RENT 10-K & 10-Q changes, risk factors and insider trading

We must continue to drive revenue growth to be successful. To effectively drive growth, we must continue to enhance customer experience and attract and retain customers (particularly subscribers), invest in rental product, iterate our subscription products, manage the interplay between our various offerings, invest in digital consumer innovation, maintain and expand our brand awareness and marketing, evolve our marketing and product strategies to address emerging machine learning, automated decision-making and artificial intelligence algorithms, models and technologies (collectively, “AI”), including agentic AI, and maintain and upgrade our management information and reverse logistics systems and other processes. Our growth and growth strategies have in the past strained, and could in the future strain, our existing resources, and we could experience ongoing operating difficulties in managing our business across numerous jurisdictions, including difficulties in hiring, training, and managing our broad employee base. Failure to scale and preserve our Company culture as we grow could also harm our future success, including our ability to retain and recruit personnel and to effectively focus on and pursue our corporate objectives.

Our growth strategy is focused on continuing to grow, engage,retain and retaingrow our subscriber and customer base, expanding our brand partner relationships and product assortment, increasing our advertising and other marketing spending, andby continuing to invest in our rental product, offerings and technology.technology to improve her experience, and continuing to drive acquisition through effective and efficient marketing. The majority of our revenue is generated by our subscribers. Our base subscriptionSubscription plans range in price and customers can customize their subscriptionSubscription monthly by purchasing additional slots and shipments. OurAlthough subscriptionswe often highlight certain Subscription plans over others in an attempt to optimize conversion and highlight opportunities to add shipments and spots to Subscription plans mid-month, we cannot be certain that these actions will be successful. Also, our Subscriptions renew automatically on a monthly basis and subscribers may disable automatic renewal by canceling or pausing their subscription prior to the next month’s bill date. As a result, even though a significant number of subscribers have historically renewed their monthly subscription, there can be no assurance that we will be able to retain a significant portion of subscribers beyond the existing monthly subscription periods. In addition, any limitation or restriction imposed on our ability to bill our subscribers on a recurring basis, enforce our terms of service orservice, collect data or deliver relevant promotions or media, whether due to new regulations or otherwise, may significantly lower our subscription retention rate. We also offer our customers the option to rent or buy items via our Reserve offering and Resale offering, respectively.respectively, which we believe is a strong competitive advantage but adds complexity to our business that we must effectively manage to drive growth. For example, our Resale strategy shifts from time to time to optimize rental product in-stock and revenue by reducing or increasing our units sold via Resale. Further, in fiscal year 2025, we focused on active subscriber growth and experienced weakness in Reserve, which we anticipate will continue in fiscal year 2026 as we plan to revisit our Reserve strategy, plans, and leadership. Our Subscription plans and offerings do not have demonstrably long track records of success and may not grow as much or as fast as we expect. For example, our active subscriber count decreased year over yearyear-over-year in fiscal year 2024 and, although we are focused on growth initiatives,initiatives and our active subscriber count increased year-over-year in fiscal year 2025, it may continue to decline in the future. In addition, our number of active subscribers may be higher or lower than the number of our actual individual subscribers, because some active subscribers may have multiple accounts (such as for professional and personal purposes), or some may share their plans with other individuals. Although we presently anticipate an increase in our year-over-year revenue growth rate in fiscal year 2025,if2026, if our growth and/or growth rates do not meet expectations, the perception of our business, financial condition and results of operations by investors and our third-party service providers and brand partners may be adversely affected.

•price and structure our Subscription, Reserve and Resale offerings so that we are able to attract new customers, and retain and expand our relationships with existing customers;

•acquire customers into varying levels of subscription programs at different price points and promotions;

•successfully maintain and grow our relationships with existing and new brand partners, including continuing to maintainleverage and growdevelop our Share by RTR and Exclusive Design offerings;

•be effective and efficient in our marketing, particularly our paid marketing efforts;

•effectively manage our costs related to our business and operations; and

•avoid or manage interruptions in our business from information technology downtime, global trade policies, cybersecurity or privacy incidents (including those resulting from our use of AI) and other factors that could affect our physical and digital infrastructure.

We also expect to continue to expend substantial financial and other resources to grow our business, and we may fail to allocate our resources in a manner that results in increased revenue growth in our business. Further, our cash position and New Credit Agreement covenants may limit our ability to invest sufficiently in future growth initiatives, including, but not limited to, funding marketing initiatives and procuring rental product. Additionally, we may encounter unforeseen capital or operating expenses, difficulties, complications, delays, and other unknown factors that may result in losses in future periods and undermine our profitability goals. If our revenue growth does not meet our expectations in future periods, our business, financial condition, and results of operations may be harmed, and we may not achieve or sustain profitability in the future.

We compete with other fashion rental companies and also with a range of traditional and online retail and resale fashion companies and we expect competition to continue to increase in the future. To be successful, we need to continue to attract and retain customers and brand partners.partners and maintain and grow brand awareness.

•how effectively differentiated our brand, offerings, customer experience and value proposition are from those of our competitors;

•how effectively we market and communicate how to use our Subscription, Reserve and Resale offeringsofferings, manage the interplay between our offerings, and attract and retain customers;

•the price at which we are able to offer our Subscription, Reserve and Resale offerings and our ability to optimize pricing;

•customer satisfaction with our offering and customer policies and the effectiveness of our customer service;

•the strength of our brand, including maintaining favorable brand recognition and effectively marketing our services and value proposition to customers; and

•the success of our reverse-logistics processes in delivering products in good condition to customers; andcustomers.

We are subject to variable industry and global economic conditions and their impact on consumer discretionary spending. Some of the factors that may negatively influence consumer spending include high levels of unemployment; recession; higher consumer debt levels; inflation; reductions in net worth, declines in asset values, and related market uncertainty; volatility in the financial markets; volatility in tariff rates and global trade policies; war in the Middle East; home foreclosures and reductions in home values; fluctuating interest rates and credit availability; fluctuating fuel and other energy costs; fluctuating commodity prices; and general uncertainty regarding the overall future political and economic environment. We have experienced many of these factors in the past and have seen negative impacts on customer demand and increases in brand, shipping, and other supplier costs as a result.

In response to the changing business environment and related inflationary pressure, we have implemented pricing increases and expect to do so in the future if our costs continue to increase. Such price increases may include, but are not limited to, higher Subscription fees and/or Reserve rental fees, new or increased shipping fees, or other types of fees or surcharges. Such pricing changes may be negatively perceived by customers, particularly in a period of economic uncertainty, and/or may fail to adequately mitigate cost increases we face, and our business and financial results could be harmed. Furthermore, increases in consumer discretionary spending tend to fluctuate and may decrease, particularly if there is a recessionrecession, a weaker jobs market, and/or higher inflation leading to increased price sensitivity. Economic conditions in certain regions may also be affected by natural disasters, such as hurricanes, tropical storms, earthquakes, and wildfires; other public health crises; geopolitical conditions, including wars, terrorism and political tensions; and other major unforeseen events. Although we believe the value proposition of our offering and business model may be strengthened in an inflationary environment where the cost of purchasing clothing and accessories increases, consumer purchases or rental of discretionary items, including the products that we offer, frequently decline during recessionary periods or periods of economic uncertainty, when disposable income is reduced or when there is a reduction in consumer confidence.

