Hello, everyone, and thanks for joining us today. During this call, we will make references to our Q4 Fiscal Year 2025 earnings presentation, which can be found in the Events and Presentation section of our Investor Relations website. Before we begin, we would like to remind you that this call will include forward-looking statements. These statements include guidance and underlying assumptions for the first quarter in fiscal year 2026 and statements regarding our 2026 business plans and initiatives and financial positions. These statements are subject to various risks, uncertainties, and assumptions that can cause our actual results to differ materially. These risks, uncertainties, and assumptions are detailed in today's press release as well as our filings of the SEC, including our Form 10-K that we plan to file shortly. We have no obligation to update any forward-looking statements or information except as required by law. During this call, we will also refer to certain non-GAAP financial information. This presentation of non-GAAP financial information is not intended to be considered in isolation or as a substitute for financial information presented in accordance with GAAP. Reconciliations of GAAP to non-GAAP measures can be found in our press release, slide presentation on our investor website, and in our SEC filings. And with that, I'll turn it over to Jen. Thanks, Carol, and thank you, everyone, for joining today. One year ago, we announced that we were making our biggest inventory investment in Run the Runway history to drive growth. We made a calculated bet based on over 15 years of data and experience that increasing our inventory investment was the strongest lever to unlock customer growth. Today, I am proud to report that this strategy has been successful. In fiscal year 2025, we grew our active subscriber base by 20%, ending the year with 144,000 subscribers. Our goal, our growth, was primarily a result of our inventory strategy and a return to customer obsession throughout the company, marked by a year of continuous transformation of our customer experiences and marketing to make Rent the Runway easier to use, more personalized, and more centered around our community. Our customers have responded with record levels of enthusiasm. Our subscription net promoter score grew 39% versus last year and has more than tripled since 2022. We also improved the health of the Rent the Runway model by completing a strategic recapitalization that reduced our total debt from approximately $319 million to $120 million, strengthening our balance sheet and adding investors around the table who are focused on equity value creation. We believe that the data is clear. More choice leads to higher customer loyalty. Inventory-related cancellations drop to 7.6% year-over-year in Q4, and our engagement metrics from app visits to hearts per subscriber have accelerated throughout the year. Today, our average subscriber visits our app 15 times per month, an almost 50% increase over 2024 levels. As we enter fiscal year 2026, we remain committed to our inventory-focused strategy and are continuing to make large investments in inventory, but are taking it to the next level. If 2025 was about inventory acquisition, 2026 is about discovery. We are working to move beyond the traditional e-commerce grid and leveraging AI technology to deliver the closet of our dreams with more choice and flexibility than ever before. We are also embarking on a new set of revenue-generating strategies to expand the services we bring to our customers and brand partners, including piloting an online marketplace, launching B2B dry cleaning services, expanding our advertising revenue program, and more. First, I want to take you through our 2026 inventory plan, which is built on three pillars. One, opportunistic procurement. In a tumultuous retail environment, premium brands are seeking immediate liquidation of inventory. We see a rare opportunity for Rent the Runway to access high-cost categories and elevated brands and attractive economics. Two, exclusive design momentum. Building on the success of 2025, we are expanding our exclusive design partnership. These collections are designed to provide our customers with brands they demand at roughly 40% lower costs on average. Three, revenue share growth. We also expect a significant increase in the number of brands and the overall percentage of inventory in our share of IRTR program, which allows us to scale inventory with lower upfront costs. To maximize the value of this inventory, we aim to revolutionize the way our customers explore it, reimagining the front-end experience through AI-driven enhancements. Over the next few quarters, we are planning a series of innovative launches designed to improve the customer experience. One, via outfit grooving. Traditional e-commerce often makes you search for one unit at a time in a sea of endless grid pages, which can exhaust the user and drive online conversion to be lower than offline conversion in retail. We're working to transform our experience to help our customers discover complete looks and curated aesthetics. Our customers will no longer have to do the work of imagining what combination of items they should rent together or how one would wear a specific item to make it more dressy, more casual, appropriate for the office, or vacation ready. Think of this as having a stylus in your pocket at all times, too, via a robust PDP. We are also transforming the product detail pages from a traditional landing page into a living experience. This includes adding more visual versatility, seeing