operations, cash flows, or business reputation.
These seasonal effects may become more pronounced over time, which could also cause our operating results and key metrics to fluctuate. 29 Table of Contents We face risks arising from the restructuring of our operations, which could adversely affect our financial condition, results of operations, cash flows, or business reputation.
We are required to meet the Nasdaq Capital Market’s continued listing requirements and other Nasdaq rules, or we may risk delisting. Delisting could negatively affect the price of our Class A common stock, which could make it more difficult for us to sell securities in a future financing or for you to sell our Class A common stock.
We are required to meet the Nasdaq Global Market’s continued listing requirements and other Nasdaq rules, or we may risk delisting. Delisting could negatively affect the price of our Class A common stock, which could make it more difficult for us to sell securities in a future financing or for you to sell our Class A common stock.
Failure to adequately protect and enforce our intellectual property could harm our brand, devalue our proprietary technology and content, and adversely affect our ability to compete effectively. 43 Table of Contents If we fail to protect our intellectual property rights adequately, our competitors may gain access to our intellectual property and proprietary technology and develop and commercialize substantially identical offerings or technologies.
Failure to adequately protect and enforce our intellectual property could harm our brand, devalue our proprietary technology and content, and adversely affect our ability to compete effectively. 42 Table of Contents If we fail to protect our intellectual property rights adequately, our competitors may gain access to our intellectual property and proprietary technology and develop and commercialize substantially identical offerings or technologies.
Our customers may also be dissatisfied with the product mix we currently offer or will offer in the future. 25 Table of Contents Additionally, as we invest in and experiment with new offerings or changes to our platform, our partners and customers may find these changes to be disruptive and may perceive them negatively.
Our customers may also be dissatisfied with the product mix we currently offer or will offer in the future. 24 Table of Contents Additionally, as we invest in and experiment with new offerings or changes to our platform, our partners and customers may find these changes to be disruptive and may perceive them negatively.
The cash flow benefits we currently experience from our brand partners’ willingness to revenue share could be adversely affected if revenue share terms change or if brand partners no longer wish to revenue share due to (1) lack of trust in us, (2) lack of revenue earned in comparison to the projections we provided, or (3) their inability to continue to spread their earnings out over the time period that the products are earning revenue on our website, among other reasons.
The cash flow benefits we currently experience from our brand partners’ willingness to revenue share could be adversely affected if revenue share terms change or if brand partners no longer wish to revenue share due to lack of trust in us, lack of revenue earned in comparison to the projections we provided, or their inability to continue to spread their earnings out over the time period that the products are earning revenue on our website, among other reasons.
These new plans and offerings do not have demonstrably long track records of success for us and could result in higher fulfillment costs and lower gross margins, higher product spend, and/or other unforeseen impacts on the business.
These new offerings and updates do not have demonstrably long track records of success for us and could result in higher fulfillment costs and lower gross margins, higher product spend, and/or other unforeseen impacts on the business.
Some of the factors that may negatively influence consumer spending include high levels of unemployment; recession; higher consumer debt levels; inflation; reductions in net worth, declines in asset values, and related market uncertainty; home foreclosures and reductions in home values; fluctuating interest rates and credit availability; fluctuating fuel and other energy costs; fluctuating commodity prices; and general uncertainty regarding the overall future political and economic environment.
Some of the factors that may negatively influence consumer spending include high levels of unemployment; recession; higher consumer debt levels; inflation; reductions in net worth, declines in asset values, and related market uncertainty; volatility in the financial markets; home foreclosures and reductions in home values; fluctuating interest rates and credit availability; fluctuating fuel and other energy costs; fluctuating commodity prices; and general uncertainty regarding the overall future political and economic environment.
Economic conditions in certain regions may also be affected by natural disasters, such as hurricanes, tropical storms, earthquakes, and wildfires; other public health crises; wars, terrorism and political tensions; and other major unforeseen events.
Economic conditions in certain regions may also be affected by natural disasters, such as hurricanes, tropical storms, earthquakes, and wildfires; other public health crises; geopolitical conditions, including wars, terrorism and political tensions; and other major unforeseen events.
Any such new laws or regulations or the interpretation, modification or application of existing laws and regulations may materially and adversely impact our business, financial condition, results of operations and cash flows. 49 Table of Contents Risks Related to Our Dependence on Third Parties We face risks associated with brand and manufacturing partners from whom our products are sourced or co-manufactured.
Any such new laws or regulations or the interpretation, modification or application of existing laws and regulations may materially and adversely impact our business, financial condition, results of operations and cash flows. Risks Related to Our Dependence on Third Parties We face risks associated with brand and manufacturing partners from whom our products are sourced or co-manufactured.
A dditionally, the 2023 Amended Temasek Facility includes a minimum liquidity maintenance covenant of $30 million and provides that the Company may not exceed mutually agreed upon quarterly and annual spend levels for rental product capital, fixed operating, and marketing expenditures during fiscal year 2024 of $51 million, $100 million (excluding $10 million of specified permitted expenditures), and $30 million, respectively, on an annual basis, and to-be-agreed levels for fiscal years 2025 and 2026, subject to the debt holders’ consent and certain exceptions .
A dditionally, the 2025 Amended Facility includes a minimum liquidity maintenance covenant of $30 million and provides that we may not exceed mutually agreed upon quarterly and annual spend levels for rental product capital, fixed operating, and marketing expenditures during fiscal year 2024 of $51 million, $100 million (excluding $10 million of specified permitted expenditures), and $30 million, respectively, on an annual basis, and to-be-agreed levels for fiscal years 2025 and 2026, subject to the debt holders’ consent and certain exceptions .
If the debt under the Credit Agreement were to be accelerated, we may not have sufficient cash or be able to borrow sufficient funds to refinance the debt or sell sufficient assets to repay the debt, which could adversely affect our business, financial condition and results of operations. We have identified material weaknesses in our internal control over financial reporting.
If the debt under the Credit Agreement were to be accelerated, we may not have sufficient cash or be able to borrow sufficient funds to refinance the debt or sell sufficient assets to repay the debt, which could adversely affect our business, financial condition and results of operations. 35 Table of Contents We have identified material weaknesses in our internal control over financial reporting.
We have experienced in the past, and may in the future experience, voluntary attrition at significant rates for various reasons, including challenges with employee morale following our recent restructurings, perception of our business and financial condition, challenging labor market conditions such as rising wages, and a decreased level of workforce participation.
We have experienced in the past, and may in the future experience, voluntary attrition at significant rates for various reasons, including challenges with employee morale, perception of our business and financial condition, challenging labor market conditions such as rising wages, and a decreased level of workforce participation.
Any inability to access or delay in accessing these funds could adversely affect our business and financial position. Our level of indebtedness could have a material adverse effect on our ability to generate sufficient cash to fulfill our obligations under such indebtedness, to react to changes in our business and to incur additional indebtedness to fund future needs.
Any inability to access or delay in accessing these funds could adversely affect our business and financial position. 34 Table of Contents Our level of indebtedness could have a material adverse effect on our ability to generate sufficient cash to fulfill our obligations under such indebtedness, to react to changes in our business and to incur additional indebtedness to fund future needs.
Similarly, the occurrence of a contagious disease or illness could cause delays or increase costs in the manufacture of certain products. For example, the COVID-19 pandemic caused delays in some shipments from our brand partners. 50 Table of Contents We rely on third parties to provide the payment processing infrastructure underlying our business.
Similarly, the occurrence of a contagious disease or illness could cause delays or increase costs in the manufacture of certain products. For example, the COVID-19 pandemic caused delays in some shipments from our brand partners. We rely on third parties to provide the payment processing infrastructure underlying our business.
In addition, we and certain stockholders, including our CEO and Co-Founder Jennifer Y. Hyman, entered into a stockholders’ agreement in connection with our IPO with respect to the election of directors.
In addition, we and certain stockholders, including our CEO, Co-Founder, President and Chair, Jennifer Y. Hyman, entered into a stockholders’ agreement in connection with our IPO with respect to the election of directors.
Any such issuances could result in substantial dilution to our existing stockholders and cause the trading price of our Class A common stock to decline. These factors could also make it more difficult for us to raise additional funds through future offerings of our shares of Class A common stock or other securities.
Any such issuances could result in substantial dilution to our existing stockholders and cause the trading price of our Class A common stock to decline. 56 Table of Contents These factors could also make it more difficult for us to raise additional funds through future offerings of our shares of Class A common stock or other securities.
A failure by us to comply with the covenants specified in the 2023 Amended Temasek Facility could result in an event of default under the agreement, which would give the lender the right to declare all borrowings outstanding, together with accrued and unpaid interest and fees, to be immediately due and payable.
A failure by us to comply with the covenants specified in the 2025 Amended Facility could result in an event of default under the agreement, which would give the lender the right to declare all borrowings outstanding, together with accrued and unpaid interest and fees, to be immediately due and payable.
If our revenue growth does not meet our expectations in future periods, our business, financial condition, and results of operations may be harmed, and we may not achieve or sustain profitability in the future. The global fashion industry is highly competitive and rapidly changing, and we may not be able to compete effectively.
If our revenue growth does not meet our expectations in future periods, our business, financial condition, and results of operations may be harmed, and we may not achieve or sustain profitability in the future. 16 Table of Contents The global fashion industry is highly competitive and rapidly changing, and we may not be able to compete effectively.
The terms of our 2023 Amended Temasek Facility include a number of covenants that limit our ability to (subject to negotiated exceptions), among other things, incur additional indebtedness, incur liens on assets, enter into agreements related to mergers and acquisitions, dispose of assets or pay dividends and make distributions.
The terms of our 2025 Amended Facility include a number of covenants that limit our ability to (subject to negotiated exceptions), among other things, incur additional indebtedness, incur liens on assets, enter into agreements related to mergers and acquisitions, dispose of assets or pay dividends and make distributions.
In the event that we do not successfully and cost-effectively manage at-home pickup logistics, it will make it more difficult for us to satisfy our customers and efficiently manage shipping costs, which will negatively affect our brand, financial condition and results of operations.
In the event that we do not successfully and cost-effectively manage at-home pickup logistics, it may make it more difficult for us to satisfy our customers and efficiently manage shipping costs, which could negatively affect our brand, financial condition and results of operations.
Additionally, if any of our insurance providers becomes insolvent, it would be unable to pay any operations-related claims that we make. Insurance providers have also raised premiums and deductibles for many businesses, including ours, and may do so in the future.
Additionally, if any of our insurance providers becomes insolvent, it would be unable to pay any operations-related claims that we make. 53 Table of Contents Insurance providers have also raised premiums and deductibles for many businesses, including ours, and may do so in the future.
We have recorded a full valuation allowance against our U.S. deferred tax assets, which includes net operating loss carryforwards. Changes in our effective tax rate or tax liability may have an adverse effect on our results of operations .
We have recorded a full valuation allowance against our U.S. deferred tax assets, which includes net operating loss carryforwards. 48 Table of Contents Changes in our effective tax rate or tax liability may have an adverse effect on our results of operations .
The benefits we currently experience from these relationships could be adversely affected if they: • discontinue selling products to us or manufacturing our Exclusive Designs; • enter into arrangements with competitors that could impair our ability to source their products, including by giving our competitors exclusivity arrangements or limiting our access to certain products; • raise the prices they charge us; • are not satisfied with the value proposition we offer them; • do not view our brand or financial profile favorably; • change pricing terms to require us to pay a significant portion of the cost of items on delivery or upfront; • experience negative publicity or reputational issues; • do not follow our vendor code of conduct and/or violate legal and regulatory requirements; • experience supply chain disruptions that cause lead times to be lengthened or missed entirely; or • fail to execute on the design we have provided for co-manufactured products.