Additionally, adverse economic changes could reduce consumer confidence, and could thereby negatively affect our operating results. In the event of a prolonged economic downturndownturn, uncertainty, or acute recession, significant inflation, or increased supply chain shortages, consumer spending habits could be adversely affected, and we could experience lower than expected revenue, net income, cash flows and Adjusted EBITDA. In challenging and uncertain economic environments, we cannot predict the degree of uncertainty, whether or when such circumstances may improve or worsen or what impact such circumstances could have on our business. Any of these developments could harm our business, financial condition and results of operations.

The growth of our business is dependent upon our ability to continue to grow by cost-effectively adding new customers and retaining existing customers. Historically, a substantial portion of new customer acquisition has originated from organic word-of-mouth and other non-paid referrals. Our marketing initiatives are generally focused on re-engaging lapsed and paused customers, retaining existing customers and growing our base of new customers. In addition, we continue to focus on growing traffic and conversion rates by optimizing our organic social media channels, by improving our email marketing performance, by refreshing our lifecycle marketing engine, by increasing paid marketing efficiency, and by focusing on ourreferrals and other community-driven “word of mouth” strategies, and aiming to optimize discovery via search engine rankingoptimization, foragentic relevantsearch, keywords.and enhanced iOS App Store presence. These efforts are ongoing and, although we have seen some positive results, they are subject to change and may not result in a sustained increase in customer conversion, loyalty or higherengagement. In fiscal year 2026 we are planning to allocate a portion of our marketing budget to drive growth through these community-driven “word-of-mouth” channels, which may not meet our expectations and/or adversely impact overall customer engagement.acquisitions as we reduce spend in lower-funnel marketing channels. The impact of emerging technologies, including, but not limited to, AI tools such as agentic search, is not yet certain and may increase these risks. See “Our use of AI may subject us to new or heightened legal, regulatory, ethical, operational or other challenges.” As a result, our levels of paid and organic growth may continue to fluctuate and/or overall growth may decline.

Paid marketing is a part of our growth strategy and weWe may determine that more significant investment in marketing will be required in the future. However, in light of cost constraints, we reduced our marketing spend, particularly in paid marketing, in fiscal yearyears 2024,2024 and 2025 (relative to years prior), which resulted in lower customer acquisitions in fiscal year 2024 and revenue.led Weus to invest more heavily in promotions in fiscal year 2025. Our marketing spend levels and prioritization of lower funnel marketing may incurhave also negatively impacted brand awareness despite our efforts to revitalize our brand. In addition, we believe that our overall levels of marketing expensesspend significantlyrelative to our revenue - both historic and projected for fiscal year 2026 - indicate that we are underinvested in advancemarketing ofrelative theto timetypical market practice for our industry and our competitors and have less channel diversification. Further, although we anticipatefocus recognizedon revenuefull associatedfunnel withmarketing, suchour expenses.marketing spend has prioritized, and is expected to continue to prioritize, paid marketing over upper funnel, brand marketing investments, which may have a negative impact on brand awareness and growth. In addition, our paidmarketing marketingefforts may be unsuccessful for various reasons, including nota failure to effectively reachingreach potential customers or beingto be cost-effective (particularly as costs increase for performance marketing), changes in regulations (e.g., privacyprivacy, pricing, and auto-renew regulations) or third-party interference that could limit the effectiveness of search engines, social media platforms, and other tools for marketing, and the possibility that potential customers may decide not to rent through our platform or the spend of new customers may not yield the intended return on investment, any of which could negatively affect our results of operations. We also may incur marketing expenses significantly in advance of the time we anticipate recognized revenue associated with such expenses. In addition, the success of our marketing initiatives overall depends upon our marketing team and leadership, which is lean and has continued to experienceexperienced transition as we focus on building creative and strategic talent on the team. If our team building efforts or marketing strategies are not successful or are not executed successfully, our growth may decline and we may not achieve our growth and/or profitability goals.

We utilize promotional pricing to attract customers and subscribers who may have heightened price sensitivity and who may not be willing to pay full price for our offering when the promotion period expires. Overall,For example, we reducedhave promotionalobserved pricingthat forsubscribers Subscriptionwho forreceive fiscalsteep yeardiscounts 2024have versushigher fiscalrates yearof 2023, which we believe negatively impacted subscriber acquisition.cancellation. Our promotional and pricing strategy changes regularly and is subject to experimentation. ForIn example,fiscal as part of our recent customer engagement campaign in the first quarter ofyear 2025, we haveincreased providedour ause freeof membershippromotional monthpricing to certaindrive high-valuegrowth lapsedin subscribers,customer whoacquisitions, mayand or may not continue their subscription when their free month expires. Wewe expect that we will continue to adjust our promotional policies in response to our business objectives and market conditions. Our business performance may be adversely impacted if our promotional strategy is not effective at attracting and retaining customers.

Further, customer preferences may change and customers may not rent through our platform as frequently or spend as much with us. Customers may also react negatively to policy changes that we make from time to time, such as more stringent late fees or pricing increases, which could cause them to cancel their subscriptions. We strive to drive conversion of new subscribers from current and former customers; however, if their behavior changes or they are not satisfied with our offering for any reason, our ability to grow subscribers may be impacted. If we are not able to continue to expand our customer base through cost-effective methods, we may not meet our revenue and profitability goals, our revenue may grow slower than expected or decline, and investors may lose confidence in our business. Relatedly, an inability to attract and retain customers could harm our ability to attract and retain brand partners, who may decide to partner with alternative platforms.

•the level of our investment in marketing and the success of our marketing strategies and tactics, including changes in efficiency of our historic or current customer acquisition and retention methods;

•the failure (or perceived failure) to meet different and sometimes conflicting stakeholder expectations regarding our environmental, social and governance (“ESG”), initiatives.

If existing customers no longer find our offerings and products appealing, appropriately priced or easy to use, or if we are unable to provide high-quality support to customers to help them resolve issues in a timely and acceptable manner, they may stop using our offerings, we may experience negative publicity and word-of-mouth and other referrals may be hampered. For example, we implemented a price increase for our subscription plans and began enforcing a more stringent late fee policy in fiscal year 2025 and anticipate that we will likely increase prices again in the future. If our customers no longer perceive our subscriptionSubscription plans as appropriately priced and cancel or pause their subscriptions, our business and financial results could be harmed. We are focused on investing in ourthe customer’scustomer experience and delivering even moregreater value to her, including by focusing on approximatelynearly doubling our rental product selection in fiscal year 2025 and maintaining these levels in fiscal year 2026, and emphasizing the value proposition of our offering in our marketing materials, among other initiatives; however these or other initiatives to retain customers may not be successful at improving customer satisfaction, subscriber retention and/or revenues and may require additional costs or lead to unanticipated consequences. For example, we may offer discounts to retain subscribers who have heightened price sensitivity and who may not be willing to continue to pay full price for a Subscription. Reductions or changes to when and under what circumstances such Subscription discounts are offered may impact retention. Even if our existing customers continue to find our offerings and products appealing and our customer service satisfactory, they may decide to downgrade to a less frequent, lower cost subscription and/or rent fewer items due to price sensitivity and/or changing demand or other reasons. If customers downgrade their subscriptions or make fewer or lower priced rentals, our financial results could be negatively affected.

