Rent the Runway shares fell in after-hours trading despite the designer apparel and accessories rental platform posting a fourth quarter earnings beat and record annual revenue for 2022.
The company also significantly narrowed its fourth quarter and full-year losses year-over-year but below-expected 2023 revenue guidance sent the stock lower.
For the three months ended January 31, 2023, the company achieved revenue of $75.4 million, up from $64.1 million in the year-ago quarter.
Its net loss decreased from $39.3 million or a loss of $0.62 per share in 4Q 2021 to a net loss of $26.2 million or a loss of $0.40 per share.
The company exceeded the Street’s expectations on both metrics, with analysts expecting a loss per share of $0.51 on revenue of $73.5 million.
For the full-year 2022, the company posted record annual revenue of $296.4 million, up 46% from $203.3 million in fiscal 2021. For the year, it reported a net loss per share of $2.16, down from a net loss per share of $8.51 in the previous year.
At the end of fiscal 2022, the company said it had 126,712 active subscribers, up 10% year-over-year from 115,240 at the end of the previous year.
For the fiscal year 2023, Rent the Runway said it expects ending active subscriber growth of more than 25% and revenue in the range of $320 million to $330 million. Analysts had been expecting full-year revenue guidance of $346 million.
"I'm proud that in fiscal 2022, we achieved 46% revenue growth and completed a significant financial transformation, doubling our gross margins compared to 2019, right-sizing our fixed cost base, improving the capital efficiency of our product acquisition and restructuring our debt,” commented Rent the Runway CEO Jennifer Hyman.
“These efforts drove progress on our path to free cash flow profitability, as we posted our first full year and third consecutive quarter of positive adjusted EBITDA ahead of the timeline we outlined at IPO.”
It appeared investors are not convinced the fashion rental company is on track to achieve profitability, with Rent the Runway trading down 5.7% at US$2.97 shortly after the market close on Wednesday.
Contact the author at emily.jarvie@proactiveinvestors.com
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