The benefits we currently experience from these relationships could be adversely affected if they: • discontinue selling products to us or manufacturing our Exclusive Designs; • enter into arrangements with competitors that could impair our ability to source their products, including by giving our competitors exclusivity arrangements or limiting our access to certain products; • raise the prices they charge us; • are not satisfied with the value proposition we offer them; • do not view our brand or financial profile favorably; • change pricing terms to require us to pay a significant portion of the cost of items on delivery or upfront; • experience negative publicity or reputational issues; • do not follow our vendor code of conduct and/or violate legal and regulatory requirements; • experience supply chain disruptions that cause lead times to be lengthened or missed entirely; or • fail to execute on the design we have provided for co-manufactured products. 49 Table of Contents Events that adversely impact our brand and manufacturing partners could impair our ability to obtain adequate and timely products.
Litigation and regulatory proceedings may be protracted and expensive, and the results are difficult to predict. Certain of these matters include speculative claims for substantial or indeterminate amounts of damages and include claims for injunctive relief. Additionally, our litigation costs could be significant.
Litigation and regulatory proceedings may be protracted and expensive, and the results are difficult to predict. Certain of these matters include speculative claims for substantial or indeterminate amounts of damages and include claims for injunctive relief. Additionally, the costs we incur could be significant.
Any of these events could harm our business and cause our results of operations, liquidity and financial condition to suffer. 45 Table of Contents Our use of third-party open-source software could adversely affect our ability to offer our products and offerings and subjects us to possible litigation .
Any of these events could harm our business and cause our results of operations, liquidity and financial condition to suffer. Our use of third-party open-source software could adversely affect our ability to offer our products and offerings and subjects us to possible litigation .
Failure to comply with such laws and regulations, which tend to become more stringent over time, can result in significant fines, penalties, costs, liabilities or restrictions on operations, injunctive relief, civil or criminal sanctions, and could expose us to costs of investigation or remediation, as well as tort claims for property damage or personal injury, and could negatively affect our business, financial condition or results of operations.
Failure to comply with such laws and regulations, which tend to become more stringent over time or failure to obtain or maintain permits necessary for our warehouse operations could, can result in significant fines, penalties, costs, liabilities or restrictions on operations, injunctive relief, civil or criminal sanctions, and could expose us to costs of investigation or remediation, as well as tort claims for property damage or personal injury, and could negatively affect our business, financial condition or results of operations.
Our management has broad discretion in the use of our cash resources and may not use them effectively . Our management has broad discretion, subject to our 2023 Amended Temasek Facility, in the application of our cash resources, which may include working capital, to fund growth and for other general corporate purposes.
Our management has broad discretion in the use of our cash resources and may not use them effectively . Our management has broad discretion, subject to our 2025 Amended Facility, in the application of our cash resources, which may include working capital, to fund growth and for other general corporate purposes.
Further, any failure by us to meet our Impact Strategy goals for any reason, including due to the potential changes to the prioritization of these goals, or a loss of confidence on the part of customers, investors, employees, brand partners and other stakeholders as it relates to our ESG initiatives could negatively impact our brand or the demand for our offerings, or lead to enforcement actions or litigation, adversely affecting our financial condition, results of operations and prospects.
Further, any failure or perceived failure to meet our Impact Strategy goals for any reason, including due to changes to the prioritization or scope of these goals, or a loss of confidence on the part of customers, investors, employees, brand partners and other stakeholders as it relates to our ESG initiatives could negatively impact our brand or the demand for our offerings, or lead to enforcement actions or litigation, adversely affecting our financial condition, results of operations and prospects.
Although we have recently renewed our lease in Secaucus, NJ, we cannot guarantee that we will be able to renew or negotiate new or renewed leases in the future at this location or in Texas on terms acceptable to us or at all.
Although we renewed our lease in Secaucus, NJ in 2023, we cannot guarantee that we will be able to renew or negotiate new or renewed leases in the future at this location or in Texas on terms acceptable to us or at all.
Any of the foregoing could be harmful to our business, financial condition, or results of operations and could help our competitors develop offerings that are similar to or better than ours. We are subject to rapidly changing and increasingly stringent laws and industry standards relating to data privacy, data security, data protection, and consumer protection .
Any of the foregoing could be harmful to our business, financial condition, or results of operations and could help our competitors develop offerings that are similar to or better than ours. 45 Table of Contents We are subject to rapidly changing and increasingly stringent laws, industry standards and consumer expectations relating to data privacy, data security, data protection, and consumer protection .
These may include new software applications or related services based on artificial intelligence (such as our AI search beta launch), augmented reality, machine learning, or robotics or more generally evolving trends in e-commerce.
These may include new software applications or related services based on artificial intelligence (such as our AI search tool), augmented reality, machine learning, or robotics or more generally evolving trends in e-commerce.
Our growth and growth strategies have in the past strained, and could in the future strain, our existing resources, and we could experience ongoing operating difficulties in managing our business across numerous jurisdictions, including difficulties in hiring, training, and managing a diverse employee base.
Our growth and growth strategies have in the past strained, and could in the future strain, our existing resources, and we could experience ongoing operating difficulties in managing our business across numerous jurisdictions, including difficulties in hiring, training, and managing our broad employee base.
We expect such rules to continue evolving and face additional challenges in the future, adding to the legal complexity and uncertainty. In addition, privacy advocates and industry groups have regularly proposed, and may propose in the future, self-regulatory standards by which we are legally or contractually bound.
We expect such rules to continue evolving and face additional challenges in the future, adding to the legal complexity and uncertainty. 46 Table of Contents In addition, privacy advocates and industry groups have regularly proposed, and may propose in the future, self-regulatory standards by which we are legally or contractually bound.
We collect, process, store, and use a wide variety of data from current and prospective customers, including personal information, such as home addresses, payment card numbers (through our payment processor) and geolocation.
We collect, process, store, and use a wide variety of data from current and prospective customers, including personal information, such as home addresses, payment card numbers (through our payment processor) and approximate location information.
To effectively manage and capitalize on our growth, we must continue to enhance customer experience and attract and retain customers (particularly subscribers), iterate our subscription products, invest in digital consumer innovation, expand our brand awareness and marketing, and upgrade our management information and reverse logistics systems and other processes.
To effectively drive growth, we must continue to enhance customer experience and attract and retain customers (particularly subscribers), iterate our subscription products, invest in digital consumer innovation, expand our brand awareness and marketing, and upgrade our management information and reverse logistics systems and other processes.
If these third-party providers become unavailable or unavailable on favorable terms, our business could be adversely affected . We rely on third parties to provide payment processing infrastructure, to accept card payments from customers and through our banking partners, to remit payments to suppliers.
If these third-party providers become unavailable or unavailable on favorable terms, our business could be adversely affected . We rely on third parties to provide payment processing infrastructure, to accept card payments from customers, process and administer gift cards, and through our banking partners, to remit payments to suppliers.
In 2022, we migrated a substantial portion of our primary production environment, core architecture, and data centers to a new third-party cloud provider, which provides a distributed computing infrastructure as a service platform for business operations. We use another third-party cloud provider for other portions of our business.
We have migrated a substantial portion of our primary production environment, core architecture, and data centers to a third-party cloud provider, which provides a distributed computing infrastructure as a service platform for business operations. We use another third-party cloud provider for other portions of our business.
The market price of our Class A common stock has declined significantly since our IPO, has been volatile and is likely to continue to be volatile and could be subject to wide fluctuations in response to the risk factors described in this Annual Report , and others within or beyond our control, including: • actual or anticipated fluctuations in our revenue or other operating metrics; • our actual or anticipated operating performance and the operating performance of our competitors; • changes in the financial projections we provide to the public or our failure to meet these projections; • positive or negative publicity; • failure of securities analysts to initiate or maintain coverage of us, changes in financial estimates by any securities analysts who follow our company, or our failure to meet the estimates or the expectations of investors; • any major change in our board of directors, management, or key personnel; • the economy as a whole and market conditions in our industry; • rumors and market speculation involving us or other companies in our industry; 56 Table of Contents • announcements by us or our competitors of significant innovations, new products, services, features, integrations, or capabilities, acquisitions, strategic investments, partnerships, joint ventures, or capital commitments; • the legal and regulatory landscape and changes in the application of existing laws or adoption of new laws that impact our business, including changes in e-commerce and tax laws; • legal and regulatory claims, litigation, or pre-litigation disputes and other proceedings; • the impact of COVID-19 on our business or the fashion industry and sharing economy generally; • sales or expected sales of our Class A common stock by us, our officers, directors, principal stockholders, and employees; • if securities or industry analysts publish research about our business, or if they publish unfavorable research; and • other events or factors, including those resulting from war, incidents of terrorism, or responses to these events.
The market price of our Class A common stock has declined significantly since our IPO, has been volatile and is likely to continue to be volatile and could be subject to wide fluctuations in response to the risk factors described in this Annual Report , and others within or beyond our control, including: • actual or anticipated fluctuations in our revenue or other operating metrics; • our actual or anticipated operating performance and the operating performance of our competitors; • changes in the financial projections we provide to the public or our failure to meet these projections; • positive or negative publicity; • failure of securities analysts to initiate or maintain coverage of us, changes in financial estimates by any securities analysts who follow our Company, or our failure to meet the estimates or the expectations of investors; • any major change in our board of directors, management, or key personnel; • the economy as a whole and market conditions in our industry; • changes in overall stock market conditions; • rumors and market speculation involving us or other companies in our industry; • announcements by us or our competitors of significant innovations, new products, services, features, integrations, or capabilities, acquisitions, strategic investments, partnerships, joint ventures, or capital commitments; • the legal and regulatory landscape and changes in the application of existing laws or adoption of new laws that impact our business, including changes in e-commerce and tax laws; • legal and regulatory claims, litigation, or pre-litigation disputes and other proceedings; • the impact of COVID-19 or future pandemics on our business or the fashion industry and sharing economy generally; • sales or expected sales of our Class A common stock by us, our officers, directors, principal stockholders, and employees; • if securities or industry analysts publish research about our business, or if they publish unfavorable research; and • other events or factors, including those resulting from geopolitical conditions, including tariffs and trade policies, war, incidents of terrorism, or responses to these events. 55 Table of Contents Our investors may not realize any return on their investment in us and may lose some or all of their investment.
For example, if our manufacturing partners increase their costs, our Exclusive Designs may not be as cost-effective to produce, which could negatively impact our ability to meet our financial goals. The fabrics used in our products are made of raw materials including petroleum-based products and cotton.
For example, if manufacturers increase their costs, our Exclusive Designs may not be as cost-effective for us or our brand partners to produce, which could negatively impact our ability to meet our financial goals. The fabrics used in our products are made of raw materials including petroleum-based products and cotton.
The Federal Trade Commission and State Attorneys General also enforce a broad range of “unfair” or “deceptive” trade practice rules and regulations that expose us to potentially substantial costs, penalties, and injunctive relief in connection with all aspects of our sales, advertising, and marketing activities.
The Federal Trade Commission and State Attorneys General also enforce a broad range of “unfair” or “deceptive” trade practice rules and regulations that expose us to potentially substantial costs, penalties, and injunctive relief in connection with all aspects of our sales, advertising, and marketing activities, as well as our subscription-based business.
Further, liability for the improper release or disposal of waste, even if non-hazardous, can be joint and several and significant and there can be no assurance that we will not have to expend material amounts to remediate the consequences of the generation or disposal of waste in the future, particularly with respect to our dry cleaning operations.