We had a net income (loss) of $(69.9)$22.6 million and $(113.269.9) million for the years ended January 31, 20252026 and 2024,2025, respectively, and have in the past had net losses. We reported net income for the year ended January 31, 2026 due to the recognition of a Gain on Debt Restructuring of $96.3 million. As of January 31, 2025,2026, we had an accumulated deficit of $(1,123.01,100.4) million. BecauseFurther, we havefor a shortvariety operatingof history at scale,reasons, it is difficult for us to predict our future operating results. We will need to generate and sustain increased revenue and manage our costs to achieve profitability. Even if we do, we may not be able to sustain or increase our profitability.

Our ability to generate profit depends on our ability to grow customers and revenue and drive operational efficiencies in our business to generate better margins. In recent years, we have taken significant steps to reduce our operating costs, improve our margins, and make progress towards profitability. We expect fiscalFiscal year 2025 to bewas a year of investment as we plan to significantly increaseincreased the amount of new rental product we acquireacquired and, therefore, expect to increaseincreased our net losses year-over-year.year-over-year, excluding the Gain on Debt Restructuring discussed above. We may also continue to generate net losses in order to:

•enhance our current offerings and develop new offerings;

We may discover unanticipated costs or that these initiatives are more expensive than we currently anticipate, and we may not succeed in increasing our revenue sufficiently to offset these expenses or realize the operating efficiencies and profitability we anticipate. We also expect to face greater compliance costs over time associated with the increased scope of our business and being a public company. If we are not able to adequately increase revenue or manage operating costs for reasons within or due to other factors outside of our control, we may continue to incur net losses and not be able to achieve or sustain profitability in the near term or at all. If we are unable to achieve or sustain profitability, the value of our business and the trading price of our Class A common stock may be negatively impacted.

We have not always predicted our customers’ preferences and acceptance levels of our products with accuracy. We may misjudge demand and over or under purchase rental product. In addition, external events may disrupt or change customer preferences and behaviors in ways we are not able to anticipate. Lower rental product availability, including depth and breadth levels, has negatively impacted active subscriber retention in the past. Although we expectare tofocused approximatelyon doubleensuring thethat newthere are adequate quantities of rental product added toon our site and aim to acquire approximately the same quantity of rental product year-over-year in fiscal year 2025,2026, we anticipateexpect that new rental product levels will fluctuate quarterly fluctuations to occur due to the timing of our purchases, seasonality and other factors within or outside of our control, which may negatively impact customer retention and, therefore, revenue. Any future decreases in our rental product availability levels or perceived availability levels, including in connection with other business objectives, may negatively impact active subscribers.

We currently primarily rely on a national carrier for our outbound and inbound logistics. However, we continue to maintain relationships with tier two and tier three carriers in order to provide redundancies and manage potential shipping disruptions from time to time. While we have confidence in our current strategy, we cannot predict changes in market conditions or how primarily relying on a single national carrier may impact customer sentiment and satisfaction, which could lead to unanticipated costs and/or have a material adverse effect on our business and financial condition.

Our ability to receive inbound products efficiently and ship products to and from customers may be negatively affected by many events outside of our control, including inclement weather, public health crises such as the COVID-19 pandemic,crises, governmental regulations, labor disputes and other factors. We are also subject to risks of damage or loss during delivery by our shipping vendors. Customers who do not receive their orders in good condition or on time, or perceive our 3-day shipping promise as too slow, often become dissatisfied and even cease using our services, which may adversely affect our business and operating results if the issues become persistent or impact a significant amount of customers. Our shipping vendors have faced and may continue to face increased volumes which, in turn, has caused and could in the future cause a decrease in their service levels, including shipping delays, or result in an increase in their prices. We have experienced increased shipping costs in recent years, and these costs mayare expected to increase in the future.future, particularly in light of the current macroeconomic landscape and global conflicts. In addition, although we have achieved efficiencies in our supply chain operations in recent years, these efficiencies may not be sustainable or meet our broader business objectives. Increases in shipping costs, in particular for our primary shipping vendor, couldare likely to result in increased costs to us and adversely impact our business. In addition, significant shipping difficulties or disruptions or any failure by our brand partners or third-party carriers to deliver high-quality products to us or to our customers, as applicable, in a timely manner or to otherwise adequately serve our customers could damage our reputation and brand and may substantially harm our business.

In addition to offering the ability to return products by dropping off items with our primary third-party shipping vendor, we offer at-home pickup for customers located in multiple markets. Although we have had positive customer feedback and adoption to date, at-home pickup is a newer offering and may not be successful over the long-term. In the event that we do not successfully and cost-effectively manage at-home pickup logistics, it may make it more difficult for us to satisfy our customers and efficiently manage shipping costs, which could negatively affect our brand, financial condition and results of operations.

We have been focused on expanding our relationships with brand partners and continuing to work to increase the proportion ofdevelop our products procured under Exclusive Designs and Share by RTR arrangements, which are our more capital-efficient ways of acquiring rental product.product, particularly in light of our 2025 and 2026 rental product strategy. For our Exclusive Designs, RTR traditionally has sourced the materials and relied upon third-party manufacturing partners to produce products; however, we have updated our Exclusive Designs model and, forstarting in fiscal year 2025, certain brands now source and manufacture the products themselves, which are exclusively available on our site for a period of time. This new Exclusive Designs approach is similar to the approach for Wholesale and Share by RTR items, for which we enter into contracts in advance of a particular season and brand partners frequently agree to incur costs related to sourcing and manufacturing products before we have paid for them, which requires the brand partners to continue to trust us. If we were viewed as less financially viable by our brand partners and/or their financing partners or factoring companies, we may receive less favorable terms and conditions from our brand partners, including requiring more upfront payments or other demonstrations of credit. The cash flow benefits we currently experience from our brand partners’ willingness to revenue share could be adversely affected if revenue share terms change or if brand partners no longer wish to revenue share due to lack of trust in us, lack of revenue earned in comparison to the projections we provided, or their inability to continue to spread their earnings out over the time period that the products are earning revenue on our website, among other reasons. For our Exclusive Design arrangements, we must continue to increase the number of brand partners with whom we work, design an assortment of styles that meet customer demand, maintain and enhance our third-party manufacturing capabilities and partner relationships and ensure the products manufactured meets brand partners’, customers’ and our quality standards. Our ability to obtain a sufficient selection or volume of products on a timely basis at competitive prices could suffer as a result of any deterioration or change in our partner relationships or events that adversely affect them and, in turn, could have a material adverse effect on our business.

