Rent the Runway, Inc 10-K for FY2022

Rent the Runway, Inc. (RENT)

10-K 2022-04-14 For: 2022-01-31

Added on April 06, 2026

About this 10-K

Rent the Runway, Inc filed this 10-K on April 14, 2022, covering the fiscal year ended January 31, 2022 (FY2022).

Headline figures

Fiscal year ended January 31, 2022, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $203.3M; up 29.1% from $157.5M a year earlier
Net loss: $211.8M; compared with a net loss of $171.1M a year earlier
Diluted EPS: -$8.51; compared with -$15.36 a year earlier

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Delaware						80-0376379
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

10 Jay Street Brooklyn, New York 11201						11201
(Address of Principal Executive Offices)						(Zip Code)


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Class A common stock, par value $0.001 per share	RENT	The Nasdaq Stock Market LLC


		Page
Part I
Item 1.	Business	4
Item 1A.	Risk Factors	17
Item 1B.	Unresolved Staff Comments	59
Item 2.	Properties	59
Item 3 .	Legal Proceedings	59
Item 4.	Mine Safety Disclosures	59

Part II
Item 5.	Market for Registrant's Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities	60
Item 6.	[Reserved]	61
Item 7 .	Management's Discussion and Analysis of Financial Condition and Results of Operations	62
Item 7A .	Quantitative and Qualitative Disclosures About Market Risk	81
Item 8 .	Financial Statements and Supplementary Data	82
Item 9.	Changes in and Disagreements With Accountants on Accounting and Financial Disclosure	118
Item 9A .	Controls and Procedures	118
Item 9B .	Other Information	119
Item 9C.	Disclosure Regarding Foreign Jurisdictions that Prevent Inspections	119

Part III
Item 10.	Directors, Executive Officers, and Corporate Governance	120
Item 11.	Executive Compensation	120
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	120
Item 13.	Certain Relationships and Related Transactions and Director Independence	120
Item 14.	Principal Accounting Fees and Services	120

Part IV
Item 15.	Exhibits and Financial Statement Schedules	121
Item 16.	Form 10-K Summary	124
	Signatures	125


	Years Ended January 31,
	2022		2021		2020

Active Subscribers	115,240		54,797		133,572
Gross Profit	$	69.7	$	15.5	$	53.6
Adjusted EBITDA (1)	$	(19.2)	$	(20.3)	$	(18.0)


	Years Ended January 31,
	2022		2021		2020
	(in millions)
Revenue:
Subscription and Reserve rental revenue	$	185.8	$	135.9	$	235.4
Other revenue	17.5		21.6		21.5
Total revenue, net	203.3		157.5		256.9
Costs and expenses:
Fulfillment	61.9		53.0		118.1
Technology	45.3		37.7		40.2
Marketing	26.5		8.1		22.9
General and administrative	104.4		77.2		98.9
Rental product depreciation and revenue share	71.7		89.0		85.2
Other depreciation and amortization	19.4		23.0		21.6
Total costs and expenses	329.2		288.0		386.9
Operating loss	(125.9)		(130.5)		(130.0)
Interest income / (expense), net	(53.0)		(46.6)		(24.0)
Gain / (loss) on warrant liability revaluation, net	(24.9)		0.4		—
Gain / (loss) on debt extinguishment, net	(12.2)		(0.6)		—
Other income / (expense), net	3.9		6.2		(0.1)
Net loss before income tax benefit / (expense)	(212.1)		(171.1)		(154.1)
Income tax benefit / (expense)	0.3		—		0.2
Net loss	$	(211.8)	$	(171.1)	$	(153.9)


☒			ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


	Years Ended January 31,
	2022		2021		2020
	(in millions)
Net cash (used in) provided by operating activities	$	(42.3)	$	(42.8)	$	(37.6)
Net cash (used in) provided by investing activities	(22.5)		(58.4)		(138.6)
Net cash (used in) provided by financing activities	215.2		168.5		177.9
Net increase in cash and cash equivalents and restricted cash	150.4		67.3		1.7
Cash and cash equivalents and restricted cash at beginning of period	109.2		41.9		40.2
Cash and cash equivalents and restricted cash at end of period	$	259.6	$	109.2	$	41.9