Liability for the improper release or disposal of waste can be joint and several and significant and there can be no assurance that we will not have to expend material amounts to remediate the consequences of the generation or disposal of waste in the future, particularly with respect to our dry cleaning operations.
Global sourcing and foreign trade involve numerous factors and uncertainties beyond our control including increased shipping costs, limitations in factory capacity, the imposition of additional import or trade restrictions, including legal or economic restrictions on overseas brand partners’ or manufacturers’ ability to produce and deliver products, increased custom duties and tariffs, unforeseen delays in customs, more restrictive quotas, loss of a most favored nation trading status, currency exchange rates, transportation delays, foreign government regulations, political instability and economic uncertainties in the countries from which we or our brand partners source our products.
Global sourcing and foreign trade involve numerous factors and uncertainties beyond our control including increased shipping costs, limitations in factory capacity, the imposition of additional import or trade restrictions, including legal or economic restrictions on overseas brand partners’ or manufacturers’ ability to produce and deliver products, increased custom duties and tariffs, unforeseen delays in customs, more restrictive quotas, loss of a most favored nation trading status, currency exchange rates, transportation delays, foreign government regulations, political instability and conflict, such as the war between Russia and Ukraine and conflict in the Middle East, and economic uncertainties in the countries from which we or our brand partners source our products.
For example, disruptions in the supply chain as a result of the COVID-19 pandemic and the recent inflationary environment increased raw material costs, impacting pricing of our products, and caused shipping delays for certain of our products. Our business is affected by seasonality. Our business is subject to seasonal fluctuations.
In addition, disruptions in the supply chain as a result of the COVID-19 pandemic and the recent inflationary environment have increased raw material costs, impacted pricing of our products, and caused shipping delays for certain of our products. Our business is affected by seasonality. Our business is subject to seasonal fluctuations.
Regulators and private plaintiffs have brought enforcement and litigation actions against companies, challenging automatic renewal and subscription programs. We strive to comply with all applicable laws; however, despite our efforts, we may not have fully complied in the past and may not in the future.
Regulators and private plaintiffs have brought enforcement and litigation or arbitration actions against companies, challenging automatic renewal, terms of service, and subscription programs. We strive to comply with all applicable laws; however, despite our efforts, we may not have fully complied in the past and may not in the future.
We are required to meet the continued listing requirements of the Nasdaq Capital Market and other Nasdaq rules, including those regarding director independence and independent committee requirements, minimum stockholders’ equity, minimum share price and certain other corporate governance requirements.
We are required to meet the continued listing requirements of the Nasdaq Global Market and other Nasdaq rules, including those regarding director independence and independent committee requirements, minimum share price and certain other corporate governance requirements.
Nevertheless, our efforts may be unsuccessful and we may continue to generate net losses in order to: • acquire rental product, which impacts rental product depreciation and revenue share expenses; • fulfill customer orders and provide customer service; • increase the engagement, enhance retention and improve the experience, of customers; • drive customer acquisition and brand awareness through marketing and promotional initiatives; • invest in technology, including to enhance our website and mobile offerings and functionality; • attract, motivate and retain our employees; • develop new offerings; • generally support a larger customer base; and • invest in our operations, including our logistics fulfillment, capacity and footprint, and other capital expenditures to support the growth in our business. 21 Table of Contents We may discover unanticipated costs or that these initiatives are more expensive than we currently anticipate, and we may not succeed in increasing our revenue sufficiently to offset these expenses or realize the operating efficiencies and profitability we anticipate.
We may also continue to generate net losses in order to: • fulfill customer orders and provide customer service; • increase the engagement, enhance retention and improve the experience, of customers; • drive customer acquisition and brand awareness through marketing and promotional initiatives; • invest in technology, including to enhance our website and mobile offerings and functionality; • attract, motivate and retain our employees; • develop new offerings; • generally support a larger customer base; and • invest in our operations, including our logistics fulfillment, capacity and footprint, and other capital expenditures to support the growth in our business. 20 Table of Contents We may discover unanticipated costs or that these initiatives are more expensive than we currently anticipate, and we may not succeed in increasing our revenue sufficiently to offset these expenses or realize the operating efficiencies and profitability we anticipate.
Our number of customers and the amounts they spend on our offerings may decline materially or fluctuate as a result of many factors, including, among other things: • the quality, consumer appeal, price, and reliability of our offerings; • dissatisfaction with changes we make to our offerings and products; • the perceived value of our offerings, especially in response to price increases and changes in the macroeconomic environment; • our ability to quality control the products delivered to our customers and their fit; • ensuring on-time delivery of orders; • the ease with which customers can find items they are looking for, including the effectiveness of our search and discovery tools and rental product availability; • the performance of our website and mobile app, including site speed and reliability; • a negative customer service experience; • intense competition in the fashion industry; • negative publicity that impacts our brand and reputation; 20 Table of Contents • changes in consumer preferences regarding the use of pre-loved apparel; • lack of market acceptance of our business model; • the unpredictable nature of the continued impact of COVID-19 or a future outbreak of disease or similar public health concern; • the failure (or perceived failure) to meet customer expectations regarding our environmental, social and governance (“ESG”), initiatives; and • changes in efficiency of our historic or current customer acquisition methods.
Our number of customers and the amounts they spend on our offerings may decline materially or fluctuate as a result of many factors, including, among other things: • the quality, consumer appeal, price, and reliability of our offerings; • dissatisfaction with changes we make to our offerings and products; • the perceived value of our offerings, especially in response to price increases and changes in the macroeconomic environment; • our ability to quality control the products delivered to our customers and their fit; • ensuring on-time delivery of orders; • the ease with which customers can find items they are looking for, including the effectiveness of our search and discovery tools, merchandising, and rental product availability; • the performance of our website and mobile app, including reliability; • the level of our investment in marketing and the success of our marketing strategies and tactics, including changes in efficiency of our historic or current customer acquisition methods; • a negative customer service experience; 19 Table of Contents • intense competition in the fashion industry; • negative publicity that impacts our brand and reputation; • changes in consumer preferences regarding the use of pre-loved apparel; • lack of market acceptance of our business model; • a future outbreak of disease or public health concern, such as COVID-19; and • the failure (or perceived failure) to meet different and sometimes conflicting stakeholder expectations regarding our environmental, social and governance (“ESG”), initiatives.
Voluntary or required standards and research regarding environmental, social and governance initiatives could change and become more onerous for both us and our third-party suppliers and vendors to meet successfully.
Voluntary or required standards and research regarding ESG initiatives could change and become more onerous for both us and our third-party suppliers and vendors to meet successfully.
This concentrated control may limit or preclude an investor’s ability to influence corporate matters for the foreseeable future, including the election of directors, amendments of our organizational documents, and any merger, consolidation, sale of all or substantially all of our assets, or other major corporate transaction requiring stockholder approval.
The holders of our Class B common stock have concentrated control may limit or preclude an investor’s ability to influence corporate matters for the foreseeable future, including the election of directors, amendments of our organizational documents, and any merger, consolidation, sale of all or substantially all of our assets, or other major corporate transaction requiring stockholder approval.
The lawsuit seeks, among other things, compensatory damages, attorneys’ fees and costs and such other relief as deemed just and proper by the court. See Note 16, “Commitments and Contingencies” in the Notes to the Consolidated Financial Statements for more details.
The lawsuit seeks, among other things, compensatory damages, attorneys’ fees and costs and such other relief as deemed just and proper by the court. See Note 15, “Commitments and Contingencies” in the Notes to the Consolidated Financial Statements for more details about the class action and other matters.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeTheir team has primary responsibility for our overall cybersecurity risk management program and they supervise our internal cybersecurity personnel and our external cybersecurity consultants. Our management team has deep expertise in e-commerce and consumer retail.
Biggest changeOur SVP, Engineering and our VP, Technology & CISO are the members of our management team who are primarily responsible for assessing and managing our material risks from cybersecurity threats. Their team has primary responsibility for our overall cybersecurity risk management program and they supervise our internal cybersecurity personnel and our external cybersecurity consultants.
Key elements of our cybersecurity risk management program include but are not limited to the following: • risk assessments designed to help identify material cybersecurity risks to our critical systems and information; • a security team principally responsible for managing our cybersecurity risk assessment processes, our security controls, and our response to cybersecurity incidents; • the use of external service providers, where appropriate, to assess, test or otherwise assist with aspects of our security controls; • cybersecurity awareness training of our employees, incident response personnel, and senior management; • a cybersecurity incident response plan that includes procedures for responding to cybersecurity incidents; and • a risk management process for certain third-party service providers, suppliers, and vendors based on, among other things, their criticality to our operations, access to RTR data, cybersecurity risk profile, and business requirements.
Key elements of our cybersecurity risk management program include but are not limited to the following: • risk assessments designed to help identify material cybersecurity risks to our critical systems and information; • a security team principally responsible for managing our cybersecurity risk assessment processes, our security controls, and our response to cybersecurity incidents; • the use of external service providers, where appropriate, to assess, test or otherwise assist with aspects of our security controls; • cybersecurity awareness training of our employees, incident response personnel, and senior management; • a cybersecurity incident response plan that includes procedures for responding to cybersecurity incidents; and 59 Table of Contents • a risk management process for certain third-party service providers, suppliers, and vendors based on, among other things, their criticality to our operations, access to RTR data, cybersecurity risk profile, and business requirements.
Under the supervision of our SVP, Engineering and our VP, IT, Infra & Security, the security team takes steps to stay informed about and monitor efforts to prevent, detect and respond to, as well as recovery efforts with respect to cybersecurity risks and incidents through various means, which may include briefings from internal security personnel; threat intelligence and other information obtained from governmental, public or private sources, including external consultants engaged by us; and alerts and reports produced by security tools deployed in our IT environment.
Under the supervision of our SVP, Engineering and our VP, Technology & CISO, the security team takes steps to stay informed about and monitor efforts to prevent, detect and respond to, as well as recovery and remediation efforts with respect to cybersecurity risks and incidents through various means, which may include briefings from internal security personnel; threat intelligence and other information obtained from governmental, public or private sources, including external consultants engaged by us and participants in our vulnerability disclosure program; and alerts and reports produced by security tools deployed in our IT environment.
In addition, our VP, Technology & CISOs experience includes developing secure products as well as head of security and CISO positions at both public and private companies.
Our management team has deep expertise in e-commerce and consumer retail. In addition, our VP, Technology & CISO’s experience includes developing secure products as well as head of security and CISO positions at both public and private companies.
Cybersecurity Governance Our full Board considers cybersecurity risk as part of its risk oversight function and oversees management’s implementation of our cybersecurity risk management program. The Board receives quarterly reports from management on cybersecurity risks.
Cybersecurity Governance Our full Board considers cybersecurity risk as part of its risk oversight function and oversees management’s implementation of our cybersecurity risk management program. The Board receives quarterly reports from management on cybersecurity risks. In addition, management is responsible for updating the Board, where it deems appropriate, regarding any cybersecurity incidents it considers to be significant.
Removed
In addition, management is responsible for updating the Board, where it deems appropriate, regarding any cybersecurity incidents it considers to be significant. 61 Table of Contents Our SVP, Engineering and our VP, Technology & CISO are the members of our management team who are primarily responsible for assessing and managing our material risks from cybersecurity threats.
Added
The security team, under the leadership of the SVP, Engineering and VP, Technology & CISO, meet periodically to review the status of the cybersecurity program, including, as applicable, the status of regularly monitored cybersecurity benchmarks, responses to external or internal incidence or intelligence, oversight of third-party vendors, and progress against discrete program goals.
