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Rent the Runway stock rips higher on record quarterly revenue, raised guide

Strong quarterly sales and a boost to its full-year guide sent shares of Rent the Runway (NASDAQ:RENT) surging upward in Wednesday’s extended session.

The company notched record revenue for the quarter, up 31% from the prior year quarter to $77.4M. That figure came in above the analyst expectation of $73.26M. Meanwhile, a $0.56 per share loss came in-line with expectations and margins expanded by 700 basis points. Active subscribers on the fashion platform rose 15% from the prior year period. Adjusted EBITDA for the quarter ticked in at $6.6M, smashing the consensus estimate set at $1.26M.

"We’re proud of our strong Adjusted EBITDA margin this quarter, which was up significantly versus the same period last year. We are also raising guidance for the year despite a tough environment," CEOJennifer Hyman said. "Our restructuring plan, now substantially complete, allows us to invest in our customer proposition while significantly improving cash burn.”

The company now anticipates full-year sales to range from $293M to $295M, up from a prior $285M to $290M forecast. Guidance now expects adjusted EBITDA margin of 1% for the full year, also raised from the prior -2% to flat forecast.

“We continue to believe that our gross margin and fixed cost leverage improvements help to ensure RTR can navigate potentially rougher macro conditions, while improving our profitability and accelerating our path to free cash flow breakeven,” CFO Scarlett O’Sullivan commented. “As a result, we are raising our annual Adjusted EBITDA margin outlook. Over the medium-term, we continue to believe we can generate 15% profitability on Adjusted EBITDA after product depreciation.”

Shares of the online fashion platform rose 9.55% in after hours trading on Wednesday.

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