			Page
Report of Independent Registered Public Accounting Firm (PCAOB ID 238)			83
Consolidated Balance Sheets as of January 31, 2022 and 2021			84
Consolidated Statements of Operations for the Years ended January 31, 2022 , 2021 and 2020			85
Consolidated Statements of Changes in Redeemable Preferred Stock and Stockholders’ Deficit for the Years ended January 31, 2022 , 2021 and 2020			86
Consolidated Statements of Cash Flows for the Years ended January 31, 2022 , 2021 , and 2020			87
Notes to Consolidated Financial Statements
1. Business			89
2. Summary of Significant Accounting Policies			89
3. Liquidity and Impact of COVID-19 Pandemic			99
4. Leases- Lessee Accounting			99
5. Rental Product, Net			101
6. Fixed and Intangible Assets, Net			102
7. Long-Term Debt			103
8. Income Taxes			106
9. Accrued Expenses and Other Current Liabilities			109
10. Fair Value Measurements			109
11. Redeemable Preferred Stock			111
12. Stockholders’ Equity			111
13. Share-based Compensation Plans			113
14. Net Loss per Share Attributable to Common Stockholders			116
15. Commitments and Contingencies			116
16. Subsequent Events			117


	January 31,		January 31,
	2022		2021
Assets
Current assets:
Cash and cash equivalents	$	247.6	$	95.3
Restricted cash, current	5.4		3.4
Prepaid expenses and other current assets	11.7		4.7
Total current assets	264.7		103.4
Restricted cash	6.6		10.5
Rental product, net	76.3		97.6
Fixed assets, net	57.2		64.7
Intangible assets, net	6.4		7.8
Operating lease right-of-use assets	31.5		34.9
Other assets	4.8		1.8
Total assets	$	447.5	$	320.7
Liabilities, Redeemable Preferred Stock and Stockholders’ Equity (Deficit)
Current liabilities:
Accounts payable	$	15.9	$	7.2
Accrued expenses and other current liabilities	30.0		14.1
Deferred revenue	10.4		5.6
Customer credit liabilities	6.9		7.0
Operating lease liabilities	5.6		6.7
Total current liabilities	68.8		40.6
Long-term debt, net	260.8		355.1
Operating lease liabilities	46.4		51.5
Warrant liability	—		11.8
Other liabilities	0.4		0.3
Total liabilities	376.4		459.3
Commitments and Contingencies (Note 15)
Redeemable preferred stock, $0.001 par value; 0 and 35,236,646 shares authorized as of January 31, 2022 and 2021, respectively; 0 and 31,137,921 shares issued and outstanding as of January 31, 2022 and 2021, respectively; liquidation preference of $0.0 million and $393.7 million as of January 31, 2022 and 2021, respectively	—		388.1
Stockholders’ equity (deficit)
Common stock, $0.001 par value; 0 and 60,000,000 shares authorized as of January 31, 2022 and 2021, respectively; 0 and 10,456,521 shares issued and outstanding as of January 31, 2022 and 2021, respectively	—		—
Class A common stock, $0.001 par value; 300,000,000 and 0 shares authorized as of January 31, 2022 and 2021, respectively; 60,104,058 and 0 shares issued and outstanding as of January 31, 2022 and 2021, respectively	0.1		—
Class B common stock, $0.001 par value; 50,000,000 and 0 shares authorized as of January 31, 2022 and 2021, respectively; 2,932,739 and 0 shares issued and outstanding as of January 31, 2022 and 2021, respectively	—		—
Preferred stock, $0.001 par value; 10,000,000 and 0 shares authorized as of January 31, 2022 and 2021, respectively; 0 and 0 shares issued and outstanding as of January 31, 2022 and 2021, respectively	—		—
Additional paid-in capital	872.2		62.7
Accumulated deficit	(801.2)		(589.4)
Total stockholders’ equity (deficit)	71.1		(526.7)
Total liabilities, redeemable preferred stock and stockholders’ equity (deficit)	$	447.5	$	320.7


