Welcome to Rent the Runway's third quarter 2024 earnings results conference call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. I would now like to turn the call over to Rent the Runway's Chief Legal and Administrative Officer, Cara Schembri. Thank you. You may begin. Good morning, everyone, and thanks for joining us today. During this call, we will make references to our Q3 2024 earnings presentation, which can be found in the Events and Presentations section of our Investor Relations website. Before we begin, we would like to remind you that this call will include forward-looking statements. These statements include our future expectations regarding financial results, guidance and targets, market opportunities, and our growth. These statements are subject to various risks, uncertainties, and assumptions that could cause our actual results to differ materially. These risks, uncertainties, and assumptions are detailed in today's press release, as well as our filings with the SEC, including our Form 10-Q that we plan to file later today. We undertake no obligation to update any forward-looking statements or information except as required by law. During this call, we will also reference certain non-GAAP financial information. The presentation of this non-GAAP financial information is not intended to be considered in isolation or as a substitute for financial information presented in accordance with GAAP. Reconciliations of GAAP to non-GAAP measures can be found in our press release, slide presentation posted on our investor website, and our SEC filings. And with that, I'll turn it over to Jen. Thanks, Cara, and thank you, everyone, for joining. We entered 2024 laser-focused on bringing our business to free cash flow break-even and returning Rent the Runway to growth. I'm pleased to report that we are well on our way on both fronts and are reiterating our guidance that we will be free cash flow break-even this fiscal year. This is a huge accomplishment for a business that burned $70 million in cash last year, and we believe it proves that our business model is sustainable and our margins are attractive. On the growth front, the most important work that we've done is realigning our organization around growth. This realignment has come from, one, simplifying key internal goals and processes, two, transforming talent in critical areas by recruiting the right external talent and elevating and orienting internal talent towards growth, and three, setting up cross-functional teams with clear mandates and resources to work in an agile manner towards their goals. Thus far, our special event rental business Reserve is up 21% year-over-year in Q3. Our r esale business is up 23% year-over-year in Q3, and we've achieved significant gains in loyalty among our post-90-day subscribers. Our plan is to spend 2025 accelerating subscriber growth, and we feel set up to win here. The rental market is now established. What was a radical idea when we started 15 years ago to rent designer clothes is now mainstream, with women of all ages more comfortable with renting than ever before. We have much progress to share, but first, let's cover the financials. Q3 revenue was $75.9 million at the midpoint of our $75-$77 million guidance range, up 4.7% year-over-year. Q3 was our fourth consecutive quarter of positive year-over-year revenue growth and the fastest one of the four. We achieved this acceleration of growth despite strategically pulling back on our resale business in order to preserve availability of newer inventory for subscribers. Adjusted EBITDA was $9.3 million, or 12.3% of revenue, a bit below our 13%-15% margin guidance, primarily due to lower-than-expected other revenue. Free cash flow for Q3 was negative $3.4 million, a $14 million year-over-year improvement. We are now three out of four quarters of the way through our journey towards free cash flow break-even, and are very proud that year-to-date free cash flow is $38 million better than 2023 and $61 million better than 2022. Turning back to the business, let's start with inventory, which is one of the most consequential strategic decisions we make every year. Our 2024 buy has greatly resonated with customers. First, the utilization of our new inventory was very high and up 530 basis points year-over-year, meaning our customers highly demanded what we brought in. Two, hearts per style increased 23.3% year-over-year, proving that she desired the inventory more. And third, love rate of the inventory increased by 800 basis points year-over-year, proving that she is more satisfied with it once she wears it. In Reserve, orders grew 23% year-over-year, and the productivity of our top styles increased. Resale units sold per subscriber on units they already had at home grew 38% year-over-year, proving that try-before-you-buy is a key benefit of our subscription program and allows us to keep our inventory fresh. We also made progress against the merchandising goals that I outlined on our Q1 call. Time to pick for our early-term subscribers has decreased 15%, and merchandising improved our hearts per style on older inventory by 6.7%, showcasing the desirability of new-to-the-customer inventory that