Added
Trends in risks, risk mitigations, long-term progress against program goals, and discrete intelligence or incidents discussed in these meetings are then shared in periodic cybersecurity reports to the Board.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeItem 2. Properties Our corporate headquarters is located in Brooklyn, New York, which consists of approximately 47,000 square feet of space under a lease that expires in November 2032. We also lease and operate two fulfillment centers in Secaucus, New Jersey and Arlington, Texas under leases that expire in August 2029 and May 2030, respectively.
Biggest changeItem 2. Properties Our corporate headquarters is located in Brooklyn, New York under a lease that expires in November 2032. This lease consists of approximately 71,000 square feet of space, of which we sublease approximately 47,000 square feet to other parties.
Legal Proceedings The information contained in “Note 16 — Commitments and Contingencies” in the Notes to the Consolidated Financial Statements is incorporated by reference into this Item. Item 4. Mine Safety Disclosures Not applicable. 62 Table of Contents Part II
Legal Proceedings The information contained in “Note 15 — Commitments and Contingencies” in the Notes to the Consolidated Financial Statements is incorporated by reference into this Item. Item 4. Mine Safety Disclosures Not applicable. 61 Table of Contents Part II
We also lease commercial spaces in New York City and Galway, Ireland. We believe our facilities are suitable for our current needs. We intend to expand our facilities or add new facilities as we grow and believe that suitable additional or alternative space will be available as needed to accommodate such growth. Item 3.
We intend to expand our facilities or add new facilities as we grow and believe that suitable additional or alternative space will be available as needed to accommodate such growth. 60 Table of Contents Item 3.
Added
We also lease and operate two fulfillment centers in Secaucus, New Jersey and Arlington, Texas under leases that expire in August 2029 and May 2030, respectively. We also lease commercial spaces in New York City and Galway, Ireland. We believe our facilities are suitable for our current needs.

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Biggest changeItem 4. Mine Safety Disclosures 62 Part II Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 63 Item 6. [Reserved] 64 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations 65 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 86 Item 8.
Biggest changeItem 4. Mine Safety Disclosures 61 Part II Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 62 Item 6. [Reserved] 63 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations 64 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 84 Item 8.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeMarket for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information Our Class A common stock is listed on the Nasdaq Capital Market under the symbol “RENT.” Holders of Record As of April 5, 2024, there were approximately 159 stockholders of record of our Class A common stock and seven stockholders of record of our Class B common stock.
Biggest changeMarket for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information Our Class A common stock is listed on the Nasdaq Global Market under the symbol “RENT.” Holders of Record As of April 11, 2025, there were approximately 129 stockholders of record of our Class A common stock and seven stockholders of record of our Class B common stock.
Issuer Purchases of Equity Securities None. 63 Table of Contents Performance Graph The following performance graph and related information shall not be deemed “soliciting material” or to be “filed” with the SEC, nor shall such information be incorporated by reference into any future filing under the Securities Act or the Exchange Act, whether made before or after the date hereof and irrespective of any general incorporation language in any such filing, or otherwise subject to the liabilities under the Securities Act or Exchange Act, except to the extent that we specifically incorporate it by reference into such filing.
Issuer Purchases of Equity Securities None. 62 Table of Contents Performance Graph The following performance graph and related information shall not be deemed “soliciting material” or to be “filed” with the SEC, nor shall such information be incorporated by reference into any future filing under the Securities Act or the Exchange Act, whether made before or after the date hereof and irrespective of any general incorporation language in any such filing, or otherwise subject to the liabilities under the Securities Act or Exchange Act, except to the extent that we specifically incorporate it by reference into such filing.
The following graph shows a comparison from October 27, 2021 (the date our common stock commenced trading on Nasdaq), through January 31, 2024, of the cumulative total returns for our common stock, the Nasdaq Composite Index and the S&P Retail Select Index.
The following graph shows a comparison from October 27, 2021 (the date our common stock commenced trading on Nasdaq), through January 31, 2025, of the cumulative total returns for our common stock, the Nasdaq Composite Index and the S&P Retail Select Index.
Removed
Recent Sales of Unregistered Securities None. Use of Proceeds from our IPO The offer and sale of the shares in the IPO was registered under the Securities Act pursuant to a registration statement on Form S-1 (File No. 333-260027), which was declared effective by the SEC on October 26, 2021.
Removed
There has been no material change in the expected use of the net proceeds from our IPO, as described in our final prospectus filed with the SEC on October 27, 2021 pursuant to Rule 424(b) under the Securities Act of 1933. As of the date of this filing, all net proceeds have been applied.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeDescription Consolidated Statement of Operations Consolidated Balance Sheets Consolidated Statement of Cash Flows Percent of Items Acquired in FY 2023 / 2022 / 2021 WHOLESALE Items are acquired directly from brands partners, typically at a discount to wholesale price Cost is recognized through straight-line depreciation, with a three-year useful life and 20% salvage value, in the "Rental Product Depreciation and Revenue Share" line ⁽¹⁾ Total cost is capitalized as "Rental Products" in long-term assets Total cost is recognized as a capital expenditure ("Purchases of Rental Product") at time of acquisition 39% / 42% / 45% SHARE BY RTR ⁽²⁾ Items are acquired directly from brand partners on consignment, at zero to low upfront cost, with performance-based revenue share payments to our brand partners over time Upfront and performance-based revenue share payments are expensed as incurred in the "Rental Product Depreciation and Revenue Share" line Items are not capitalized on the balance sheet as we do not own them Upfront revenue share payments flow through Net Income as incurred 33% / 27% / 33% 68 Table of Contents EXCLUSIVE DESIGNS ⁽²⁾⁽³⁾ Items are designed using our data in collaboration with our brand partners We manufacture through third-party partners and pay the brand partner an upfront fee and minimal revenue share payments Upfront and performance-based revenue share payments are expensed as incurred in the "Rental Product Depreciation and Revenue Share" line Manufacturing cost is recognized through straight-line depreciation, with a three-year useful life and 20% salvage value, in the "Rental Product Depreciation and Revenue Share" line ⁽¹⁾ Manufacturing cost is capitalized as "Rental Products" in long-term assets Upfront and revenue share payments flow through Net Income as incurred Manufacturing cost is recognized as a capital expenditure ("Purchases of Rental Product") at time of acquisition 28% / 31% / 22% For additional details, refer to the section titled "Business - Our Unique Brand Partner Approach." ⁽¹⁾ The cost of accessory items, which made up less than 10% of the gross book value of rental product as of January 31, 2024, is recognized through straight-line depreciation with two-year useful life and 30% salvage value. ⁽²⁾ For both Share by RTR and Exclusive Designs, the Company shares a percentage of revenue less a logistics fee with the brand.
Biggest changeDescription Consolidated Statement of Operations Consolidated Balance Sheets Consolidated Statement of Cash Flows Percent of Items Acquired in FY 2024 / 2023 / 2022 WHOLESALE Items are acquired directly from brands partners, typically at a discount to wholesale price Cost is recognized through straight-line depreciation, with a three-year useful life and 20% salvage value, in the "Rental Product Depreciation and Revenue Share" line ⁽¹⁾ Total cost is capitalized as "Rental Products" in long-term assets Total cost is recognized as a capital expenditure ("Purchases of Rental Product") at time of acquisition 30% / 39% / 42% SHARE BY RTR ⁽²⁾ Items are acquired directly from brand partners on consignment, at zero to low upfront cost, with performance-based revenue share payments to our brand partners over time Upfront and performance-based revenue share payments are expensed as incurred in the "Rental Product Depreciation and Revenue Share" line Items are not capitalized on the balance sheet as we do not own them Upfront revenue share payments flow through Net Income as incurred 48% / 33% / 27% 66 Table of Contents EXCLUSIVE DESIGNS ⁽²⁾⁽³⁾ Items are designed in collaboration with our brand partners and available exclusively on our site for a period of time.
The non-cash charges were primarily comprised of $56.1 million of rental product depreciation and write-off expenses, $22.5 million of payment-in-kind interest, $26.2 million of share-based compensation, $11.7 million of debt discount amortization, $15.0 million of other fixed and intangible asset depreciation and $1.1 million consisting of asset impairment charges related to the discontinuation of a software implementation project in connection with the January 2024 restructuring plan, of which $0.1 million is included in accrued expenses related to the asset impairment (see the Supplemental Cash Flow Information in Part II, Item 8.
The non-cash charges were primarily comprised of $56.1 million of rental product depreciation and write-off expenses, $26.2 million of share-based compensation, $22.5 million of payment-in-kind interest, $15.0 million of other fixed and intangible asset depreciation, $11.7 million of debt discount amortization, and $1.1 million consisting of asset impairment charges related to the discontinuation of a software implementation project in connection with the January 2024 restructuring plan, of which $0.1 million is included in accrued expenses related to the asset impairment (see the Supplemental Cash Flow Information in Part II, Item 8.
We have successfully disproved the myth that fashion apparel items and accessories only last one season as we are able to rent or “turn” our products multiple times over many years. We price our items at a fraction of their retail or comparable value, creating an attractive price and value proposition for our subscribers and customers.
We have successfully disproved the myth that fashion apparel items and accessories only last one season as we are able to rent or “turn” our products multiple times over many years. We price our rental items at a fraction of their retail or comparable value, creating an attractive price and value proposition for our subscribers and customers.
Although we continue to face a challenging environment, we plan to invest in our customers, manage our staffing and further leverage our transportation partners to help to drive growth and efficiencies in our business.
Although we continue to face a challenging and unpredictable environment, we plan to invest in our customers, manage our staffing and further leverage our transportation partners to help to drive growth and efficiencies in our business.
We believe that we have a significant market opportunity to increase our base of subscribers and customers, and that our long-term growth depends in large part on our continued ability to acquire and retain subscribers and customers. 69 Table of Contents We provide a flexible offering that allows our subscribers to customize their subscription as their everyday life changes, choosing to pause and reactivate their membership as needed.
We believe that we have a significant market opportunity to increase our base of subscribers and customers, and that our long-term growth depends in large part on our continued ability to acquire and retain subscribers and customers. 67 Table of Contents We provide a flexible offering that allows our subscribers to customize their subscription as their everyday life changes, choosing to pause and reactivate their membership as needed.
Discussion of fiscal year 2021 financial condition and results of operations and year-to-year comparisons between fiscal years 2022 and 2021 are included in Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the fiscal year ended January 31, 2023.
Discussion of fiscal year 2022 financial condition and results of operations and year-to-year comparisons between fiscal years 2023 and 2022 are included in Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the fiscal year ended January 31, 2024.
The investment in rental product does not include an additional $3.3 million of cost for units received in the current period but not yet paid for, but does include $(5.4) million of cost for units paid for in the current period but received in the prior period (see the Supplemental Cash Flow Information in Part II, Item 8.
The investment in rental product did not include an additional $3.3 million of cost for units received in the current period but not yet paid for, but did include $(5.4) million of cost for units paid for in the current period but received in the prior period (see Supplemental Cash Flow Information in Part II, Item 8.
To the extent we are successful in becoming more efficient in fulfilling orders, and at a magnitude that is able to offset long-term increases in shipping costs, wage rates and cleaning/packing supply price increases, we would expect these expenses to decrease as a percentage of total revenue over the longer term. Technology.
To the extent we are successful in becoming more efficient in fulfilling orders, and at a magnitude that is able to offset long-term increases in shipping costs, wage rates and cleaning/packing supply price increases, we would expect these expenses to decrease as a percentage of total revenue over the longer term. 73 Table of Contents Technology.
The fair value of our common stock was determined by considering a number of objective and subjective factors, including: the valuation of comparable companies, sales of preferred stock to unrelated third parties, our operating and financial performance, the lack of liquidity of common stock and general and industry specific economic outlook, among other factors. 84 Table of Contents • Expected volatility.