	Year Ended January 31,
	2022		2021		2020
Revenue:
Subscription and Reserve rental revenue	$	185.8	$	135.9	$	235.4
Other revenue	17.5		21.6		21.5
Total revenue, net	203.3		157.5		256.9
Costs and expenses:
Fulfillment	61.9		53.0		118.1
Technology	45.3		37.7		40.2
Marketing	26.5		8.1		22.9
General and administrative	104.4		77.2		98.9
Rental product depreciation and revenue share	71.7		89.0		85.2
Other depreciation and amortization	19.4		23.0		21.6
Total costs and expenses	329.2		288.0		386.9
Operating loss	(125.9)		(130.5)		(130.0)
Interest income / (expense), net	(53.0)		(46.6)		(24.0)
Gain / (loss) on warrant liability revaluation, net	(24.9)		0.4		—
Gain / (loss) on debt extinguishment, net	(12.2)		(0.6)		—
Other income / (expense), net	3.9		6.2		(0.1)
Net loss before income tax benefit / (expense)	(212.1)		(171.1)		(154.1)
Income tax benefit / (expense)	0.3		—		0.2
Net loss	$	(211.8)	$	(171.1)	$	(153.9)
Net loss per share attributable to common stockholders, basic and diluted	$	(8.51)	$	(15.36)	$	(14.04)
Weighted-average shares used in computing net loss per share attributable to common stockholders, basic and diluted	24,874,061		11,138,851		10,964,634


RENT THE RUNWAY, INC. Consolidated Statements of Changes in Redeemable Preferred Stock and Stockholders’ Equity (Deficit)


	Redeemable Preferred Stock			Common Stock			Additional Paid-in Capital		Accumulated Deficit		Total Stockholders’ Equity (Deficit)
	Shares	Amount		Shares	Amount
Balances as of January 31, 2019	20,891,652	$	196.7	10,100,658	$	—	$	45.4	$	(267.0)	$	(221.6)
Issuance of redeemable preferred stock	6,100,619	133.8		—	—		—		—		—
Stock issued under stock incentive plan	—	—		270,978	—		1.8				1.8
Share-based compensation expense	—	—		—	—		6.8				6.8
Adjustment to accumulated deficit, cumulative effect of ASC 606 adoption	—	—		—	—		—		2.6		2.6
Net loss	—	—		—	—		—		(153.9)		(153.9)
Balances as of January 31, 2020	26,992,271	330.5		10,371,636	—		54.0		(418.3)		(364.3)
Issuance of redeemable preferred stock	4,145,650	57.6		—	—		—		—		—
Stock issued under stock incentive plan	—	—		84,885	—		0.5		—		0.5
Share-based compensation expense	—	—		—	—		8.2		—		8.2
Net loss	—	—		—	—		—		(171.1)		(171.1)
Balances as of January 31, 2021	31,137,921	388.1		10,456,521	—		62.7		(589.4)		(526.7)
Issuance of redeemable preferred stock	1,437,541	21.2		—	—		—		—		—
Conversion of redeemable preferred stock	(32,575,462)	(409.3)		32,575,462	0.1		409.2		—		409.3
Stock issued under stock incentive plan	—	—		583,439	—		3.3		—		3.3
Stock issued as part of IPO, net of offering costs	—	—		17,000,000	—		327.3		—		327.3
Issuance of warrants	—	—		—	—		6.4		—		6.4
Exercise of warrants	—	—		2,421,375	—		35.5		—		35.5
Reclassification of warrants	—	—		—	—		1.2		—		1.2
Share-based compensation expense	—	—		—	—		26.6		—		26.6
Net loss	—	—		—	—		—		(211.8)		(211.8)
Balances as of January 31, 2022	—	$	—	63,036,797	$	0.1	$	872.2	$	(801.2)	$	71.1