may, in fact, be from last season or the season before. We are also continuing to test ways to launch more personalized and more frequent merchandising changes, including through the use of AI. As we've communicated before, inventory satisfaction is an important predictor of growth rates across our revenue lines. Our data shows that we do a great job picking styles our customers love. We feel confident that we can drive considerable business growth in 2025 by investing even more into inventory, both breadth and depth. We see in our data that our customer cares about using Rent the Runway to access a certain set of designer brands that have outsized demand and high velocity on our platform. In 2025, we plan to significantly increase the breadth of styles and depth from our top 25 pillar brands on Rent the Runway. Across the board, these brands outperform on utilization, hearts, velocity of how quickly they get stocked out, and customer satisfaction. We know that the inventory availability of a rental platform will never be perfect, but we think we can do an even better job in the brand she loves most. We also plan to leverage the incredible inventory acquisition platforms we have created in our revenue share program and our exclusive design collections to help drive this inventory growth in a capital-efficient manner. Let's turn to some more highlights from Q3. First up, Reserve. On our last call, we shared that in August, the first month of Q2, we had seen orders up around 23% year-over-year. Today, we are pleased to confirm that momentum continued through the entire quarter, with orders for Q3 ending up around 23% year-over-year. Equally important, new customers into Reserve grew at an even faster pace, up approximately 36% year-over-year. We achieved these results by a series of strategic steps. As we shared last quarter, we staffed a cross-functional pod solely focused on Reserve. In the summer, we expanded our Reserve booking window, which increased bookings. We also implemented a series of changes to improve productivity, such as removing buffer days and expediting turnaround time in our warehouses. As a result, we've seen that the number of units that turned two-plus times in October was 46% higher than the prior year. We also leaned into the Reserve customer experience by reinforcing our Customer Promise, our Fit Guarantee throughout the user journey, and started to focus on upsell via UX changes that encouraged the addition of additional styles and accessories. Looking ahead into 2025, we have a robust roadmap of improvements that we believe will drive continued revenue growth in Reserve. Second, in Q3, we've seen significant efficiencies in paid marketing that have enabled us to free up dollars to invest into initiatives to reignite our brand. Reigniting our brand will take time, but we believe that it's critical to increasing new customers into Rent the Runway via improved organic traffic. In paid marketing, we saw improvement for the second consecutive quarter, with Q3 CACs better by 23% year-over-year. We believe this improvement has come from diversification of paid marketing channels, as well as much-improved creative content across all of our surfaces more tailored to the dynamics of that environment. We also believe our innovation and creative is critical to reinforcing with customers and prospects that we are a luxury proposition with higher-end designer inventory and superior customer service that deserves a higher price point than our competitors. Our 15-year anniversary in November also saw the launch of our new brand campaign, "Own Nothing, Have Everything," which features some of our most loyal customers and their stories. We believe the key to succeeding on social media is to have authenticity that the audience responds to, and making the stories of our customers the centerpiece is a step in that direction. More tactically on organic traffic, we believe we have a meaningful opportunity that we plan to capture via SEO improvements. This past quarter, we saw new highs in our keyword rankings, which resulted in a 53% quarter-over-quarter growth in non-branded impressions and a 14% quarter-over-quarter increase in non-branded traffic. Third, towards the end of Q3, we launched a new subscription plan. For $119 per month, customers get access to the full subscription Rent the Runway closet of marquee designer brands in a five-item, one-shipment-a-month offering. Our other five-item plan limits customers to items with lower retail price points. One of our guiding and differentiating principles at Rent the Runway is to have products that cater to varying needs and life stages. The new $119 per month program is consistent with this strategy. We are eager to dig into the data on how the new plan resonates with prospects and how it impacts loyalty. Thus far, we've seen a sizable percentage of prospects joining this new plan. Fourth, in the third quarter, we launched several initiatives designed to improve the onboarding experience. In September, we relaunched our Customer Promise for subscription. During a customer's first 60 days of subscription, we will replace any item for any reason. In October, we also launched a new