Rent the Runway Shares Gain After Earnings Beat, Analysts Positive -Breaking
Rent the Runway’s shares rose almost 8 percent in premarket trade Friday, after the ecommerce company announced Q1 earnings which exceeded market expectations.
Analyst consensus was $64.2 million. The Q1 revenues of RENT exceeded $67.1 million. RENT reported an $8.8m adjusted EBITDA loss in Q1 compared with the $10.7m estimated loss. Analyst estimates were for 131,320 active subscribers. However, the e-commerce company reported 134 998 active customers in the third quarter.
RENT anticipates Q2 revenue to be between $72 million and $74 million, as opposed to analyst estimates of $71 millions. While analysts had predicted $5.33 million, the expected adjusted EBITDA losses will range from $3 to $4 million.
RENT anticipates FY23 revenue in the $295-$305 million range, while analysts expected $304.1 million. Forecasts for FY23 indicate that the adjusted EBITDA will be lower at -5% and -6%.
“We are reiterating our outlook of 45%-50% YoY revenue growth in fiscal year 2022, and our target of Adjusted EBITDA breakeven in the next 2-4 quarters, while progressing towards our top priority of free cash flow breakeven in the midterm,” CFO Scarlett O’Sullivan said.
Morgan Stanley Lauren Schenk (NYSE:), analyst, lowered the price target by $14.00 per share to $22.00
“RENT delivered a 1Q beat and maintained full year outlook… rare in this environment, but also with the added benefit of conservatism baked in, we think. Continued solid execution and investor education should drive the stock to better reflect fundamentals over the medium-term,” Schenk told clients in a note.
Piper Sandler analyst Abbie Zvejnieks slashed the price target by nearly 50% to $12.00 to reflect “current market conditions.”
“RENT beat on the top and bottom line led by strong subscriber growth. While only 13% revenue went to marketing, subscribers increased 82% year-over-year to 135k. For continued subscriber growth, return to event such as weddings as well as return to work should be strong tailwinds. We also believe the business has significant operational expense leverage. We think the value proportion of rental would be relevant in a potential declining consumer environment,” Zvejnieks told clients in a note.
By Senad Karaahmetovic