	Year Ended January 31,
	2022		2021		2020
OPERATING ACTIVITIES
Net loss	$	(211.8)	$	(171.1)	$	(153.9)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
Rental product depreciation and write-offs	45.6		55.9		61.6
Write-off of rental product sold	4.7		14.0		14.0
Other depreciation and amortization	19.5		24.1		21.6
Proceeds from rental product sold	(12.9)		(17.9)		(19.3)
(Gain) / loss from liquidation of rental product	(0.6)		0.9		0.5
Accrual of paid-in-kind interest	38.8		36.9		19.0
Settlement of paid-in-kind interest	(6.3)		—		—
Amortization of debt discount	5.9		5.0		4.0
Loss on debt extinguishment	12.2		0.6		—
Share-based compensation expense	26.6		8.2		6.8
Remeasurement of warrant liability	24.9		(0.4)		—
Changes in operating assets and liabilities:
Prepaid expenses and other current assets	(7.0)		0.3		(2.4)
Operating lease right-of-use assets	3.4		(0.4)		(34.5)
Other assets	(3.0)		1.8		(1.3)
Accounts payable, accrued expenses and other current liabilities	18.4		(4.5)		6.0
Deferred revenue and customer credit liabilities	4.7		(7.3)		1.5
Operating lease liabilities	(6.2)		11.4		46.8
Other liabilities	0.8		(0.3)		(8.0)
Net cash (used in) provided by operating activities	(42.3)		(42.8)		(37.6)
INVESTING ACTIVITIES
Purchases of rental product	(30.8)		(54.9)		(117.7)
Proceeds from liquidation of rental product	5.7		2.4		3.6
Proceeds from sale of rental product	12.9		17.9		19.3
Purchases of fixed and intangible assets	(10.3)		(23.8)		(43.8)
Net cash (used in) provided by investing activities	(22.5)		(58.4)		(138.6)
FINANCING ACTIVITIES
Proceeds from issuance of common stock upon IPO, net of offering costs	327.3		—		—
Proceeds from issuance of redeemable preferred stock	21.2		60.4		133.8
Proceeds from exercise of stock options under stock incentive plan	3.3		0.5		1.8
Proceeds from line of credit	—		15.0		86.0
Principal repayments on line of credit	—		(59.0)		(92.6)
Proceeds from long-term debt	—		155.0		50.0
Principal repayments on long-term debt	(135.0)		—		—
Debt extinguishment costs	(4.7)		—		—
Proceeds from short-term financing agreements	5.0		—		—
Other financing payments	(1.9)		(3.4)		(1.1)
Net cash (used in) provided by financing activities	215.2		168.5		177.9
Net increase in cash and cash equivalents and restricted cash	150.4		67.3		1.7
Cash and cash equivalents and restricted cash at beginning of period	109.2		41.9		40.2
Cash and cash equivalents and restricted cash at end of period	$	259.6	$	109.2	$	41.9


RENT THE RUNWAY, INC. Notes to Consolidated Financial Statements


	Useful Life	Salvage Value
Apparel	3 years	20	%
Accessories	2 years	30	%


Leasehold improvements			Lesser of estimated useful life or lease term
Machinery and equipment			5 to 6 years
Furniture and fixtures			5 years
Computer hardware			3 years
Reusable packaging			1.5 years
Capitalized third-party software			3 years
Capitalized internally developed software			2 years


	Operating		Financing
Fiscal year:
2022	$	13.6	$	0.4
2023	11.6		0.3
2024	10.4		0.1
2025	9.1		0.0
2026	9.1		0.0
Thereafter	48.7		0.0
Total minimum lease payments	102.5		0.8
Imputed interest	(50.5)		(0.1)
Lease liabilities as of January 31, 2022	$	52.0	$	0.7


		January 31,		January 31,
Description	Level	2022		2021
Liabilities:
Warrant liability – Common stock warrants	3	$	—	$	11.2
Warrant liability – Preferred stock warrants	3	—		0.6
Total liabilities		$	—	$	11.8


	Warrant Liability
Balance as of January 31, 2020	$	0.6
Issuance of warrants	11.6
Changes in estimated fair value	(0.4)
Balance as of January 31, 2021	11.8
Issuance of warrants	0.5
Changes in estimated fair value	24.4
Exercise of warrants	(35.5)
Reclassification to equity-classified warrants	(1.2)
Balance as of January 31, 2022	$	—


