Rent the Runway posts record $97.7m Q2 revenue and names new CEO
Rent the Runway (NASDAQ: RENT) has reported its highest-ever quarterly revenue, with total income of $97.7 million for the three months ended 31 July 2026, up 20.8% on the same period a year earlier. The result was accompanied by a leadership transition, with Paige Thomas named as incoming chief executive and president, replacing interim CEO Teri Bariquit, who moves to non-executive chair of the board.
Subscription and Reserve rental revenue accounted for $83.8 million of the total, with the remaining $13.9 million coming from other sources including resale. Gross profit climbed 45.3% to $35.3 million, giving a gross margin of 36.1% against 30.0% in Q2 2025, an improvement of 609 basis points. Adjusted EBITDA reached $12.6 million, or 12.9% of revenue, compared with $3.6 million, or 4.4%, a year ago. The company posted a net loss of $12.9 million, narrowed significantly from $26.4 million in Q2 2025.
AI and product focus
The quarter saw Rent the Runway complete a full rollout of AI-generated outfit recommendations, a feature piloted in May 2026 and live to all customers by the end of June. The company says engagement with the tool in its app is running at approximately 35%, and during the pilot phase, customers who had access added items to their bag roughly 12% more often than those without it. In August the company extended the feature with avatar-based visualisation, allowing customers to preview recommended looks on a range of body types, and began a pilot of virtual try-on tools.
The company also scaled back several peripheral initiatives. It paused an online marketplace pilot, halted on-site advertising monetisation to preserve a premium customer experience, and stopped pursuing new business-to-business dry-cleaning contracts, redirecting those resources towards core rental and its Reserve service.
Thomas, who joined the company as chief commercial officer in June 2026, brings a retail leadership background that includes roles as president and chief executive of Saks OFF 5TH and more than a decade at Nordstrom, including five years at Nordstrom Rack. Bariquit, stepping up to chair, said the company is "operating from a focused foundation." Thomas framed her brief as "an acceleration of the strong foundation the team has built" rather than a strategic pivot.
Market context and outlook
The clothing-rental and resale market occupies an interesting position for a datatech audience: RTR's core technology stack, its logistics orchestration, personalisation engine and demand-forecasting tools, is the competitive moat the company consistently cites. Rivals including Nuuly and a range of peer-to-peer rental platforms compete on price and catalogue breadth, but RTR's bet on AI-driven discovery and fit technology is directly analogous to the recommendation and personalisation layers deployed across e-commerce more broadly.
The company carries $157.5 million of long-term debt against $29.0 million in cash as of 31 July, a liquidity position that interim CFO Dave Loretta acknowledged, pointing to improved free cash flow in the first half and additional support from the investor group. Cash burn remains a watchpoint: free cash flow was negative $21.6 million for the first half of 2026, though that compares favourably with negative $32.9 million in the same period of 2025.
For Q3 2026, RTR guided revenue of $87 million to $90 million, with adjusted EBITDA margin expected to turn negative, at between minus 3% and minus 6%, reflecting seasonality. For the full year, it reaffirmed double-digit revenue growth and an adjusted EBITDA margin of 4% to 7%. The company noted material macro uncertainties, including fuel surcharges and tariff exposure, that are not embedded in its current guidance.