We also procure and manufacture products outside of the United States. Global sourcing and foreign trade involve numerous factors and uncertainties beyond our control including increased shipping costs, increased or changing tariffs, limitations in factory capacity, the imposition of additional import or trade restrictions, including legal or economic restrictions on overseas brand partners’ or manufacturers’ ability to produce and deliver products, increased custom duties and tariffs, unforeseen delays in customs, more restrictive quotas, loss of a most favored nation trading status, currency exchange rates, transportation delays, foreign government regulations, political instability and conflict, such as the war between Russia and Ukraine and conflict in the Middle East, and economic uncertainties in the countries from which we or our brand partners source our products. Future extended disruptions in travel may limit our ability to source products in-person, which may lead to suboptimal products and harm our business. For the next several quarters, we anticipate facing, and having to address challenges relating to, economic uncertainty and trends that may also impact our business operations, including transportation efficiencies. Additionally, oil supply disruptions related to Russia’sthe invasionwar ofbetween Russia and Ukraine and conflict in the Middle East have in the past led to, and couldare likely to continue to lead toto, increased fuel andand, therefore, shipping prices. Further, certain trade restrictions related to the Xinjiang region of China that impose a ban on virtually all imports from that region could affect the sourcing and availability of raw materials, such as cotton, used in the manufacturing of certain products and lead to our products and materials and those of our brand and/or manufacturing partners being held for inspection by the United States Customs & Border Patrol and delayed or rejected for entry, which could adversely impact the customer experience and our business. In addition, negative press or consumer sentiment about internationally sourced products may lead to reduced demand for our products. These and other issues affecting our international brand partners, manufacturers or internationally sourced products could have a material adverse effect on our business, financial condition, and results of operations.

Furthermore, we must execute our cleaning and repair protocols and reverse logistics operations efficiently and at a significant scale to maximize the utilization of units and reducehelp theensure numberadequate ofavailability units purchased,levels the failure of which may adversely affect our operating results. We cannot control products while they are out of our possession or prevent all damage while in our fulfillment centers, during shipping, or while with customers, third-party suppliers or partners. We are focused on enhancing our automation and quality control processes to ensure that we are appropriately managing our rental product; however, we may incurdeactivate additionalrental expensesproduct prematurely, which could reduce availability to our customers, or we may deactivate rental product too slowly, which could increase costs and harm our reputation could be harmed if customers and potential customers believe that our products are not of high quality or may be damaged.

Maintaining and enhancing our appeal and reputation as a stylish, revolutionary and trusted brand is critical to attracting and retaining customers and brand partners. The successful promotion of our brand and awareness of our offerings and products depends on a number of factors, including our marketing efforts, ability to continue to develop our offerings and products, the quality and appeal of our products, and ability to successfully differentiate our offerings from competitive offerings. We expect to invest substantial resources to promote and maintain our brand,brand; buthowever we believe that we are underinvested in brand marketing and channel diversification relative to typical market practice and our competitors (as discussed elsewhere in these risk factors). Further, although we focus on full funnel marketing, our marketing spend has prioritized, and is expected to continue to prioritize, paid marketing over upper funnel, brand marketing investments, which may negatively impact our brand awareness and growth. Further, there is no guarantee that our brand development strategies will enhance the recognition of our brand or lead to increased customer acquisition and sales. The strength of our brand depends largely on our ability to provide a compelling customer value proposition for our rental and resale offerings and continued customer engagement and word of mouth organic marketing. Our efforts to improve our customer experience may not be successful. In addition, brand promotion activities may not yield increased revenue, and even if they do, the increased revenue may not offset the expenses we incur in promoting and maintaining our brand and reputation.

Furthermore, whether accurate or not, negative publicity about our business, operations, leadership or employees, and customer complaints hashave in the past, and could in the future, harm our reputation, customer trust and referrals of our services, brand partner confidence, vendor confidence, employee morale and culture, and our ability to recruit new employees effectively. In addition, negative publicity related to our brand partners, influencers and other vendors that we have partnered with may damage our reputation, even if the publicity is not directly related to us. Negative commentary concerning us or our brand partners may also be posted on social media platforms at any time and may have an adverse impact on our brand, reputation and business. The harm of negative publicity, particularly on social media platforms, may be immediate, without affording us an opportunity for redress or correction.

If we are not able to continue to improve our website and mobile app performance, keep pace with technological changes,changes or consumer expectations, enhance our current offerings, and develop new offerings in a timely way to respond to the changing needs of partners and customers, our business, financial performance, and growth may be harmed.

Our industry is characterized by rapidly changing technology, new service and product introductions, and changing customer demands and preferences, and we are not able to predict the effect of these changes on our business. In addition, we believe that our future success depends, in part, on our ability to anticipate and respond effectively to new technology disruption and developments and keep pace more generally with technological changes and trends. These may include new software applications or related services based on artificialAI, intelligenceincluding (such as our AIagentic search tool),and machine learning, augmented reality, machine learning, or robotics or more generally evolving trends in e-commerce. For example, we are continue to focus on improving the performance and design of our website and mobile application for our customers, including increasingby reliabilityleveraging AI tools and resources and increased personalization; however, our efforts may be unsuccessful. The technologies that we currently use to support our business platform are highly interconnected and complex (as discussed elsewhere in these risk factors) and may become inadequate or obsolete, and the cost of incorporating new technologies into our offerings and services may be substantial. In addition, any failure by us to adequately integrate technological developments in our approach to data management could harm our ability to leverage data, including customer data, collected through our technology and our systems, which could have a negative effect on our business. If we are unable to adequately utilize our data in support of our operations due to technical or other limitations, our ability to drive leverage in operational efficiencies and to attract new customers and retain existing customers could be impaired. In addition, if we are unable to successfully leverage new technology to automate and otherwise enhance and drive efficiencies in our operations, our business, results of operations and financial condition could be harmed. For risks related to our adoption and use of AI, see “Our use of AI may subject us to new or heightened legal, regulatory, ethical, operational or other challenges.”

Additionally, as we invest in and experiment with new offerings or changes to our platform, our partners and customers may find these changes to be disruptive and may perceive them negatively. For example, in March 2023, we changedare focused on increasing personalization and introducing AI styling tools for our subscriptioncustomers. programsWe have also recently launched a pilot of a marketplace offering designed to providesell customers withcomplementary oneproducts, additionalsuch itemas perclothing shipmentbasics, at no extra charge, which is intended to provide more value to our customersshapewear and increaseshoes, retention.that Inare fiscalnot year 2025, we plan to approximately double our rental product addedavailable on our site.core platform. These new offerings and updates do not have demonstrably long track records of success for us and could result in higher fulfillmentcosts, costsincreased liability, not meet our expectations and lowergoals, grossbe margins,a higherdistraction productfrom spend,our core business goals, dilute our brand, and/or have other unforeseen impacts on the business. In addition, developing new offerings and services is complex, and the timetable for their public launch is difficult to predict and may vary from our historical experience.expectations. As a result, the introduction of new offerings may occur after anticipated release dates, or they may be introduced as pilot programs, which may not be continued for various reasons. In addition, new offerings may not be successful due to defects or errors, negative publicity, or our failure to market them effectively. New offerings may not drive revenue growth, customer acquisition or retention, may require substantial investment and planning, and may bring us more directly into competition with companies that are better established or have greater resources than we do. If we do not continue to cost-effectively develop new offerings that satisfy our brand partners and customers, then our competitive position and growth prospects may be harmed. In addition, changes to subscription plans or new offerings may have lower margins than we anticipate or than existing offerings, and our revenue from new offerings may not be enough to offset the cost of developing and maintaining them, which could adversely affect our business, financial performance, and growth. Finally, the success of our technology and product initiatives overall depends upon our engineering and product teams and leadership, which have experienced recent transition and may continue to experience transition in the future. If our team building efforts or engineering and product strategies and plans are not successful or are not executed successfully, our growth may decline and we may not achieve our profitability goals.