	January 31,
	2021
Valuation assumptions:
Expected dividend yield	—	%
Expected volatility	87.68	%
Expected term (in years)	6.75
Risk-free interest rate	0.79	%


	January 31, 2022
Outstanding Warrants	Date Issued	Number of Shares	Class of Shares	Exercise Price		Fair Value at Issuance
Equity classified:
TriplePoint	Nov-16	82,891	Common	$	7.54	$	0.3
TriplePoint	Jun-17	18,236	Common	7.54		0.1
TriplePoint	Sep-17	14,920	Common	7.54		0.1
TriplePoint	Jan-18	16,578	Common	7.54		0.1
TriplePoint	Apr-18	16,578	Common	7.54		0.1
TriplePoint	Nov-15	35,215	Common	17.04		0.2
TriplePoint	Jun-16	28,172	Common	17.04		0.2
TriplePoint	Sep-16	24,650	Common	17.04		0.1
Double Helix (Temasek)	Jul-18	730,000	Common	27.40		1.3
Double Helix (Temasek)	Oct-21	394,343	Common	21.00		5.3
		1,361,583				7.8


	January 31, 2021
Outstanding Warrants	Date Issued	Number of Shares	Class of Shares	Exercise Price		Fair Value at Issuance
Equity classified:
TriplePoint	Nov-16	82,891	Common	$	7.54	$	0.3
TriplePoint	Jun-17	18,236	Common	7.54		0.1
TriplePoint	Sep-17	14,920	Common	7.54		0.1
TriplePoint	Jan-18	16,578	Common	7.54		0.1
TriplePoint	Apr-18	16,578	Common	7.54		0.1
Double Helix (Temasek)	Jul-18	730,000	Common	0.01		9.0
Double Helix (Temasek)	Jul-18	730,000	Common	27.40		1.3
		1,609,203				$	11.0
Liability classified:
TriplePoint	Nov-15	35,215	Series D	$	17.04	$	0.2
TriplePoint	Jun-16	28,172	Series D	17.04		0.2
TriplePoint	Sep-16	24,650	Series D	17.04		0.1
10 Jay	Oct-20	76,627	Series G	14.74		—
Ares	Oct-20	1,651,701	Common	0.01		11.6
		1,816,365				$	12.1


	Number of Shares	Weighted Average Exercise Price		Weighted Average Remaining Contract Term (in years)	Aggregate Intrinsic Value
Balances as of January 31, 2021	6,060,107	$	6.76	6.45	$	3.7
Granted	4,556,962	8.04
Exercised	(546,934)	6.34
Forfeited	(599,965)	7.61
Balances as of January 31, 2022	9,470,170	$	7.33	7.17	$	2.1
Exercisable as of January 31, 2022	4,291,573	$	6.68	5.16	$	2.1


	Number of Shares	Weighted Average Grant-Date Fair Value per Share
Unvested and outstanding as of January 31, 2021	1,509,601	$	12.17
Granted	1,184,465	9.79
Exercised	(50,883)	17.25
Forfeited	(214,609)	8.32
Unvested and outstanding as of January 31, 2022	2,428,574	$	11.32


	RENT THE RUNWAY, INC.

Date: April 14, 2022	By:	/s/ Jennifer Y. Hyman
		Jennifer Y. Hyman
		Chief Executive Officer


			10 JAY MASTER TENANT LLC, a Delaware limited liability company

			By:			/s/ Mark Weissman
						Mark Weissman
			Title:			Authorized Signatory


			RENT THE RUNWAY, INC., a Delaware corporation

			By:			/s/ Jennifer Y. Hyman
						Jennifer Y. Hyman
			Title:			Chief Executive Officer


Name of Subsidiary						Jurisdiction of Organization
Rent the Runway Limited						Ireland



Date: April 14, 2022	By:	/s/ Scarlett O’Sullivan
		Scarlett O’Sullivan
		Chief Financial Officer