items on different models and sizes, images in motion, and AI-driven styling and fit advice so customers feel like renting the item is less of a risk for them. And three, via conversational search, improving use case search functionality. Ultimately, our vision is a state-of-the-art conversational agent that allows her to search for what to wear to a destination wedding in Italy rather than just floral dress. While our customer-facing AI investments prioritize discovery, we are also focused on leveraging machine learning to improve our backend operations, which we expect to drive team productivity and margin efficiency. Via one, quality control. We are integrating AI technology into our quality control processes, which is intended to optimize quality and cost in our operations. By utilizing computer vision to identify wear and tear, we believe we can better salvage inventory, ensuring more units remain in peak rotation for longer while reducing manual labor costs. Two, via dynamic pricing. We also plan to leverage machine learning to move toward even more efficient dynamic pricing, which we expect to better maximize the yield of the units in our ecosystem. And three, via team productivity. We are also infusing AI into how we work. For example, we are utilizing AI-assisted coding to increase the velocity of our technical teams. We expect that this will enable us to ship more product updates and new features, like our recent back-and-stop notifications faster and more efficiently. Alongside our technical evolution, our goal is to drive growth in fiscal year 2026 through bold authenticity. The paradigm for brand expansion has shifted. While acquisition via paid ads was once the primary lever, we believe that today's consumers demand more genuine connection. In 2025, we successfully piloted an expansion of our organic community-led channels. Our Muse program, a community-generated content engine, surpassed 13 million impressions in Q4 alone, while our city ambassador program that we launched in October 2025 has scaled rapidly to over 1,000 on the Grand Evangelist. In fiscal year 2026, we are reallocating a significant portion of our paid marketing budget to further scale this word-of-mouth engine. Furthermore, we're leaning into answer engine optimization and SEO strategies designed to ensure Run the Runway is the top destination for discovery online. By optimizing for how the next generation discovers fashion on TikTok, Instagram, and AI search interfaces, we want Run the Runway to be the premier destination for fashion. Membership flexibility and revenue optimization. We will also aim to drive higher revenue per customer in 2026 by expanding membership flexibility. In fiscal year 2025, we saw significant success with our subscription add-on business, which accelerated throughout the year, driven by the launch of back-in-stock notifications in Q1, followed by add-on pricing transparency and instant gratification one-off shipments in Q3. In Q4 2025, our add-on revenue was up 67% versus the prior year. In 2026, we plan to build on this traction by scaling our resale and reserve businesses for our customers through smarter pricing and discounting. Our customer wants more from Rent the Runway, and our goal is to give her the freedom to get exactly what she wants precisely when she wants it. Lastly, this year, we are aggressively pursuing revenue diversification by leveraging our existing infrastructure and high-value customer base to build a more robust ecosystem. In March, we launched a pilot of our Rent the Rugby marketplace with a small subset of our most loyal subscribers. The marketplace is designed to solve a gap that exists in our customer's wardrobe between her rental assortment and the total look she desires by providing a highly curated assortment of shoes, shapewear, basics, beauty products, and more available for purchase. The goal is to increase the attach rate of orders by providing the wardrobe essentials that complete her rental list. Our research shows the demand. Eighty-six percent of members surveyed are interested in purchasing these complimentary items from us. Beyond the closet, we are also focused on scaling our advertising and media business, which we expect to grow significantly this year. While we've tested various iterations of what our media business could look like in prior years, We've seen success with 360-degree brand partnerships, connecting our customers with significant brand partners like Air France, who recognize the value of our highly engaged, high-net-worth customer, who is often at a pivotal life moment where she is making meaningful financial and lifestyle decisions. Finally, we are taking steps to monetize our best-in-class logistics infrastructure through initiatives like B2B Dry Cleaning Services, which we launched with one partner in March. While these initiatives are all still in early stages, we aim to lay the groundwork to realize meaningful revenue and margin expansion over the coming months and years with this diversification. In short, we are not sitting still. We are actively working to build a durable, multi-faceted platform that defines the future of fashion consumption. To conclude, I firmly believe that Rent the Runway is in the strongest position in years, operating from a foundation of financial stability and renewed growth. As we look forward to fiscal year 2026, we are committed to staying at the forefront of the modern consumer experience with a laser focus on defining the next era of fashion discovery by leveraging AI technology, doubling down on authenticity through our community, and providing unrivaled flexibility for our customers. With that, I'll hand it over to Sid.