The fair value of our common stock was determined by considering a number of objective and subjective factors, including: the valuation of comparable companies, sales of preferred stock to unrelated third parties, our operating and financial performance, the lack of liquidity of common stock and general and industry specific economic outlook, among other factors. • Expected volatility.
Other income / (expense) consists primarily of proceeds from previous insurance claims, proceeds from monetizing tax credits associated with growth and Irish refundable tax credits. Income Tax Benefit / (Expense). Income taxes consist primarily of state minimum and foreign taxes. We have established a valuation allowance for our U.S. federal and state deferred tax assets, including net operating losses.
Other Income / (Expense). Other income / (expense) consists primarily of proceeds from monetizing tax credits associated with growth and Irish refundable tax credits. Income Tax Benefit / (Expense). Income taxes consist primarily of state minimum and foreign taxes. We have established a valuation allowance for our U.S. federal and state deferred tax assets, including net operating losses.
We defer recognizing the rental fees and any related promotions for Reserve rentals until the date of delivery, and then recognize those fees evenly over the four- or eight-day rental period. 74 Table of Contents Other Revenue. We generate Other revenue primarily from the sale of products while they are in rental condition.
We defer recognizing the rental fees and any related promotions for Reserve rentals until the date of delivery, and then recognize those fees evenly over the four- or eight-day rental period. Other Revenue. We generate Other revenue primarily from the sale of products while they are in rental condition.
GAAP financial measure, net loss, and why we consider Adjusted EBITDA to be a useful metric, see “—Non-GAAP Financial Metrics” below. Active Subscribers : Active Subscribers represents the number of subscribers with an active membership as of the last day of any given period and exclu des paused subscribers.
GAAP financial measure, net loss, and why we consider Adjusted EBITDA to be a useful metric, see “—Non-GAAP Financial Metrics” below. Active Subscribers : Active Subscribers represents the number of subscribers with an active membership as of the last day of any given period and excludes paused subscribers.
Both our purchasing power and the diversification into Share by RTR and Exclusive Designs have led to a decrease in rental product capital expenditures (or Purchases of Rental Product as presented in the Consolidated Statement of Cash Flows) as a percentage of revenue over time.
Both our purchasing power and the diversification into Share by RTR and Exclusive Designs have led to a decrease in rental product capital expenditures (or Purchases of Rental Product as presented in the Consolidated Statement of Cash Flows) as a percentage of revenue over ti me.
In the third and fourth fiscal quarters, our Reserve business historically (prior to COVID-19) benefited from increased wedding and holiday events but this seasonality has varied since the onset of COVID-19. In fiscal year 2022, we believe that a price increase of our Subscription programs in April 2022 affected traditional seasonal patterns.
In the third and fourth fiscal quarters, our Reserve offering historically (prior to COVID-19) benefited from increased wedding and holiday events but this seasonality has varied since the onset of COVID-19. For example, in fiscal year 2022, we believe that a price increase of our Subscription programs in April 2022 affected traditional seasonal patterns.
Diversifying our product acquisition away from 100% Wholesale has driven higher overall product return on investment and reduced the capital needs of the business. In fiscal year 2023, approximately 61% of new items were acquired through our more capital efficient non-Wholesale channels, compared to 58% in fiscal year 2022 and 55% in fiscal year 2021.
Diversifying our product acquisition away from 100% Wholesale has driven higher overall product return on investment and reduced the capital needs of the business. In fiscal year 2024, approximately 70% of new items were acquired through our more capital efficient non-Wholesale channels, compared to 61% in fiscal year 2023 and 58% in fiscal year 2022.
The amount and proportion of rental product depreciation and revenue share will vary from period to period based on how and when we acquire items as well as the mix of our rental product base. 75 Table of Contents Other Depreciation and Amortization.
The amount and proportion of rental product depreciation and revenue share will vary from period to period based on how and when we acquire items as well as the mix of our rental product base. Other Depreciation and Amortization.
The restructuring plan was substantially completed by the end of the fourth quarter of fiscal year 2023 and is expected to be fully completed by the end of the second quarter of fiscal year 2024. See Note 4, “Restructuring and Related Charges” in the Notes to the Consolidated Financial Statements for more details on these charges.
The restructuring plan was substantially completed by the end of the second quarter of fiscal year 2024 and is expected to be fully completed by the end of the first quarter of fiscal year 2025. See Note 4, “Restructuring and Related Charges” in the Notes to the Consolidated Financial Statements for more details on these charges.
The following discussion focuses on fiscal years 2023 and 2022 financial condition and results of operations and year-to-year comparisons between fiscal years 2023 and 2022.
The following discussion focuses on fiscal years 2024 and 2023 financial condition and results of operations and year-to-year comparisons between fiscal years 2024 and 2023.
The 2022 Amended Temasek Facility extended the maturity date from October 2024 to October 2026, reduced cash interest payments by over $20 million in cash in the next two fiscal years while the total interest rate remains unchanged during this period, with subsequent increases thereafter.
The 2022 Amended Temasek Facility extended the maturity date from October 2024 to October 2026, reduced cash interest payments by over $20 million for the two succeeding fiscal years while the total interest rate remains unchanged during this period, with subsequent increases thereafter.
We plan to further increase the percentage of units acquired through Exclusive Designs and Share by RTR in fiscal year 2024. We continuously evaluate our product acquisition mix to maximize our strategic priorities. Purchases of rental product includes the cost of wholesale products acquired in the period and other ancillary costs such as freight, where applicable.
We plan to further increase the percentage of units acquired through Exclusive Designs and Share by RTR on a combined basis in fiscal year 2025. We continuously evaluate our product acquisition mix to maximize our strategic priorities. Purchases of rental product includes the cost of wholesale products acquired in the period and other ancillary costs such as freight, where applicable.
See Note 8 — Long-Term Debt in the Notes to the Consolidated Financial Statements for more information. As of January 31, 2024 , we had approximately $306.7 million of total debt outstanding, none of which matures within the next 12 months. See “Note 8 — Long-Term Debt” in the Notes to the Consolidated Financial Statements for more information.
As of January 31, 2025 , we had approximately $333.7 million of total debt outstanding, none of which matures within the next 12 months. See “Note 8 — Long-Term Debt” in the Notes to the Consolidated Financial Statements for more information.
For additional information, see the section of Part I, Item 1A, “Risk Factors — Risks Relating To Our Business and Industry — Our business is affected by seasonality.” Impact of Macro and Consumer Environment on Our Business There remains significant uncertainty in the current macroeconomic and consumer environment, driven by several factors, including inflationary pressures, higher interest rates, potential risk of recession, ongoing industry-wide supply chain issues, instability in the financial system, the wars in Ukraine and the Middle East and COVID-19.
For additional information, see the section of Part I, Item 1A, “Risk Factors — Risks Relating To Our Business and Industry — Our business is affected by seasonality.” 70 Table of Contents Impact of Macro and Consumer Environment on Our Business There remains significant uncertainty in the current macroeconomic and consumer environment, driven by several factors, including inflationary pressures, global trade policies and tariffs, higher interest rates, potential risk of recession, ongoing industry-wide supply chain issues, instability in the financial system, and the wars in Ukraine and the Middle East.
Interest income / (expense) consists primarily of accrued paid-in-kind interest, cash interest and debt issuance cost amortization associated with our 2023 Amended Temasek Facility going forward. The 2023 Amended Temasek Facility eliminates all interest (both payment-in-kind and cash interest) for a period of six full fiscal quarters beginning with the fourth quarter of fiscal year 2023.
Interest income / (expense) consists primarily of accrued paid-in-kind interest, cash interest and debt issuance cost amortization associated with our 2025 Amended Facility going forward. 74 Table of Contents The 2023 Amended Temasek Facility eliminated all interest (both payment-in-kind and cash interest) for a period of six full fiscal quarters beginning with the fourth quarter of fiscal year 2023.
(5) Non-recurring adjustments for the year ended January 31, 2024 includes $1.7 million of costs primarily related to debt refinancing and related fees and the option exchange and for the year ended January 31, 2023 includes $1.3 million of costs related to public company SOX readiness.
(5) Non-recurring adjustments for the year ended January 31, 2025 includes $0.1 million of costs related to one-time professional fees, for the year ended January 31, 2024 includes $1.7 million of costs primarily related to debt refinancing and related fees and the option exchange, and for the year ended January 31, 2023 includes $1.3 million of costs related to public company SOX readiness.
We acquire customers efficiently as evidenced by over 80% of our lifetime customers having joined organically. As seen in the table below, our LTV to CAC ratio has remained relatively consistent for our fiscal year 2018 through fiscal year 2023 customer cohorts, with the exception of our fiscal year 2020 cohort which was impacted by the COVID-19 pandemic.
We acquire customers efficiently as evidenced by over a majority of our lifetime customers having joined organically. 68 Table of Contents As seen in the table below, our LTV to CAC ratio has remained relatively consistent for our fiscal year 2018 through fiscal year 2024 customer cohorts, with the exception of our fiscal year 2020 cohort which was impacted by the COVID-19 pandemic.
In fiscal year 2023, changes in rental product in-stock levels and changes to promotional prices also disrupted typical seasonality. Given continued business changes, our future seasonality may not resemble historical trends. We also experience seasonality in the timing of expenses and capital outlays.
In fiscal year 2023, changes in rental product in-stock levels and changes to promotional prices also disrupted typical seasonality. However, in fiscal year 2024, we observed more typical seasonal patterns. Given continued business changes, our future seasonality may not resemble historical trends. We also experience seasonality in the timing of expenses and capital outlays.
Cash Flows The following table summarizes our cash flows for the periods presented: Years Ended January 31, 2024 2023 2022 (in millions) Net cash (used in) provided by operating activities $ (15.7) $ (47.7) $ (42.3) Net cash (used in) provided by investing activities (54.6) (44.3) (22.5) Net cash provided by (used in) financing activities 0.7 (4.0) 215.2 Net (decrease) increase in cash and cash equivalents and restricted cash (69.6) (96.0) 150.4 Cash and cash equivalents and restricted cash at beginning of period 163.6 259.6 109.2 Cash and cash equivalents and restricted cash at end of period $ 94.0 $ 163.6 $ 259.6 We also measure the cash consumption of the business including capital expenditures, by assessing net cash used in operating activities and net cash used in investing activities on a combined basis, which was $(70.3) million for the year ended January 31, 2024 and $(92.0) million for the year ended January 31, 2023 .
Cash Flows The following table summarizes our cash flows for the periods presented: Years Ended January 31, 2025 2024 2023 (in millions) Net cash (used in) provided by operating activities $ 12.9 $ (15.7) $ (47.7) Net cash (used in) provided by investing activities (20.1) (54.6) (44.3) Net cash provided by (used in) financing activities (0.3) 0.7 (4.0) Net (decrease) increase in cash and cash equivalents and restricted cash (7.5) (69.6) (96.0) Cash and cash equivalents and restricted cash at beginning of period 94.0 163.6 259.6 Cash and cash equivalents and restricted cash at end of period $ 86.5 $ 94.0 $ 163.6 We also measure the cash consumption of the business including capital expenditures, by assessing net cash used in operating activities and net cash used in investing activities on a combined basis, which was $(7.2) million for the year ended January 31, 2025 and $(70.3) million for the year ended January 31, 2024 .
Our total indebtedness as of January 31, 2024 was $306.7 million. For a description of the terms o f our current and prior credit agreements, see “Note 8 – Long-Term Debt” in the Notes to the Consolidated Financial Statements.
Our total indebtedness as of January 31, 2025 was $333.7 million. For a description of the terms of our current and prior credit agreements, see “Note 8 – Long-Term Debt” in the Notes to the Consolidated Financial Statements.