Key Fiscal Fourth Quarter and Recent Business Highlights:

•132,574 143,796 and 135,211119,778 Averageending Active Subscribers4,Subscribers3, respectively, representing a change of (2)%20.1% year-over-year;

•164,004143,558 and 173,247132,574 endingAverage TotalActive Subscribers (including paused subscribers),Subscribers4, respectively, representing a change of (5)%8.3% year-over-year;

•Net Income (Loss) was $(69.9)$22.6 million and $(113.269.9) million, respectively. Net Income (Loss) as a percentage of revenue was (22.8)%,6.9%, and (38.022.8)%, respectively, and included $0.2 million and $3.1 million of restructuring and related charges,charges respectivelyfor the year ended January 31, 2025;

•Net cash (used in) provided by operating activities was $12.9$3.5 million and $(15.7)$12.9 million, and net cash used in investing activities was $(20.149.5) million and $(54.620.1) million, respectively;

•CashNet andcash Cash(used Equivalentsin) provided by financing activities was $77.4$18.6 million and $84.0$(0.3) million, respectively.respectively;

We acquire and monetize products in three ways: Wholesale, Share by RTR and Exclusive Designs. These three product acquisition methods are strategic levers to manage our capital efficiency, profitability and product risk. Our Exclusive Designs channel partners with brands to acquire RTR-exclusive items at a lower cost, which are designed to generate higher profitability over time. Share by RTR meaningfully reduces our upfront purchases of rental product and de-risks our investment since we pay brands primarily based on item performance. Our Share by RTR arrangements with brands target delivering 75% to 100% of comparable Wholesale cost to the brand in the first yeartwelve to eighteen months; however there is no minimum commitment other than the upfront payment, if applicable. Nearly all Share by RTR deals consummated after September 2020 include a cap on total potential payments to the brand partner.

The chart below summarizes the percentage of new items acquired via each method. In total, approximately 70%69% of new items were acquired through the more capital-efficient channels in fiscal year 2024,2025, approximately 70% in fiscal year 2024 and approximately 61% in fiscal year 2023 and approximately 58% in fiscal year 2022.2023. Both our purchasing power and the diversification into Share by RTR and Exclusive Designs have led to a decrease in rental product capital expenditures (or Purchases of Rental Product as presented in the Consolidated Statement of Cash Flows) as a percentage of revenue over time. We aim to acquire approximately the same quantity of rental product year-over-year in fiscal year 2026; however, we expect the total percentage of units acquired through our more capital-efficient channels to increase in fiscal year 2026 versus fiscal year 2025, with an increase in the percentage of units acquired through our Share by RTR program versus fiscal year 2025. We plan to further decrease the percentage of units acquired through Wholesale and increase the percentage of units acquired through our more capital-efficient channels, Exclusive Designs and Share by RTRchannels over time.the longer term. We expect to incur higherlower capital expenditures for purchases of rental product in fiscal year 20252026 relative to fiscal year 20242025 in connection with our strategydue to approximatelya doublegreater theproportion newof rental product addedacquired tothrough our siteShare andby madeRTR available to our customersprogram in fiscal year 2025.2026.

We provide a flexible offering that allows our subscribers to customize their subscription as their everyday life changes, choosing to pause and reactivate their membership as needed. We have also historically seen that many subscribers who cancel their subscription will return and resubscribe when membership again makes sense for their everyday life. Customer acquisition is dependent on organic growth, the effectiveness of our paid marketing strategy and the availability of and satisfaction with our rental product. We are focused on our community-driven organic growth marketing strategy that is intended to drive improved brand awareness and acquisition. Our acquisitions are also reliant on new customer promotions. Our promotional strategy is subject to change depending on business and market conditions. In fiscal year 2024, we have focused, and plan to continue to focus in fiscal year 2025, on improving both the availability of and satisfaction with our rental product for our Reserve and Subscription customers.

We believe customer retention plays an important role in driving business growth. Customer retention is influenced by a number of factors, including rental product in-stock levels and satisfaction, product experience, and customer service levels. Starting in fiscal year 2023, we increased the depth of our rental product purchases to improve rental product in-stock levels. We increased the depth of our rental product further in fiscal year 2024 and experienced better customer retention for fiscal year 2024 versus fiscal year 2023. In fiscal year 2025, we planapproximately to focus on significantly increasingdoubled the quantity of our rental product acquisitions year-over-year and qualityenhanced the desirability of rental product purchases,acquisitions, which we believe will increaseincreased customer satisfaction and improveimproved retention further.versus fiscal year 2024. We are also focused on new product features as well as a more personalpersonalized customer serviceexperience. andIn styling.fiscal year 2026, we expect to continue to make efforts to increase customer retention through improved customer experience with our rental product as well as new product features.

As seen in the table below, our LTV to CAC ratio has remained relatively consistent for our fiscal year 2018 through fiscal year 20242025 customer cohorts, with the exception of our fiscal year 2020 cohort which was impacted by the COVID-19 pandemic. The fiscal year 2021 cohort, which benefited from strong loyalty post-recovery from the pandemic, exhibited an LTV to CAC ratio of 0.7x in its first six months and 1.3x in its first twelve months, implying that we recovered our customer acquisition cost between six months and twelve months for this cohort. Our fiscal year 20242025 cohort thus far is exhibiting an LTV to CAC ratio of 0.5x0.3x in its first six months.months, down slightly from recent years due to the impact of the company’s decision to significantly increase the quantity and quality of rental product available to customers. We anticipate that the improvement in customer retention due to the greater satisfaction with our rental productproduct, alongthe withimpact of the company’s August 2025 Subscription price increase, and anticipated product experience improvements will benefit the lifetime value of our customer cohorts. The performance of our historical cohorts has been consistent as our more loyal customers continue to spend with us.