styling team who can book appointments with new customers over phone, text, or Zoom to help them pick out items for their first shipments and recommend styles to try. Early indications are that these onboarding initiatives are improving loyalty and driving engagement, so we plan to scale them into Q4 in 2025. We also recently welcomed a new Chief Product Officer, Bradford Schellhammer, to Rent the Runway, whose career spans founding multiple high-growth consumer startups, having a leadership role in product at eBay for six and a half years, where he ran the entire buyer experience product organization and drove the company's successful product personalization, mobile, and focus categories, including fashion and visions. Bradford was most recently the Chief Product Officer of Reverb, an Etsy subsidiary. His focus is on all things growth, with an emphasis on driving more prospect conversion on our platform and innovating the subscriber experience to drive higher loyalty. Last but not least, we've made tech strides throughout Q3 that have enabled us to deliver better experiences to our customers. We rolled out our new faster loading grids. The improved load time resulted in a 33% increase in grids viewed per session and a 61% increase in add-to-bag as customers could find items faster. We've also implemented tech upgrades that allow for faster and more frequent merchandising changes. On UX, we started to see improved conversion resulting from initiatives like delayed account creation and the launch of Apple Pay. Finally, we relaunched our gift card programs in time for the holidays. In conclusion, this quarter and year to date, we have stayed laser-focused on our free cash flow break-even goal, demonstrated our ability to buy the right inventory, reemphasized the brand within marketing, delivered on product, technology, and merchandising improvements, and followed through on progress in the reserve business. We are excited to continue our work throughout Q4 and enter 2025 with a culture fired up around growth, a sustainable core business, and momentum across our growth levers. With that, I'll turn it over to Sid. Thanks, Jen, and thank you, everyone, for joining us. We continued to make good progress in the third quarter of fiscal 2024, with improvements in revenue growth, ending active subscriber growth, Adjusted EBITDA, and free cash flow. Revenue growth of 4.7% versus Q3 2023 was better than the 4.2% year-over-year growth we experienced in Q2 2024. Indeed, year-over-year revenue growth has shown improvements the fourth consecutive quarter. Consistent with our expectations, ending active subscribers returned to growth after declining year-over-year in Q2 2024. As a reminder, Q2 2024 ending active subscribers were down 6.2% versus Q2 2023 due to changes in our promotional strategy. Ending active subscribers grew 0.6% in Q3 2024 versus Q3 2023 due to stronger year-over-year subscriber acquisition and retention versus the prior quarter. Adjusted EBITDA and free cash flow improved substantially versus Q3 2023. Adjusted EBITDA was 12.3% of revenue in Q3 2024 compared to 4.8% of revenue in Q3 2023. Adjusted EBITDA margins were slightly lower than Q3 adjusted EBITDA guidance of 13%-15% of revenue, primarily due to lower-than-expected other revenue. We chose to sell less inventory as our rental business continued to improve. In addition, we expect the timing of inventory sales to third parties to be more Q4-weighted than originally anticipated. As evidenced by our reiteration of full-year adjusted EBITDA guidance, we continue to expect strong progress on profitability improvement this fiscal year. Free cash flow for the nine months ending October 31, 2024, was negative $9.3 million versus negative $47.3 million for the nine months ended October 31, 2023. As I will outline in more detail, we are reiterating our guidance to be free cash flow break-even for fiscal year 2024. Let me now provide a more detailed review of third-quarter results. We ended Q3 2024 with 132,518 ending active subscribers, up approximately 0.6% year-over-year. Average active subscribers during the quarter were 130,796 versus 134,646 subscribers in the prior year, a decrease of 2.9%. Ending active subscribers increased from 129,073 subscribers at the end of Q2 2024 due primarily to strong acquisitions as well as improved retention versus the prior quarter. Total revenue for the quarter was $75.9 million, up $3.4 million or 4.7% year-over-year, and down $3 million or 3.8% quarter-over-quarter. Subscription and reserve rental revenue was up 2.5% year-over-year in Q3 2024, primarily due to growth in our reserve business and higher revenue per average subscriber. Other revenue increased 23.1% or $1.8 million year-over-year. Fulfillment costs were $21.4 million in Q3 2024 versus $21.5 million in Q3 2023 and $20.6 million in Q2 2024. Fulfillment costs as a percentage of revenue were lower year-over-year at 28.2% of revenue in Q3 2024 compared to 29.7% of revenue in Q3 2023. Fulfillment costs benefited from higher resale revenue and continued warehouse efficiencies. Gross margins were 34.7% in Q3 2024 versus 34.8% in Q3 2023. Q3 2024 gross margins reflect higher rental product costs