Thanks, Jen, and thank you, everyone, for joining us. I believe that fiscal year 2025 marked an important turning point for Rent the Runway. As Jen mentioned earlier, we accomplished a return to strong ending active subscriber and revenue growth by Q4 and significantly improved that balance sheet. Further, we believe we've set a solid foundation for future growth by adding almost double the new receipts in fiscal year 2025 compared to fiscal year 2024. Units of inventory per subscriber grew over the course of the year, and we expect that our subscribers will continue to feel the benefits of this inventory investment in the years to come. Fiscal year 2025 also provides a playbook for future growth that we intend to execute on in fiscal year 2026 and beyond through a combination of products and inventory-driven initiatives. I'd like to take a moment to discuss free cash flow for fiscal year 2025 and why we believe we will see improving trends in fiscal year 2026. The accomplishments described above were accompanied by higher cash consumption, with free cash flow declining to negative $46 million in fiscal year 2025 from negative $7.2 million in fiscal year 2024. The primary reason for this decline is our decision to front-load inventory investments in fiscal year 2025 to more rapidly improve the customer experience and ignite growth. We typically monetize that inventory over several years and are pleased with the results of the additional investments we have seen so far. As a reminder, subscriber growth is highly pre-cash flow accretive in the years after a subscriber is acquired, given we only need to replace inventory that is lost, damaged, or sold to a subscriber in subsequent years. The replacement cost of that inventory is typically a fraction of the initial investment in inventory we need to make for growth. We expect to make good underlying progress on both growth and pre-cash flow in fiscal year 2026. Given the step change in inventory purchases in fiscal year 2025, we don't anticipate significant increases in new inventory receipts in fiscal year 2026. Despite this, we believe that the combination of a large inventory buy in fiscal year 25 and our fiscal year 26 purchases will result in continued improvement in the inventory experience for subscribers in fiscal year 2026. While we do expect higher revenue share payments in fiscal year 2026, as the base of revenue share inventory increases, we expect significantly lower capital expenditures for rental products. This, combined with a higher subscriber base and the remaining impact of our August 2025 price increase, is expected to result in improved free cash flow in fiscal year 2026, as outlined by adjusted EBITDA and rental product acquired guidance. In summary, we feel good about our accomplishments in fiscal year 2025 and look forward to continued progress this fiscal year. Let me now review results for the fourth quarter before turning to Q1 and full-year 2026 guidance. We ended Q425 with 143,796 ending active subscribers, up 20.1% year-over-year. Average active subscribers during the quarter were 146,356 subscribers versus 126,148 subscribers in the prior year, an increase of 16% year-over-year. Subscriber growth was driven primarily by a higher base of active subscribers at the end of Q325 versus the same period in fiscal 2024, higher subscriber acquisitions due to higher marketing and promotional activity, and improved subscriber retention versus Q424. Ending active subscribers decreased 3.4% from 148,916 subscribers in Q325, primarily due to seasonal factors. Total revenue for the quarter was $91.7 million, up $15.3 million, or 20% year-over-year, and up $4.1 million, or 4.7% quarter-over-quarter. Subscription and reserve rental revenue was up $13.2 million, or 20.4% year-over-year in Q425, primarily due to higher average subscribers and higher average revenue per subscriber due to the subscription price increase effective August 1st, partially offset by lower reserve revenue versus Q424. Other revenue increased $2.1 million to 17.8% year-over-year. Fulfillment costs were $21.6 million in Q425 versus $20.2 million in Q424 and $24 million in Q325. Fulfillment costs as a percentage of revenue were 23.6% of revenue in Q425 compared to 26.4% of revenue in Q424. Fulfillment costs declined in the percentage of revenue, primarily due to higher revenue per order, driven by an August price increase, partially offset by higher transportation costs as a result of carrier rate increases and higher warehouse processing costs. Gross margins were 38.6% in Q425 versus 37.7% in Q424. Q425 gross margins reflect lower fulfillment and rental product depreciation and write-off costs as a percentage of revenue, partially offset by higher revenue share costs as a percentage of revenue due to greater share by RTR inventory levels. Q425 gross margins increased quarter over quarter from 29.6% in Q325, primarily due to lower fixed revenue share costs as a percentage of revenue due to seasonally lower receipts of shared by RTR inventory, the impact of higher revenue for order on fulfillment expenses as a percentage of revenue, and the impact of a full quarter of the price increase implemented last quarter. Q425 operating expenses were 3.6% higher year-over-year due primarily to higher technology expenses. Total operating expenses, which include technology, marketing, and G&A with 37.9% of revenue in Q425 versus 44% of revenue in Q424 and 45.1% of revenue in Q325. Adjusted EBITDA for Q425 was $18.3 million