Ability to Acquire, Manage and Monetize Products Efficiently. Our ability to deliver an elevated experience for our subscribers and customers that keeps them loyal to RTR depends on us having the right assortment. For example, beginning in fiscal year 2023, we focused on enhancing the availability of rental product on our site by increasing the depths of our buys (i.e. acquiring more units of particular styles) and continued to pursue this strategy in fiscal year 2024. Due to our deep partnerships with brands, flexibility in our buying timelines and ability to react to advantageous retail purchasing environments, we can acquire products directly from brands in multiple cost effective ways. Our expertise in reverse logistics and garment restoration also provides us with the ability to monetize our products effectively over their useful life. Diversifying our product acquisition away from 100% Wholesale has driven higher overall product return on investment and reduced the capital needs of the business. In fiscal year 2024,2025, approximately 70%69% of new items were acquired through our more capital efficient non-Wholesale channels, compared to 70% in fiscal year 2024 and 61% in fiscal year 2023 and 58% in fiscal year 2022.2023. We plan to further increase the percentage of units acquired through Exclusive Designs and Share by RTR on a combined basis in fiscal year 2025.2026. We continuously evaluate our product acquisition mix to maximize our strategic priorities.

Purchases of rental product includes the cost of wholesaleWholesale products acquired in the period and other ancillary costs such as freight, where applicable. Many factors impact the purchases of rental product including our depth and acquisition mix strategy, the proportion of subscribers to total customers, timing of when those subscribers are acquired, the formality of styles, brand assortment, opportunities in the market and timing of when the rental product is received and paid for. Purchases of rental product as a percentage of revenue in fiscal year 20242025 wasincreased to 23% from 16% in fiscal year 2024, despite higher Share by RTR units as a percentage of total receipts, as a result of aour greaterstrategy proportionto approximately double the quantity of rental product acquiredpurchases through our Share by RTR channel combined with fewer units of rental product purchased compared toversus fiscal year 2023.2024. Purchases of rental product as a percentage of revenue was 26%16% and 21%26% in fiscal year 20232024 and 2022,2023, respectively. We anticipate this percentage to increasedecrease in fiscal year 20252026 compared with fiscal year 2024,2025 despitedue ato greateran increase in the proportion of units acquired through our Share by RTR units, due to a significant increase in units of rental product purchased.channel. Due to seasonality factors, we track our progress on purchases of rental product as a percentage of revenue on a full year basis, as quarterly expenditures are not necessarily reflective of full year trends. As of January 31, 2025,2026, the quarterly and annual spend levels for rental product capital expenditures for fiscal year 2025 under our 2025 Amended Facility havewere noteliminated yetunder beenthe finalized.Fourteenth PursuantAmendment to the 2025debt Amended Facility, the deadline to agree on such levels was extended from March 31, 2025 to May 30, 2025.facility.

Ability to Achieve Leverage in our Cost Structure. Improving operational efficiency of our platform is imperative to increasing profitability. We expect certain of our operating costs to increase as order volume increases and as we make investments to grow subscribers and revenue and to enhance the customer experience. In September 2022, we announced a restructuring plan that reduced operating expenses by approximately $27 million in the four quarters following the restructuring compared to the annualized run rate for the second quarter of fiscal year 2022. In January 2024, we announced a restructuring plan expectedthat to generategenerated total annual operating expense savings of approximately $12 million, which primarily includesincluded the reduction in force, with some open role closures/reduced backfills, and excludes potential hiring of new employees or other additions to the Company’s costs and expenses. Though we anticipate quarterly fluctuations in operating leverage, we expect our fixed costs to decrease as a percentage of total revenue in fiscal year 2025, andleverage over time we anticipate that our operating costs will grow more slowly than our total revenue on an annual basis. As of January 31, 2025, the quarterly and annual spend levels for rental product capital expenditures for fiscal year 2025 under our 2025 Amended Facility have not yet been finalized. Pursuant to the 2025 Amended Facility, the deadline to agree on such levels was extended from March 31, 2025 to May 30, 2025.

We use technology and customer data to drive efficiency across products, fulfillment expenses and operating costs. Our data has allowed us to build a differentiated and proprietary rental reverse logistics platform with a vertically integrated cleaning and restoration process. We have invested in technology and automation in order to drive operating leverage and higher margins as we growfocus on growing and scalescaling our business.

We use Adjusted EBITDA to assess our operating performance and the operating leverage of our business prior to capital expenditures. We also measure the cash consumption of the business including capital expenditures by assessing net cash used in operating activities and net cash used in investing activities on a combined basis. TheSee also “Note 3 — Liquidity” and “Note 4 — Recapitalization Transactions” in the Notes to the Consolidated Financial Statements for more details regarding our 2025 Amended Facility reduced our cash interest payments during fiscal year 2024 and reducesRecapitalization our cash interest payments during fiscal year 2025 relative to the original agreement,Transactions, which we expect to improve our overall liquidity.

For additional information, see the section of Part I, Item 1A, “Risk Factors — Risks RelatingRelated To Our Business and Industry — Our business is affected by seasonality.”

There remains significant uncertainty in the current macroeconomic and consumer environment, driven by several factors, including inflationary pressures, global trade policies and tariffs, higher interest rates, potential risk of recession, ongoing industry-wide supply chain issues, instability in the financial system, and the wars in Ukraine and the Middle East. These factors have impacted, and are expected to continue to impact, consumer discretionary spending and purchasing behavior, price sensitivity, wage rates, transportation costs, rental product costs, and other costs associated with our business.

We continue to take actions to adjust to the changing business environment and related inflationary pressure. For example, in light of potential pricing sensitivity in the current macro-economic environment, we are focused on investing in our customer and delivering even more value to her, and emphasizing the value proposition of our offering in our marketing materials. In addition, we increased wage rates during the first quarter of fiscal yearyears 2024,2025 and expect to raise wages in the first quarter of fiscal year 2025,2026 to attract and retain talent at our fulfillment centers. We expect to continue to be impacted by rising labor costs in the future. TransportationIn costsaddition, decreasedwe asimplemented a percentageprice ofincrease revenuefor our subscription plans in fiscalAugust year 2024 due to higher revenue per order2025 and the benefits of our September 2023 transportation contract with a major national carrier. While we expect to beimplement ablepricing increases and/or new or additional fees in the future if costs continue to reducerise. transportationWe costs as a percentage of revenue for fiscal year 2025, we planaim to continue to mitigate longer-term rising costs through a variety of methods, including by seeking to optimize shipping methods and improve contractual and pricing terms;terms. however,However, unpredictable changes inthe global trade policiesenvironment is unpredictable and tariffsevolving or other significantand macroeconomic or geopolitical developments have in the past and, may in the future, negatively impact our ability to meet our current expectations and objectives.objectives, including due to unfavorable policies and tariffs, and rising shipping costs. In addition, steps we take may not fully mitigate rising costs. For example, the conflict in the Middle East has led to fuel surcharges that have increased our shipping costs, which are likely to continue to increase if the conflict continues. As a result, it is also difficult to predict what transportation costs as a percentage of Revenue will be in fiscal year 2026. Although we continue to face a challenging and unpredictable environment, we plan to invest in our customers, manage our staffingstaffing, and further leverage our transportation partners to help to drive growth and efficiencies in our business.

In addition to the measures presented in our consolidated financial statements, we use the following key business and financial metrics to help us evaluate our business, identify trends affecting our business, formulate business plans, and make strategic decisions. The calculation of the key business and financial metrics discussed below may differ from similarly titled metrics used by other companies, securities analysts or investors, limiting the usefulness of those measures for comparative purposes. These key business and financial metrics are not meant to be considered as indicators of our financial performance in isolation from or as a substitute forfor, our financial information prepared in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”) and should be considered in conjunction with other metrics and components of our results of operations, such as each of the other key business and financial metrics, and our revenue and net loss.income (loss).

