Shares of Lease the Runway (RENT) are up nearly 8% in premarket buying and selling Friday after the e-commerce firm reported Q1 earnings that got here forward of market expectations.

The corporate reported Q1 income of $67.1 million, topping the analyst consensus of $64.2 million. RENT posted an adjusted EBITDA lack of $8.8 million within the interval, in comparison with the estimated lack of $10.7 million. The e-commerce enterprise reported 134,998 lively subscribers within the quarter, greater than analyst estimates of 131,320.

Waiting for Q2, RENT expects income within the vary of $72 million to $74 million, in comparison with the analyst estimates of $71 million. The adjusted EBITDA loss is predicted to vary between $3 million and $4 million, whereas analysts had been estimating $5.33 million.

For FY23, RENT expects income to be within the vary of $295 million to $305 million, whereas analysts had been searching for $304.1 million. The FY23 adjusted EBITDA is predicted to be down -5% to -6%.

“We’re reiterating our outlook of 45%-50% YoY income progress in fiscal yr 2022, and our goal of Adjusted EBITDA breakeven within the subsequent 2-4 quarters, whereas progressing in the direction of our high precedence of free money movement breakeven within the midterm,” CFO Scarlett O’Sullivan mentioned.

Morgan Stanley (NYSE:) analyst Lauren Schenk reduce the value goal to $14.00 per share from $22.00.

“RENT delivered a 1Q beat and maintained full yr outlook… uncommon on this atmosphere, but in addition with the additional advantage of conservatism baked in, we expect. Continued strong execution and investor schooling ought to drive the inventory to raised mirror fundamentals over the medium-term,” Schenk instructed purchasers in a observe.

Piper Sandler analyst Abbie Zvejnieks slashed the value goal by almost 50% to $12.00 to mirror “present market circumstances.”

“RENT beat on the highest and backside line led by robust subscriber progress. With solely 13% of income spent on advertising and marketing, subscribers grew 82% y/y to 135k. Return to occasions corresponding to weddings and return to workplace must be tailwinds for continued subscriber progress, and we consider there is a chance for important working expense leverage because the enterprise scales. We expect the worth proportion of rental can be related in a possible declining client atmosphere,” Zvejnieks instructed purchasers in a observe.

By Senad Karaahmetovic