due to increased investment in inventory in fiscal year 2023, offset partially by improved fulfillment costs. Increased inventory investment reflects last year's debt adjustments to increase inventory in stock rates in fiscal 2023 and beyond. Q3 2024 gross margins decreased quarter-over-quarter to 34.7% from 41.1% in Q2 2024 due to seasonally higher revenue share payments and higher fulfillment costs as a percentage of revenue. Operating expenses were 15.1% lower year-over-year primarily due to the favorable impact of our cost reduction efforts and lower stock-based compensation expenses. Total operating expenses, which includes technology, marketing, and G&A, were 48.7% of revenue in Q3 2024 versus 60.1% of revenue in Q3 2023 and 49% of revenue in Q2 2024. Adjusted EBITDA for the quarter was $9.3 million or 12.3% of revenue versus $3.5 million or 4.8% of revenue in the prior year. Adjusted EBITDA for the nine months ending October 31, 2024, was approximately $29.5 million or 12.8% of revenue versus $15.7 million or 7.1% of revenue in the prior year. Adjusted EBITDA improvement year-over-year reflects the impact of our fixed cost reduction efforts, higher revenue, and lower fulfillment costs, partially offset by higher revenue share payments due to a greater proportion of revenue share units. Free cash flow for Q3 2024 was negative $3.4 million versus negative $17.7 million in Q3 2023 due primarily to lower costs of rental product and higher profitability. Free cash flow for the nine months ending October 31, 2024, was negative $9.3 million versus negative $47.3 million in the nine months ending October 31, 2023. I will now discuss guidance for Q4 2024 and fiscal year 2024. Let me start with revenue. We expect revenue for fiscal year 2024 to grow between 2% and 4% versus fiscal year 2023. As a result, Q4 2024 revenue is expected to be between $74.4 million and $80.3 million. We are reiterating our full-year adjusted EBITDA guidance of between 15% and 16% of revenue for fiscal year 2024. This implies Q4 adjusted EBITDA of between $16.1 million and $20.1 million. Finally, we are reiterating our free cash flow break-even guidance for fiscal year 2024. Free cash flow in the fourth quarter of fiscal 2024 is expected to be approximately positive $9.3 million, resulting in free cash flow break-even for the fiscal year. Let me take a moment to walk through free cash flow progression from Q3 2024 to Q4 2024. Free cash flow for Q3 2024 was negative $3.4 million. Our adjusted EBITDA guidance for Q4 implies a $6.8 million to $10.8 million improvement over Q3 2024. Further, we expect about $7 million in lower rental product capital expenditure versus Q3 2024. The combination of these two factors is expected to result in positive free cash flow for Q4 2024. After taking into account differences in non-inventory-related capital expenditures and working capital changes, we expect to reach free cash flow break-even for fiscal year 2024. We have improved free cash flow significantly through the first three quarters of fiscal 2024. Achieving our free cash flow goals for Q4 2024 will require executing on plans for the quarter, as well as continued vigilance on cost control. In summary, we believe these results demonstrate the continued improvement in underlying business trends at Rent the Runway. We believe we have also demonstrated, through the first nine months of this fiscal year, an ability to significantly improve free cash flow. As Jen outlined, we are now squarely focused on accelerating growth in our subscription business by listening to our customers and making decisions that lay the foundation for stronger growth in fiscal 2025 and beyond. We will now take your questions. Thank you. At this time, we'll be conducting a question-and-answer session. If you'd like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the s tar keys. Our first question comes from the line of Andrew Boone with Citizens JMP. Please proceed with your question. Good morning, and thanks so much for taking my questions. I wanted to ask specifically about the 4Q revenue guide. This quarter, it looks like it's a more or less $6 million guide for 4Q that compares to $2 million in the last three quarters. Can you talk about the widening of the range and then what may be embedded at the high end versus the low end in terms of expectations? Sure. As you know, we started the year with revenue guidance of 2%-6% for the full year, and we narrowed that range to 2%-4% for the full year now. The Q4 implied guidance range is really a function of the 2%-4% guidance range for the full year. Now, we're already about three quarters through the year, so it made sense to narrow the range to reflect the sort of likely range of outcomes for the year. I think the main variation or the main reason for the range is, number one, part of the reduction in the top end is a function of the other revenue that we highlighted in Q3 and the fact that we actually want to hold on to more inventory, both in Q3 as well as in Q4, because we see the rental business doing better as the year has progressed. And then the second factor in terms of the range, as well as the reduction in the top end of the range, is