for 20% of revenue versus $17.4 million for 22.8% of revenue in Q424. Note that adjusted EBITDA margins for Q425 were positively impacted by 2.1% due to the reversal of incentive compensation accruals during the quarter. The decrease in adjusted EBITDA as a percentage of revenue versus the prior year is primarily a result of higher revenue share expenses as a percentage of revenue due to greater share by RTR inventory levels, partially offset by lower operating expenses as a percentage of revenue and lower fulfillment costs as a percentage of revenue. Free cash flow for Q425 was $0.5 million versus $2.1 million in Q424. Free cash flow decreased versus the prior year primarily due to higher purchases of rental products on account of our inventory strategy for fiscal year 2025. Free cash flow for fiscal year 2025 was negative $46 million compared to negative $7.2 million in fiscal year 2024 on account of the significant investment in inventory to improve customer experience and drive revenue growth. I will now discuss guidance for Q1-2026 and fiscal year 2026. For Q1, we expect revenue to be between $85 million and $87 million, representing growth of between 22% and 25% versus Q1-25. The sequential decline in revenue from $91.7 million in Q4-25 is primarily expected to be driven by lower resale revenue in Q126 versus Q425. Note that this sequential decline in resale revenue is consistent with prior years and reflects higher sales of inventory during the holiday season. We expect Q126 adjusted EBITDA margins to be between negative 5% and negative 7% of revenue compared to negative 1.9% of revenue in Q125. The decline in adjusted EBITDA margins year-over-year, despite higher revenue, and the impact of our August 25, August price increase, primarily reflects significantly higher revenue share expenses. Fixed revenue share payments are expected to be higher in Q126 due to a much larger proportion of inventory receipts from our revenue share channel versus Q125. We also expect higher variable revenue share expenses due to the higher base of revenue share inventory acquired throughout fiscal year 2025. So, fiscal year 2026, we expect double-digit growth in revenue versus fiscal year 2025. I wanted to point out a few factors to keep in mind when thinking about revenue growth this year. First, revenue growth beginning in Q325 was positively impacted by the price increase enacted in August of 2025. As a result, we expect stronger year-over-year revenue growth in the first half of fiscal 2026 compared to the second half when we begin to face comparisons against prior periods that already have the impact of the price increase. Second, ending active subscriber growth of Q425 of 20.1% versus Q424 was influenced, in part, by the significant decline in active subscribers towards the end of fiscal year 2024 on account of reductions in marketing spending. We expect to see a deceleration in year-over-year ending active subscriber growth versus the 20.1% growth seen in Q425 in subsequent quarters as we compare against periods with more robust subscriber additions in fiscal year 2025. Regardless, we feel good about the underlying progress of the business and expect, as mentioned earlier, double-digit revenue growth for the full year. For fiscal year 2026, we expect adjusted EBITDA to be between 4% and 7% of revenue compared to 7.5% of revenue in fiscal year 2025. We expect full year 2026 adjusted EBITDA as a percentage of revenue to be negatively impacted by a significantly higher mix of revenue share units as a percentage of the new buy versus fiscal year 2025. This, combined with higher revenue share units received throughout fiscal year 2025, will result in higher revenue share expenses as a percentage of revenue in fiscal year 2026 versus fiscal year 2025. As outlined in our press release, we expect rental products acquired in fiscal year 2026 to be between $45 million and $50 million compared to $74.9 million in fiscal year 2025, a decline of approximately $25 to $30 million year-over-year. It is important to think about adjusted EBITDA margins in conjunction with our guidance for rental products acquired through our non-revenue share channels when thinking about the cash impact of our adjusted EBITDA margin guidance for the fiscal year. As you know, revenue share payments are expensed and affect the adjusted EBITDA, whereas payments for non-revenue share inventory are reflected as capital expenditures and don't affect the adjusted EBITDA. As our inventory mix continues to shift towards revenue share, our guidance for adjusted EBITDA margins and rental products acquired should be considered together to understand the impact on cash. We feel good about the underlying progress on cash consumption in fiscal year 2026 versus fiscal year 2025. Finally, I would emphasize that the macroeconomic and geopolitical environment remains highly uncertain with potential impacts on transportation costs, fuel surcharges, and consumer confidence. Our guidance is based on current conditions and assumptions and does not contemplate material deterioration or volatility in these factors. Accordingly, actual results may differ materially if such conditions change. In conclusion, we're pleased with the improved growth momentum we have seen. I echo Jen's conviction that Rent the Runway is in the strongest position that has been in several years. We look forward to continuing to delight our customers and to driving sustainable growth, along with improving free cash flow in the years ahead. Thank you, everyone, for joining us. We look forward to speaking to you next quarter.