In total, approximately 61% of new items were acquired through the more capital-efficient channels in fiscal year 2023, approximately 58% in fiscal year 2022 and approximately 55% in fiscal year 2021.
In total, approximately 70% of new items were acquired through the more capital-efficient channels in fiscal year 2024, approximately 61% in fiscal year 2023 and approximately 58% in fiscal year 2022.
We had 125,954 active subscribers as of January 31, 2024. The majority of our revenue is highly recurring and is generated by our subscribers. For the years ended January 31, 2024 and 2023, respectively, 88% and 86% of our total revenue (including Reserve and Resale revenue) was generated by subscribers while they were active or paused.
We had 119,778 active subscribers as of January 31, 2025. The majority of our revenue is highly recurring and is generated by our subscribers. For the years ended January 31, 2025 and 2024, respectively, 88% and 88% of our total revenue (including Reserve and Resale revenue) was generated by subscribers while they were active or paused.
Rental product depreciation and revenue share was 31.0% of revenue in the year ended January 31, 2024, up from 28.4% in the same period last year primarily due to the factors discussed above . Other Depreciation and Amortization.
Rental product depreciation and revenue share was 35.1% of revenue in the year ended January 31, 2025, up from 31.0% in the same period last year primarily due to the factors discussed above . Other Depreciation and Amortization.
These offerings allow us to engage and serve our subscribers and customers across diverse use cases from everyday life to special occasions. We have served approximately 3 million lifetime customers across all of our offerings and we had 173,247 ending total subscribers 5 (active and paused) as of January 31, 2024.
These offerings allow us to engage and serve our subscribers and customers across diverse use cases from everyday life to special occasions. We have served approximately 3 million lifetime customers across all of our offerings and we had 164,004 ending total subscribers 2 (active and paused) as of January 31, 2025.
Contractual Obligations and Commitments In December 2023, we entered into the 2023 Amended Temasek Facility, which eliminated all interest (both payment-in-kind and cash interest) for a period of six full fiscal quarters beginning with the fourth quarter of fiscal year 2023, reduced the minimum liquidity maintenance covenant from $50 million to $30 million, and provided that we may not exceed mutually agreed upon quarterly and annual spend levels for rental product capital expenditures, fixed operating expenses and marketing expenditures during fiscal year 2024 and to-be-agreed levels for fiscal years 2025 and 2026.
During the year ended January 31, 2024, net cash used in financing activities was $0.7 million, consisting of other financing payments. 81 Table of Contents Contractual Obligations and Commitments In December 2023, we entered into the 2023 Amended Temasek Facility, which eliminated all interest (both payment-in-kind and cash interest) for a period of six full fiscal quarters beginning with the fourth quarter of fiscal year 2023, reduced the minimum liquidity maintenance covenant from $50 million to $30 million, and provided that we may not exceed mutually agreed upon quarterly and annual spend levels for rental product capital expenditures, fixed operating expenses and marketing expenditures during fiscal year 2024 and to-be-agreed levels for fiscal years 2025 and 2026.
The timing of our marketing expenses during the year will depend in part on the timing of marketing campaigns. General and Administrative. General and administrative (“G&A”) expenses were $101.6 million for the year ended January 31, 2024, a decrease of $(7.4) million, or (6.8)%, compared to $109.0 million for the year ended January 31, 2023.
The timing of our marketing expenses during the year will depend in part on the timing of marketing campaigns. General and Administrative. General and administrative (“G&A”) expenses were $86.8 million for the year ended January 31, 2025, a decrease of $(14.8) million, or (14.6)%, compared to $101.6 million for the year ended January 31, 2024.
The following table presents a reconciliation of net loss, the most comparable GAAP financial measure, to Adjusted EBITDA for the periods presented: Years Ended January 31, 2024 2023 2022 (in millions) Net loss $ (113.2) $ (138.7) $ (211.8) Interest (income) / expense, net (1) 33.7 36.8 53.0 Rental product depreciation 57.1 52.9 50.3 Other depreciation and amortization (2) 14.7 16.4 19.4 Share-based compensation (3) 26.2 25.4 26.6 Write-off of liquidated assets (4) 3.4 5.8 4.8 Non-recurring adjustments (5) 1.7 1.3 5.3 Non-ordinary course legal fees (6) 0.3 0.1 — Restructuring charges (7) 2.0 2.4 — Loss on asset impairment related to restructuring (8) 1.1 5.3 — Income tax (benefit) / expense 0.2 (0.2) (0.3) (Gain) / loss on warrant liability revaluation, net (9) — — 24.9 (Gain) / loss on debt extinguishment, net (10) — — 12.2 Other (income) / expense, net (11) (0.7) (1.5) (3.9) Other (gains) / losses (12) 0.4 0.7 0.3 Adjusted EBITDA $ 26.9 $ 6.7 $ (19.2) Adjusted EBITDA Margin (13) 9.0 % 2.3 % (9.4) % __________ (1) Includes debt discount amortization of $11.7 million in the year ended January 31, 2024, $4.3 million in the year ended January 31, 2023, and $5.9 million in the year ended January 31, 2022.
The following table presents a reconciliation of net loss, the most comparable GAAP financial measure, to Adjusted EBITDA for the periods presented: Years Ended January 31, 2025 2024 2023 (in millions) Net loss $ (69.9) $ (113.2) $ (138.7) Interest (income) / expense, net (1) 24.2 33.7 36.8 Rental product depreciation 64.6 57.1 52.9 Other depreciation and amortization (2) 12.5 14.7 16.4 Share-based compensation (3) 9.7 26.2 25.4 Write-off of liquidated assets (4) 6.6 3.4 5.8 Non-recurring adjustments (5) 0.1 1.7 1.3 Non-ordinary course legal fees (6) 0.3 0.3 0.1 Restructuring charges (7) 0.2 2.0 2.4 Loss on asset impairment related to restructuring (8) — 1.1 5.3 Income tax (benefit) / expense 0.3 0.2 (0.2) Other (income) / expense, net (9) (2.1) (0.7) (1.5) Other (gains) / losses (10) 0.4 0.4 0.7 Adjusted EBITDA $ 46.9 $ 26.9 $ 6.7 Net Loss as a percentage of revenue (22.8) % (38.0) % (46.8) % Adjusted EBITDA Margin (11) 15.3 % 9.0 % 2.3 % __________ (1) Includes debt discount amortization of $27.0 million in the year ended January 31, 2025, $11.7 million in the year ended January 31, 2024, and $4.3 million in the year ended January 31, 2023.
“Financial Statements and Supplementary Data”). Net cash (used in) provided by investing activities . For the year ended January 31, 2024, net cash used in investing activi ties was $(54.6) million, primarily consisting of $(77.9) million of purchases of rental product incurred in the period and $(4.6) million of purchases of fixed and intangible assets.
For the year ended January 31, 2024, net cash used in investing activities was $(54.6) million, primarily consisting of $(77.9) million of purchases of rental product incurred in the period and $(4.6) million of purchases of fixed and intangible assets .
Though we anticipate quarterly fluctuations in operating leverage, with these reductions and continuous improvements to our cost structure, we expect our fixed costs to decrease as a percentage of total revenue in fiscal year 2024, and over time we anticipate that our operating costs will grow more slowly than our total revenue on an annual basis.
Though we anticipate quarterly fluctuations in operating leverage, we expect our fixed costs to decrease as a percentage of total revenue in fiscal year 2025, and over time we anticipate that our operating costs will grow more slowly than our total revenue on an annual basis.
(7) Reflects restructuring charges primarily related to severance and related costs in connection with the January 2024 and September 2022 restructuring plans. 80 Table of Contents (8) Reflects the asset impairment charges related to the discontinuation of a software implementation project in connection with the January 2024 restructuring plan in the year ended January 31, 2024 and the discontinuation of warehouse operations projects in connection with the September 2022 restructuring plan in the year ended January 31, 2023.
(8) Reflects the asset impairment charges related to the discontinuation of a software implementation project in connection with the January 2024 restructuring plan in the year ended January 31, 2024 and the discontinuation of warehouse operations projects in connection with the September 2022 restructuring plan in the year ended January 31, 2023.
The sale of additional equity would result in additional dilution to our stockholders. The incurrence of debt financing would result in debt service obligations and the instruments governing such debt could provide for operating and financing covenants that would restrict our operations.
The incurrence of debt financing would result in debt service obligations and the instruments governing such debt could provide for operating and financing covenants that would restrict our operations.
The cash used in investing activities was partially offset by $23.3 million of proceeds from the sale of owned rental product and $4.6 million of proceeds from the liquidation of rental product.
The cash used in investing activities was partially offset by $23.3 million of proceeds from sales of owned rental products and $4.6 million of proceeds from the liquidation of rental product. Net cash provided by (used in) financing activities .
We believe that Active Subscriber levels have been impacted by seasonal changes in consumer behavior and macro factors, such as higher levels of remote work and evolving demand for work wear, inflationary pressures and sensitivity to increased pricing, or other factors, and may continue to be impacted by these factors in the future. 72 Table of Contents We continue to take actions to adjust to the changing business environment and related inflationary pressure.
We believe that Active Subscriber levels have been impacted by seasonal changes in consumer behavior and macro factors, such as higher levels of remote work and evolving demand for work wear, inflationary pressures and sensitivity to increased pricing, or other factors, and may continue to be impacted by these factors in the future.
The investment in rental product did not include the additional $5.4 million of cost for units received in the current period but not yet paid for, but did include $(6.5) million of cost for units paid for in the current period but received in the prior period (see Supplemental Cash Flow Information in Part II, Item 8.
The investment in rental product does not include an additional $2.7 million of cost for units received in the current period but not yet paid for, but does include $(1.4) million of cost for units paid for in the current period but received in the prior period (see the Supplemental Cash Flow Information in Part II, Item 8.
General and administrative expenses also includes occupancy costs (including warehouse-related), professional services, credit card fees, general corporate and warehouse expenses, other administrative costs, and gains and losses associated with asset disposals and operating lease terminations We expect to incur lower fixed cost G&A expense dollars and as a percentage of total revenue in the short term as a result of our restructuring plan.
General and administrative expenses also includes occupancy costs (including warehouse-related), professional services, credit card fees, general corporate and warehouse expenses, other administrative costs, and gains and losses associated with asset disposals and operating lease terminations. We expect to incur lower fixed cost G&A as a percentage of revenue in the short term due to higher expected revenue driving operating leverage.
Upon grant of awards, we also estimate an amount of forfeitures that will occur prior to vesting. We estimate forfeitures based on the dynamic forfeiture model based on our historical forfeitures of stock options adjusted to reflect future changes in facts and circumstances, if any. There were no stock options granted during the years January 31, 2024 and 2023.
Upon grant of awards, we also estimate an amount of forfeitures that will occur prior to vesting. We estimate forfeitures based on the dynamic forfeiture model based on our historical forfeitures of stock options adjusted to reflect future changes in facts and circumstances, if any.
For example, in light of potential pricing sensitivity in the current macro-economic environment, we are focused on investing in our customer and delivering even more value to her, and emphasizing the value proposition of our offering in our marketing materials.
We continue to take actions to adjust to the changing business environment and related inflationary pressure. For example, in light of potential pricing sensitivity in the current macro-economic environment, we are focused on investing in our customer and delivering even more value to her, and emphasizing the value proposition of our offering in our marketing materials.
Years Ended January 31, 2024 2023 2022 Active Subscribers 125,954 126,712 115,240 Average Active Subscribers 135,211 128,586 93,371 Gross Profit $ 119.7 $ 120.0 $ 69.7 Adjusted EBITDA (1) $ 26.9 $ 6.7 $ (19.2) __________ (1) Adjusted EBITDA is a non-GAAP financial measure; for a reconciliation to the most directly comparable U.S.