the timing of subscriber acquisitions and the impact of lower promotions, as we discussed last quarter, which also factor into this decision. So I think the primary reason for the Q4 range is just dependent on how much inventory we choose to sell in Q4, but it is not a reflection, as we've seen over the past four quarters. Revenue growth has continued to accelerate. We feel better about the underlying trends. The subscription businesses and the reserve businesses are starting to do better. So it really isn't a function of anything other than us desiring to keep more inventory for our customers, and the range is reflective of that uncertainty. And then if I think about subscriber growth going forward, right, it seems like there's traction with reserve, better top-of-funnel now as you guys think about new customers trying the product. It seems like inventory is in a better place. Can you guys just outline the key levers as we think about subscriber growth for 2025? What are the key metrics or operational initiatives that you guys have as we think about accelerating that subscriber growth next year? Yeah. I think just to backtrack a bit, just as a reminder, between 2020 and 2023, Rent the Runway was primarily in cost-cutting and kind of margin generation mode. This is what we had to do at the time, and it's certainly what we prioritized. We prioritized financially transforming our P&L. When we entered 2024, we had confidence that we would be able to bring the business to free cash flow break-even this year, even in lower growth scenarios. So we had two goals. Let's actually achieve free cash flow break-even, and let's change the company from the culture of cost-cutting back into growth mode. So we were certainly successful between 2020 and 2023 in really transforming our P&L. We moved from an asset-heavy business into an asset-light business, and this year, we have accomplished an enormous amount in setting up the business for growth, so number one, we've changed talent. We've reoriented internal talent towards growth. We reorganized our business in terms of how we operate. We simplified our goals. We have created cross-functional teams to achieve these goals, and we are already seeing really nice traction, so we talked about, as you mentioned, in Q3, our reserve business is up over 20% year-over-year. Our resale business is up over 20% year-over-year, and that we're seeing some really nice leading indicators of subscription going up, like our loyalty rate and our CACs going down, so now the whole business is really primed for our key growth lever, which is subscriber growth. Now, how do we drive subscriber growth? First and foremost, we're focused on inventory. Inventory is one of the most important, the inventory position is one of the most important predictors of growth. And we've set up these incredible inventory acquisition channels in our rev share business and our exclusive design business to be able to acquire a lot of inventory at very low or no cost of capital. So we are investing heavily into our inventory position into 2025 as a key to unlock subscriber growth. So that's one component of it. Another component is that we've set up a cross-functional team internally that we've mentioned over the last few calls, focused on the subscriber onboarding experience and improving, therefore, retention. So between kind of the pod that's focused on subscriber experience and retention and between our focus on depth and breadth across inventory for 2025 to drive subscriber growth, we feel set up really to win here. That's helpful. And then just for my last question, I wanted to double-click on inventory. You guys have made some changes in terms of resale, understood. But can you just talk about the timeline of when you guys will feel like inventory is in the right place? Can you guys get there in the next quarter or two, or is that more like an evolving thing where we expect that's a multi-year initiative? Thanks so much, guys. Look, I don't think we want to get into specific plans for 2025. I think what we will say is we can make. I mean, I kind of bring you back to fiscal 2023 for a second, just to show that we can actually make fairly substantial improvements in a reasonably short period of time. So if you recall, in fiscal 2023, we talked a lot about in-stock rates and the fact that in-stock rates were an issue for us. And within effectively one fiscal year, we were able to buy in significantly more depth and have that problem be significantly lower than it was. So I think we can make a lot of progress. If you look at our evolution of the channel mix that we purchase inventory through, we have made considerable strides in relatively short periods of time on revenue share, for instance. I mean, almost half of the units we're buying this year are coming from revenue shares. I think we're going to utilize all of the lessons we've learned, both from what customers want, how to target that customer more appropriately, the channels we have unlocked, and the learnings we have to make some pretty quick progress on inventory. Yeah. We mentioned on this call that we have an enormous amount of data on what our customers love. And we see that there