__________ (1)Adjusted EBITDA is a non-GAAP financial measure; for a reconciliation to the most directly comparable U.S. GAAP financial measure, net loss,income (loss), and why we consider Adjusted EBITDA to be a useful metric, see “—Non-GAAP Financial Metrics” below.

Active Subscribers: Active Subscribers represents the number of subscribers with an active membership as of the last day of any given period and excludes paused subscribers. As of January 31, 2025,2026, we had 119,778143,796 Active Subscribers, aan decreaseincrease from 125,954119,778 as of January 31, 2024.2025. The decreaseincrease in activeActive subscribersSubscribers was driven primarily by lowerhigher subscriber acquisitions during the year compared to the prior year due to a change in promotional strategy during the second quarter ofversus fiscal year 20242024, versus the same quarter last year and a reductiondriven in marketingpart spend.by Thehigher decreasepromotional inactivity, acquisitions was partially offsetand by improved subscriber retention.retention versus fiscal year 2024. We expect Active Subscribers to grow year-over-year in fiscal year 2026.

Average Active Subscribers: Average Active Subscribers represents the mean of the beginning of quarter and end of quarter Active Subscribers for a quarterly period; and for other periods, represents the mean of the Average Active Subscribers of every quarter within that period. As of January 31, 2025,2026, we had 132,574143,558 Average Active Subscribers, aan decreaseincrease from 135,211132,574 as of January 31, 2024.2025. The declineyear-over-year increase in averageAverage activeActive subscribersSubscribers was primarily due to lowerhigher subscriber acquisitions duringversus thefiscal year compared2024, to the prior year. The decreasedriven in acquisitionspart wasby partiallyhigher offsetpromotional activity, and by improved subscriber retention.retention versus fiscal year 2024.

Gross Profit was $107.5 million for the year ended January 31, 2026 compared to $115.9 million for the year ended January 31, 2025 comparedrepresenting toGross $119.7Margins millionof 32.6% and 37.9%, respectively. Gross Profit for the year ended January 31, 20242026 representingdecreased Grossprimarily Marginsdue ofto 37.9%higher Revenue share costs and 40.1%,higher respectively.Fulfillment Grossexpenses Profitpartially offset by higher Revenue and lower Rental Product depreciation and write-off costs. Gross Margin for the year ended January 31, 20252026 decreased primarily due to the impact of higher revenueRevenue share costs and rental product depreciation as a percentage of sales, partially offset by lower fulfillment costs as a percentage of sales.Revenue, partially offset by lower Rental product depreciation and write-off costs as a percentage of Revenue and lower Fulfillment costs as a percentage of Revenue.

Adjusted EBITDA and Adjusted EBITDA Margin: We define Adjusted EBITDA as net loss,income (loss), adjusted to exclude interest expense, rental product depreciation, other depreciation and amortization, share-based compensation expense, write-off of liquidated assets, non-recurring adjustments, non-ordinary course legal expenses, restructuring charges, loss on asset impairment related to restructuring, Gain on Debt Restructuring, income tax (benefit) expense, other income and expense, and other gains / losses. Adjusted EBITDA margin is defined as Adjusted EBITDA calculated as a percentage of total revenue, net for a period.

Subscription and Reserve Rental Revenue. We generate Subscription and Reserve rental revenue from subscriptionSubscription and Reserve rental fees. The majority of our revenue is generated by our Subscription offering, which we are prioritizing. We recognize subscription fees ratably over the subscription period, commencing on the date the subscriber enrolls in a subscription program. These fees are collected upon enrollment and any revenue from an unrecognized portion of the subscription period is deferred to the following fiscal period. We implemented a price increase for our subscription plans in August 2025, which increased revenue per subscriber in the third quarter of fiscal year 2025 and which we expect will continue to do so over the coming quarters. We recognize Reserve fees over the rental period, which starts on the date of delivery of the product to the customer. Reserve orders can be placed up to four months prior to the rental start date (increased from two months prior to the rental start date beginning in June 2024) and the customer’s payment form is charged upon order confirmation. We defer recognizing the rental fees and any related promotions for Reserve rentals until the date of delivery, and then recognize those fees evenly over the four- or eight-day rental period.

Other Revenue. We generate Other revenue primarily from the sale of products while they are in rental condition. We offer the ability for subscribers and customers to purchase products at a discount to retail price. Payment for the sale of products occurs upon order confirmation while the associated revenue is recognized either at the time the sold product is delivered or when purchased, if the item is already at home with the customer. From time to time, Other revenue may include revenue generated from pilots and other growth and business development initiatives which may cause quarterly fluctuations in the Other revenue line.

Marketing. Marketing expenses include online and mobile marketing, search engine optimization and email costs, marketing personnel and related costs, agency fees, brand marketing, influencer marketing, printed collateral, consumer research, and other related costs. Marketing expenses unrelated to personnel costs may increase if we increase marketing spend to drive the growth of our business and increase our brand awareness.

General and Administrative. General and administrative (“G&A”) expenses consist of all other personnel and related costs for customer service, finance, tax, legal, human resources, fashion and photography and fixed operations costs. General and administrative expenses also includesinclude occupancy costs (including warehouse-related), professional services, credit card fees, general corporate and warehouse expenses, other administrative costs, and gains and losses associated with asset disposals and operating lease terminations. We expect to incur lower fixed cost G&A as a percentage of revenue in the short term due to higher expected revenue driving operating leverage. Over the longer term, these expenses may increase as we grow our infrastructure to support the overall growth of the business. Rent expense and other facilities-related costs may increase in the future due to inflation or to support overall business growth and fulfillment efficiencies. While these expenses may vary from period to period as a percentage of total revenue, we expect them to decrease as a percentage of total revenue over the longer term.

Restructuring Charges. Restructuring charges consist of severance and related costs associated with the January 2024 and September 2022 restructuring plans.plan.

Interest Income / (Expense). Interest income / (expense) consists primarily of accrued paid-in-kind interest, cash interest and debt issuance cost amortization associated with our 2025 Amended Facility going forward. The 2023 Amended Temasek Facility eliminated all interest (both payment-in-kind and cash interest) for a period of six full fiscal quarters beginning with the fourth quarter of fiscal year 2023.

We must continue to drive revenue growth to be successful. To effectively drive growth, we must continue to enhance customer experience and attract and retain customers (particularly subscribers), invest in rental product, iterate our subscriptionproducts products,and services, manage the interplay between our various offerings, invest in digital consumer innovation, maintain and expand our brand awareness and marketing, keep pace with customer preferences and expectations, evolve our marketing and product strategies to address emerging machine learning, automated decision-making and artificial intelligence algorithms, models and technologies (collectively, “AI”), including agentic AI, and maintain and upgrade our management information and reverse logistics systems and other processes. Our growth and growth strategies have in the past strained, and could in the future strain, our existing resources, and we could experience ongoing operating difficulties in managing our business across numerous jurisdictions, including difficulties in hiring, training, and managing our broad employee base. Failure to scale and preserve our Company culture as we grow could also harm our future success, including our ability to retain and recruit personnel and to effectively focus on and pursue our corporate objectives.