Years Ended January 31, 2025 2024 2023 Active Subscribers 119,778 125,954 126,712 Average Active Subscribers 132,574 135,211 128,586 Gross Profit $ 115.9 $ 119.7 $ 120.0 Net Loss $ (69.9) $ (113.2) $ (138.7) Adjusted EBITDA (1) $ 46.9 $ 26.9 $ 6.7 __________ (1) Adjusted EBITDA is a non-GAAP financial measure; for a reconciliation to the most directly comparable U.S.
The sum of net cash used in operating activities and net cash used in investing activities, as a percentage of revenue, was (23.6)% for the year ended January 31, 2024 and (31.0)% for the year ended January 31, 2023 . Net cash (used in) provided by operating activities .
The sum of net cash used in operating activities and net cash used in investing activities, as a percentage of revenue, was (2.4)% for the year ended January 31, 2025 and (23.6)% for the year ended January 31, 2024 . 80 Table of Contents Net cash (used in) provided by operating activities .
Fulfillment expenses were $86.0 million for the year ended January 31, 2024, a decrease of $(6.2) million, or (6.7)%, representing 28.8% of revenue, compared to $92.2 million for the year ended January 31, 2023, representing 31.1% of revenue.
Fulfillment expenses were $82.8 million for the year ended January 31, 2025, a decrease of $(3.2) million, or (3.7)%, representing 27.0% of revenue, compared to $86.0 million for the year ended January 31, 2024, representing 28.8% of revenue.
In late 2018, we began to procure products through Share by RTR and Exclusive Designs. See “—Our Product Acquisition Strategy” below for a description of the three ways in which we procure products.
In late 2018, we began to procure products through Share by RTR and Exclusive Designs. See “—Our Product Acquisition Strategy” below for a description of the three ways in which we procure products. Recent Business Highlights: • Returned to our customer-obsessed roots. Refocused our team on the customer.
The following tables set forth our results of operations for the periods presented: Years Ended January 31, 2024 2023 2022 (in millions) Revenue: Subscription and Reserve rental revenue $ 264.9 $ 268.6 $ 185.8 Other revenue 33.3 27.8 17.5 Total revenue, net 298.2 296.4 203.3 Costs and expenses: Fulfillment 86.0 92.2 61.9 Technology 49.1 55.4 45.3 Marketing 31.2 35.1 26.5 General and administrative 101.6 109.0 104.4 Rental product depreciation and revenue share 92.5 84.2 71.7 Other depreciation and amortization 14.7 16.4 19.4 Restructuring charges 2.0 2.4 — Loss on asset impairment related to restructuring 1.1 5.3 — Total costs and expenses 378.2 400.0 329.2 Operating loss (80.0) (103.6) (125.9) Interest income / (expense), net (33.7) (36.8) (53.0) Gain / (loss) on warrant liability revaluation, net — — (24.9) Gain / (loss) on debt extinguishment, net — — (12.2) Other income / (expense), net 0.7 1.5 3.9 Net loss before income tax benefit / (expense) (113.0) (138.9) (212.1) Income tax benefit / (expense) (0.2) 0.2 0.3 Net loss $ (113.2) $ (138.7) $ (211.8) Comparison of the years ended January 31, 2024 and 2023 Total Revenue, Net.
The following tables set forth our results of operations for the periods presented: Years Ended January 31, 2025 2024 2023 (in millions) Revenue: Subscription and Reserve rental revenue $ 265.5 $ 264.9 $ 268.6 Other revenue 40.7 33.3 27.8 Total revenue, net 306.2 298.2 296.4 Costs and expenses: Fulfillment 82.8 86.0 92.2 Technology 35.7 49.1 55.4 Marketing 28.2 31.2 35.1 General and administrative 86.8 101.6 109.0 Rental product depreciation and revenue share 107.5 92.5 84.2 Other depreciation and amortization 12.5 14.7 16.4 Restructuring charges 0.2 2.0 2.4 Loss on asset impairment related to restructuring — 1.1 5.3 Total costs and expenses 353.7 378.2 400.0 Operating loss (47.5) (80.0) (103.6) Interest income / (expense), net (24.2) (33.7) (36.8) Other income / (expense), net 2.1 0.7 1.5 Net loss before income tax benefit / (expense) (69.6) (113.0) (138.9) Income tax benefit / (expense) (0.3) (0.2) 0.2 Net loss $ (69.9) $ (113.2) $ (138.7) Comparison of the years ended January 31, 2025 and 2024 Total Revenue, Net.
Gross Profit was $119.7 million for the year ended January 31, 2024 compared to $120.0 million for the year ended January 31, 2023 representing Gross Margins of 40.1% and 40.5%, respectively.
Gross Profit was $115.9 million for the year ended January 31, 2025 compared to $119.7 million for the year ended January 31, 2024 representing Gross Margins of 37.9% and 40.1%, respectively.
Rental product depreciation and revenue share was $92.5 million for the year ended January 31, 2024, an increase of $8.3 million, or 9.9%, compared to $84.2 million for the year ended January 31, 2023. The increase was primarily driven by higher Share by RTR units acquired, higher purchases of rental product and an increase in other revenue.
Rental product depreciation and revenue share was $107.5 million for the year ended January 31, 2025, an increase of $15.0 million, or 16.2%, compared to $92.5 million for the year ended January 31, 2024. The increase was primarily driven by higher Share by RTR units acquired, higher base of rental product and an increase in other revenue.
We believe our existing cash and cash equivalents, and cash generated from our operations, will be sufficient to sustain our business operations and satisfy the $30 million minimum liquidity maintenance covenant for at least the next twelve months .
We believe our existing cash and cash equivalents, and cash generated from our operations, will be sufficient to sustain our business operations, including interest payments that are scheduled to resume effective May 1, 2025, and satisfy the $30 million minimum liquidity maintenance covenant for at least the next twelve months.
We use Adjusted EBITDA to assess our operating performance and the operating leverage of our business prior to capital expenditures. We also measure the cash consumption of the business including capital expenditures by assessing net cash used in operating activities and net cash used in investing activities on a combined basis.
We also measure the cash consumption of the business including capital expenditures by assessing net cash used in operating activities and net cash used in investing activities on a combined basis.
Of the $(33.7) million total interest expense in the year ended January 31, 2024, $(22.5) million was the accrual of PIK interest, $(11.7) million was debt discount amortization, and $0.5 million was the net of cash interest, interest earned and financing lease and other interest, compared to $(14.3) million of PIK interest, $(18.2) million net of cash interest, financing lease and other interest and $(4.3) million of debt discount amortization in the year ended January 31, 2023.
Of the $(24.2) million total interest expense in the year ended January 31, 2025, $(27.0) million was debt discount amortization and $2.8 million was the net of interest earned, financing lease and other interest, compared to $(22.5) million of PIK interest, $0.5 million net of cash interest paid, cash interest earned, financing lease and other interest and $(11.7) million of debt discount amortization in the year ended January 31, 2024.
(11) Primarily includes $1.4 million of monetized tax credits for the year ended January 31, 2023. (12) Includes gains / losses recognized in relation to foreign exchange, operating lease terminations and the related surrender of fixed assets (see “Note 5 - Leases – Lessee Accounting” in the Notes to the Consolidated Financial Statements).
(9) Primarily includes the monetization of tax credits and government grants for the years ended January 31, 2025 and January 31, 2023. (10) Includes gains / losses recognized in relation to foreign exchange, operating lease terminations and the related surrender of fixed assets (see “Note 5 - Leases – Lessee Accounting” in the Notes to the Consolidated Financial Statements).
In addition, we increased wage rates during fiscal years 2022 and 2023 to attract and retain talent at our fulfillment centers and we expect to continue to be impacted by rising labor costs in the future.
In addition, we increased wage rates during the first quarter of fiscal year 2024, and expect to raise wages in the first quarter of fiscal year 2025, to attract and retain talent at our fulfillment centers. We expect to continue to be impacted by rising labor costs in the future.
We recorded asset impairment charges of $1.1 million during the year ended January 31, 2024 related to the discontinuation of a software implementation project in connection with the January 2024 restructuring plan. The charge is reflected in Loss on asset impairment related to restructuring on our Consolidated Statements of Operations. We may incur additional restructuring charges in the future.
The loss on asset impairment during the year ended January 31, 2024 related to the discontinuation of a software implementation project in connection with the January 2024 restructuring plan. The charge is reflected in Loss on asset impairment related to restructuring on our Consolidated Statements of Operations. Interest Income / (Expense), Net.
During the year ended January 31, 2024, net cash provided by financing activities was $0.7 million, consisting of other financing payments. During the year ended January 31, 2023, net cash used in financing activities was $(4.0) million, consisting of other financing payments.
During the year ended January 31, 2025, net cash provided by financing activities was $(0.3) million, consisting of other financing payments.
There are limitations to the use of the non-GAAP financial metrics presented in this Annual Report. For example, our non-GAAP financial metrics may not be comparable to similarly titled measures of other companies.
There are limitations to the use of the non-GAAP financial metrics presented in this Annual Report. For example, our non-GAAP financial metrics may not be comparable to similarly titled measures of other companies. Other companies, including companies in our industry, may calculate non-GAAP financial metrics differently than we do, limiting the usefulness of those measures for comparative purposes.
Marketing expenses unrelated to personnel costs were $28.5 million in the year ended January 31, 2024 and 9.5% of revenue, compared to $30.7 million and 10.3% of total revenue for the same period last year. In fiscal year 2024, we expect marketing expenses to remain roughly flat in dollars compared to fiscal year 2023.
Marketing expenses unrelated to personnel costs were $25.4 million in the y ear ended January 31, 2025 and 8.3% of revenue, compared to $28.5 million and 9.5% of total revenue for the same period last year. In fiscal year 2025, we expect marketing expenses to decrease in dollars compared to fiscal year 2024.
Impairment Evaluation Long-lived assets, such as rental product, fixed assets, intangible assets, and right-of-use lease assets, are reviewed for impairment triggers when events or changes in circumstances indicate the carrying value of such assets may not be recoverable.
There were no stock options granted during the years January 31, 2025 and 2024. 83 Table of Contents Impairment Evaluation Long-lived assets, such as rental product, fixed assets, intangible assets, and right-of-use lease assets, are reviewed for impairment triggers when events or changes in circumstances indicate the carrying value of such assets may not be recoverable.
We have achieved the following operating and financial results for the years ended January 31, 2024 and 2023 , respectively: • Revenue was $298.2 million and $296.4 million, respectively, representing 0.6% growth year-over-year; • 125,954 and 126,712 ending Active Subscribers 6 (excluding paused subscribers), respectively, representing a change of (1)% year-over-year; • 135,211 and 128,586 Average Active Subscribers 7 , respectively, representing 5% growth year-over-year; • 173,247 and 171,998 ending Total Subscribers (including paused subscribers), respectively, representing 1% growth year-over-year; • Gross Profit was $119.7 million and $120.0 million, respectively, representing a gross margin of 40.1% and 40.5%, respectively; • Net Loss was $(113.2) million and $(138.7) million, respectively.
We have achieved the following operating and financial results for the years ended January 31, 2025 and 2024 , respectively: • Revenue was $306.2 million and $298.2 million, respectively, representing 2.7% growth year-over-year; • 119,778 and 125,954 ending Active Subscribers 3 (excluding paused subscribers), respectively, representing a change of (5)% year-over-year; • 132,574 and 135,211 Average Active Subscribers 4 , respectively, representing a change of (2)% year-over-year; • 164,004 and 173,247 ending Total Subscribers (including paused subscribers), respectively, representing a change of (5)% year-over-year; • Gross Profit was $115.9 million and $119.7 million, respectively, representing a gross margin of 37.9% and 40.1%, respectively; • Net Loss was $(69.9) million and $(113.2) million, respectively.