are a set of brands on our platform that have incredibly high demand, have high customer satisfaction rate, have high hearts, have high love rate. And on a rental platform, you're never going to have perfect availability at every point in time. But we certainly can improve our position and really "double down" into these pillar brands to ensure that for the brands that people come to Rent the Runway for, we're giving her an even better chance of being able to wear those brands when she comes. And so that's just an example of a strategy that we've already executed against for 2025 as it relates to inventory. And that's just about the distribution of our dollars. That's not necessarily more dollars. That's saying, "Okay, more of these top 25 pillar brands." And I think the other thing to point out is if you think about this year, for instance, on inventory, it isn't. Our making progress on inventory isn't something that necessarily requires huge amounts of time. This year has been really a function of running a very tight shift. We went from negative $70 million in cash consumption last year to what we expect will be free cash flow break-even for the full year. And as part of that, we also needed to continue to make significant progress in diversifying the channel mix, making sure revenue share partners were comfortable with us providing significantly more inventory and so on. So I think what we're telling you is the building blocks are in place. The customers are responding, as you can see with Reserve and with resale and with the leading indicators of the subscription business. The business is at break-even. It really now is up to us to put in the investment to accelerate revenue growth. And we're telling you that we're trying to do this in a way that preserves the capital sustainability of the business and the cash characteristics of the business while really trying to accelerate the growth element of things. Thank you. Thank you. Our next question comes from the line of Ashley Helgans with Jefferies. Please proceed with your question. Hi. Thanks for taking our questions. So to start, maybe you can talk a little bit about the difference in customer between reserve, resale, and subscribers, any trends to call out, and just how they're each performing. Thanks. Hi. Our Reserve business certainly provides an easy way to enter Rent the Runway for Reserve pricing as low as kind of 10% of the retail price, starting at just $30 to rent a dress. You can come and have a great experience renting for a holiday party, a wedding, etc. We've always seen a diverse customer base across age, across geography, across income level into the Reserve business. Prior to 2024, we had seen that that business had been declining year over year, which was not great in terms of driving new customer growth into Rent the Runway because traditionally, Reserve has been a driver of new customer growth. We really put an emphasis on Reserve this year to re-accelerate it. We've made some very quick and significant progress given that our Reserve business is up over 20% in Q3, and new customers into that business are up 35% year over year in Q3, so we're showing that we can drive more people into the ecosystem of Rent the Runway. And then we've set up really great lifecycle marketing communications. Once you have a great experience in Rent the Runway, obviously, to familiarize that customer with the suite of products that we have from resale to subscription, and even the launch of this one swap, $119 a month subscription plan this month gives us yet another kind of entree to sell our Reserve customers into a more lightweight subscription program where you get that one shipment a month, but have access to the full assortment of our inventory. So one of the really positive things that we're seeing about subscription is five, six years ago, a subscription to fashion was fundamentally about early adopters, people that were comfortable with what was then a radical new way to get dressed. Now, even a subscription to fashion has become more mainstream. And how do we know that? We know that because of the diversification of the customers coming into subscription as the first product that they engage with Rent the Runway. And we're seeing very high kind of engagement amongst a much more diverse age demographic into subscription, more diverse geographies where she's coming from, and certainly diverse use cases. So we see a lot of really nice momentum in our subscription business and feel very confident that with this very simplified focus within the company right now and cross-functional alignment around key goals, that 2025 is going to be the year where we really accelerate our subscriber acquisition and growth. Great. Thanks so much. Thank you. Ladies and gentlemen, that concludes our question and answer session. I'll turn the floor back to management for any closing comments. Thank you for joining us on this Q3 call. We're really excited about our progress this year, and we look forward to chatting with you on our Q4 call in April. Thanks, everyone. Thank you. This concludes today's conference call. You may disconnect your lines at this time. Thank you for your participation.