(6) Non-ordinary course legal fees for the years ended January 31, 2024 and 2023 includes $0.3 million and $0.1 million, respectively, of costs related to a class action lawsuit.
(6) Non-ordinary course legal fees for the years ended January 31, 2025, 2024, and 2023 includes $0.3 million, $0.3 million, and $0.1 million, respectively, of costs related to a class action lawsuit. (7) Reflects restructuring charge primarily related to severance and related costs in connection with the January 2024 and September 2022 restructuring plans.
In fiscal year 2024, we expect fulfillment expenses to increase due to increases in volume and expected annual rate increases; however, we expect fulfillment expenses as a percentage of total revenue to decrease as a result of higher revenue per order and continued transportation and processing efficiencies. Technology.
In fiscal year 2025, we expect fulfillment expenses as a percentage of total revenue to decrease compared to fiscal year 2024 as a result of anticipated higher revenue per order and continued processing efficiencies. Technology.
JOBS Act We currently qualify as an “emerging growth company” under the Jumpstart Our Business Startups Act of 2012, or the JOBS Act. Accordingly, we are provided the option to adopt new or revised accounting guidance either (i) within the same periods as those otherwise applicable to non-emerging growth companies or (ii) within the same time periods as private companies.
Accordingly, we are provided the option to adopt new or revised accounting guidance either (i) within the same periods as those otherwise applicable to non-emerging growth companies or (ii) within the same time periods as private companies.
Total revenue, net was $ 298.2 million for the year ended January 31, 2024, an increase of $1.8 million, or 0.6%, compared to $296.4 million for the year ended January 31, 2023. This increase was primarily driven by the increase in Average Active Subscribers and units purchased per subscriber .
Total revenue, net was $ 306.2 million for the year ended January 31, 2025, an increase of $8.0 million, or 2.7%, compared to $298.2 million for the year ended January 31, 2024. This increase was primarily driven by the increase in units purchased per subscriber combined with an increase in Reserve revenue.
Loss on asset impairment related to restructuring was $1.1 million for the year ended January 31, 2024, a decrease of $(4.2) million, or (79.2)%, compared to $5.3 million for the year ended January 31, 2023.
Loss on Asset Impairment Related to Restructuring . Loss on asset impairment related to restructuring was $0.0 million for the year ended January 31, 2025, a decrease of $(1.1) million, or (100.0)%, compared to $1.1 million for the quarter and year ended January 31, 2024 .
These three product acquisition methods are strategic levers to manage our capital efficiency, profitability and product risk. Our Exclusive Designs channel uses data insights to acquire items at a lower cost, which are designed to generate higher profitability over time.
Our Product Acquisition Strategy We acquire and monetize products in three ways: Wholesale, Share by RTR and Exclusive Designs. These three product acquisition methods are strategic levers to manage our capital efficiency, profitability and product risk. Our Exclusive Designs channel partners with brands to acquire RTR-exclusive items at a lower cost, which are designed to generate higher profitability over time.
We define Adjusted EBITDA Margin as Adjusted EBITDA as a percentage of total revenue, net for a period. Adjusted EBITDA was $26.9 million for the year ended January 31, 2024 compared to $6.7 million for the year ended January 31, 2023, representing margins of 9.0% and 2.3%, respectively.
Adjusted EBITDA margin as Adjusted EBITDA calculated as a percentage of total revenue, net for a period. Net Loss was $(69.9) million for the year ended January 31, 2025 compared to $(113.2) million for the year ended January 31, 2024, representing margins of (22.8)% and (38.0)%, respectively.
The decrease in fulfillment dollars and as a percentage of revenue was primarily driven by transportation and processing cost efficiencies and higher revenue per shipment that offset an increase in units per shipment due to the 5 item plan and an increase in wage rates during fiscal years 2022 and 2023 .
The decrease in fulfillment dollars and as a percentage of revenue was primarily driven by warehouse processing cost efficiencies and higher revenue per shipment that offset an increase in wage rates during the first quarter of fiscal year 2024 .
We recognize subscription fees ratably over the subscription period, commencing on the date the subscriber enrolls in a subscription program. These fees are collected upon enrollment and any revenue from an unrecognized portion of the subscription period is deferred to the following fiscal period.
These fees are collected upon enrollment and any revenue from an unrecognized portion of the subscription period is deferred to the following fiscal period. We recognize Reserve fees over the rental period, which starts on the date of delivery of the product to the customer.
Based on the quantitative assessment, undiscounted cash flows expected to be generated by the use and eventual disposition of the Company’s long-lived assets exceeded their carrying values and therefore no impairment was recognized for the year ended January 31, 2024. Warrants Warrants held prior to the IPO which did not meet the criteria for equity treatment were recorded as liabilities.
Based on the quantitative assessment performed, undiscounted cash flows expected to be generated by the use and eventual disposition of the Company’s long-lived assets exceeded their carrying values and therefore no impairment was recognized for the years ended January 31, 2024 and January 31, 2025.
Other revenue was $33.3 million for the year ended January 31, 2024, an increase of $5.5 million, or 19.8% , compared to $27.8 million for the year ended January 31, 2023. This increase was primarily driven by an increase in Average Active Subscribers and the items purchased per subscriber.
Other revenue was $40.7 million for the year ended January 31, 2025, an increase of $7.4 million, or 22.2% , compared to $33.3 million for the year ended January 31, 2024. This increase was primarily driven by an increase in the items purchased per subscriber and an increase in the average selling price per unit.
Other depreciation and amortization was $14.7 million for the year ended January 31, 2024, a decrease of $(1.7) million, or (10.4)%, compared to $16.4 million for the year ended January 31, 2023. This decrease was primarily driven by lower depreciation and amortization associated with capitalized software computers, equipment and software. Restructuring Charges .
Other depreciation and amortization was $12.5 million for the year ended January 31, 2025, a decrease of $(2.2) million, or (15.0)%, compared to $14.7 million for the year ended January 31, 2024 . This decrease was primarily driven by lower depreciation and amortization associated with machinery and equipment and leasehold improvements. Restructuring Charges .
Our most significant product capital expenditures typically occur in the first fiscal quarter and the third fiscal quarter, when we acquire product for the upcoming fall and spring seasons. However, the impact on cash is historically dependent on timing of receipt of product.
Our most significant receipt of rental product typically occurs in the first fiscal quarter and the third fiscal quarter, when we acquire product for the upcoming fall and spring seasons.
Share by RTR meaningfully reduces our purchases of rental product and de-risks our investment since we pay brands primarily based on item performance. Our Share by RTR arrangements with brands target deliv ering 75% to 100% of comparable Wholesale cost to the brand in the first year; however there is no minimum commitment other than the upfront payment, if applicable.
Our Share by RTR arrangements with brands target deliv ering 75% to 100% of comparable Wholesale cost to the brand in the first year; however there is no minimum commitment other than the upfr ont payment, if applicable.
We encourage reviewing the reconciliation in conjunction with the presentation of the non-GAAP financial metrics for each of the periods presented. In future periods, we may exclude similar items, may incur income and expenses similar to these excluded items, and may include other expenses, costs and non-recurring items. Adjusted EBITDA and Adjusted EBITDA Margin.
In future periods, we may exclude similar items, may incur income and expenses similar to these excluded items, and may include other expenses, costs and non-recurring items. Adjusted EBITDA and Adjusted EBITDA Margin.
We expect to maintain this valuation allowance until it becomes more likely than not that the benefit of our federal and state deferred tax assets will be realized by way of expected future taxable income in the United States. 76 Table of Contents Results of Operations The results of operations presented below should be reviewed in conjunction with the consolidated financial statements and notes included elsewhere in this Annual Report on Form 10-K.
We expect to maintain this valuation allowance until it becomes more likely than not that the benefit of our federal and state deferred tax assets will be realized by way of expected future taxable income in the United States.
Technology related share-based compensation expense was $5.5 million for the year ended January 31, 2024 and was $5.9 million for the same period last year.
G&A related share-based compensation expense was $7.7 million for the year ended January 31, 2025 and was $20.5 million for the year ended January 31, 2024.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeForeign Currency Risk Our net revenue is denominated in U.S. dollars and a portion of our operating expenses are incurred outside the United States, denominated in foreign currencies. Accordingly, our results of operations are subject to fluctuations due to changes in foreign currency exchange rates, particularly changes in the euro.
Biggest changeAs of January 31, 2025, a hypothetical 10% change in interest rates would not have resulted in a material impact on our consolidated financial statements. 84 Table of Contents Foreign Currency Risk Our net revenue is denominated in U.S. dollars and a portion of our operating expenses are incurred outside the United States, denominated in foreign currencies.
As of January 31, 2024, a hypothetical 10% change in the relative value of the U.S. dollar to other currencies would not have had a material effect on our results of operations . Inflation Risk In recent months, persistent inflation has continued to result in rising transportation, wages, rental product and other costs in the United States and overseas .
As of January 31, 2025, a hypothetical 10% change in the relative value of the U.S. dollar to other currencies would not have had a material effect on our results of operations. Inflation Risk In recent months, persistent inflation has continued to result in rising transportation, wages, rental product and other costs in the United States and overseas.
“Management’s Discussion and Analysis of Financial Condition and Results of Operations.” If our costs become subject to significant inflationary pressures, we may not be able to fully offset such higher costs with increased revenue. Our inability or failure to do so could harm our business, financial condition, and results of operations . 86 Table of Contents
“Management’s Discussion and Analysis of Financial Condition and Results of Operations.” If our costs become subject to significant inflationary pressures, we may not be able to fully offset such higher costs with increased revenue. Our inability or failure to do so could harm our business, financial condition, and results of operations . 85 Table of Contents
Borrowings under the 2023 Amended Temasek Facility bear interest at fixed rates. We have minimal exposure to market risk relating to changes in interest rates as they can affect the amount of interest income we earn on our cash.
Borrowings under the 2025 Amended Facility bear interest at fixed rates. We have minimal exposure to market risk relating to changes in interest rates as they can affect the amount of interest income we earn on our cash.
Interest Rate Risk As of January 31, 2024, we had cash and cash equivalents of $84.0 million and $306.7 million of debt outstanding under the 2023 Amended Temasek Facility. Cash and cash equivalents consist primarily of cash held in financial institutions within the United States and Ireland and cash in transit from third-party credit card providers.
Interest Rate Risk As of January 31, 2025, we had cash and cash equivalents of $77.4 million and $333.7 million of debt outstanding under the 2025 Amended Facility. Cash and cash equivalents consist primarily of cash held in financial institutions within the United States and Ireland and cash in transit from third-party credit card providers.
Additionally, fluctuations in foreign currency exchange rates may cause us to recognize transaction gains and losses in our Consolidated Statements of Operations.
Accordingly, our results of operations are subject to fluctuations due to changes in foreign currency exchange rates, particularly changes in the euro. Additionally, fluctuations in foreign currency exchange rates may cause us to recognize transaction gains and losses in our Consolidated Statements of Operations.
We do not enter into investments for trading or speculative purposes and have not used any derivative financial instruments to manage our interest rate risk exposure . As of January 31, 2024, a hypothetical 10% change in interest rates would not have resulted in a material impact on our consolidated financial statements.
We do not enter into investments for trading or speculative purposes and have not used any derivative financial instruments to manage our interest rate risk exposure .

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