Our growth strategy is focused on continuing to retain and grow our subscriber and customer base, by focusing on our core business of renting and selling, continuing to invest in our rental product, offerings and technology to improve her experience, and continuing to drive acquisition through effective and efficient marketing. The majority of our revenue is generated by our subscribers. Our base Subscription plans range in price and customers can customize their Subscription monthly by purchasing additional slots and shipments. Although we often highlight certain Subscription plans over others in an attempt to optimize conversion and highlight opportunities to add shipments and spots to Subscription plans mid-month, we cannot be certain that these actions will be successful. Also, our Subscriptions renew automatically on a monthly basis and subscribers may disable automatic renewal by canceling or pausing their subscription prior to the next month’s bill date. As a result, even though a significant number of subscribers have historically renewed their monthly subscription, there can be no assurance that we will be able to retain a significant portion of subscribers beyond the existing monthly subscription periods. In addition, any limitation or restriction imposed on our ability to bill our subscribers on a recurring basis, enforce our terms of service, collect data or deliver relevant promotions or media, whether due to new regulations or otherwise, may significantly lower our subscription retention rate. We also offer our customers the option to rent or buy items via our Reserve offering and Resale offering, respectively, which we believe is a strong competitive advantage but adds complexity to our business that we must effectively manage to drive growth. For example, our Resale strategy shifts from time to time to optimize rental product in-stock and revenue by reducing or increasing our units sold via Resale. Further, in fiscal year 2025, we focused on activeActive subscriberSubscriber growth and experienced weakness in Reserve, which we anticipate will continue in fiscal year 2026 as we planare toin revisitthe process of revisiting our Reserve strategy,strategy and plans, and onboarding new leadership. Our Subscription plans and offerings do not have demonstrably long track records of success and may not grow as much or as fast as we expect. For example, our activeActive subscriberSubscriber count decreased year-over-year in fiscal year 2024 and, although we are focused on growth initiatives and our activeActive subscriberSubscriber count increased year-over-year in fiscal year 2025, it may decline in the future. In addition, our number of activeActive subscribersSubscribers may be higher or lower than the number of our actual individual subscribers, because some activeActive subscribersSubscribers may have multiple accounts (such as for professional and personal purposes), or some may share their plans with other individuals. Although we anticipate an increase in our year-over-year revenue growth rate in fiscal year 2026, if our growth and/or growth rates do not meet expectations, the perception of our business, financial condition and results of operations by investors and our third-party service providers and brand partners may be adversely affected.

•successfully maintain and grow our relationships with existing and new brand partners, including continuing to leverage and developevolve our Share by RTR and Exclusive Design offerings and explore new rental product acquisition strategies;

•keep pace with AI developments such as agentic search for shoppingshopping, styling and outfit recommendation capabilities, and successfully integrate and leverage AI tools and resourcescapabilities;

•avoid or manage interruptions in our business from information technology downtime, global trade policies, cybersecurity or privacy incidents (including those resulting from our use of AI or others’ use of AI) and other factors that could affect our physical and digital infrastructure.

•our ability to acquire products on favorable and efficient terms, including our ability to attract new brand partnersleveraging and retain existing brand partners inevolving our Share by RTR and Exclusive Design programs;

Our inability to respond effectively to competitive pressures, improved performance by our competitors, our failure to achieve broad acceptance andor changes in consumer trends or in the fashion retail markets could result in lost market share and have a material adverse effect on our business, financial condition, and results of operations.

In response to the changing business environment and related inflationary pressure, we have implemented pricing increases and expect to do so in the future if our costs continue to increase. Such price increases may include, but are not limited to, higher Subscription fees and/or Reserve rental fees, new or increased shipping fees, or other types of fees or surcharges. For example, in June 2026, we implemented a new shipping charge on our subscriptionSubscription plans to address rising shipping costs from carriers, which had a temporary negative impact to subscriber retention in June and may have a negative impact on subscriber acquisitionretention andin retentionthe future even though it is intended to be a temporary charge. Such pricing changes may be negatively perceived by customers, particularly in a period of economic uncertainty, and/or may fail to adequately mitigate cost increases we face, and our business and financial results could be harmed. Furthermore, increases in consumer discretionary spending tend to fluctuate and may decrease, particularly if there is a recession, a weaker jobs market, and/or higher inflation leading to increased price sensitivity. Economic conditions in certain regions may also be affected by natural disasters, such as hurricanes, tropical storms, earthquakes, and wildfires; other public health crises; geopolitical conditions, including wars, terrorism and political tensions; and other major unforeseen events. Although we believe the value proposition of our offering and business model may be strengthened in an inflationary environment where the cost of purchasing clothing and accessories increases, consumer purchases or rental of discretionary items, including the products that we offer, frequently decline during recessionary periods or periods of economic uncertainty, when disposable income is reduced or when there is a reduction in consumer confidence.

The growth of our business is dependent upon our ability to continue to grow by cost-effectively adding new customers and retaining existing customers. Historically, a substantial portion of new customer acquisition has originated from organic word-of-mouth and other non-paid referrals. Our marketing initiatives are generally focused on re-engaging lapsed and paused customers, retaining existing customers and growing our base of new customers. In addition, we continue to focus on growing traffic and conversion rates by optimizing our organic social media channels, improving our email marketing performance, refreshing our lifecycle marketing engine, increasing paid marketing efficiency, focusing on referrals and other community-driven “word of mouth” strategies, and aiming to optimize discovery via search engine optimization, agentic search, and enhanced iOS App Store presence. These efforts are ongoing and, although we have seen some positive results, they are subject to change and may not result in a sustained increase in customer conversion, loyalty or engagement. In fiscal year 2026 we are planning to allocate a portion of our marketing budget to drive growth through these community-driven “word-of-mouth” channels, which may not meet our expectations and/or adversely impact overall customer acquisitions as we reduce spend in lower-funnel marketing channels. Theengagement.The impact of emerging technologies, including, but not limited to, AI tools such as agentic search, is not yet certain and may increase these risks. See “Our use of AI may subject us to new or heightened legal, regulatory, ethical, operational or other challenges.” As a result, our levels of paid and organic growth may continue to fluctuate and/or overall growth may decline.

We may determine that more significant investment in marketing will be required in the future. However, in light of cost constraints, we reduced our marketing spend, particularly in paid marketing, in fiscal years 2024 and 2025 (relative to years prior), which resulted in lower customer acquisitions in fiscal year 2024 and led us to invest more heavily in promotions in fiscal year 2025. Our marketing spend levels and prioritization of lower funnel marketing may have also negatively impacted brand awareness despite our efforts to revitalize our brand. In addition, we believe that our overall levels of marketing spend relative to our revenue - both historic and projected for fiscal year 2026 - indicate that we are underinvested in marketing relative to typical market practice for our industry and our competitors and have less channel diversification. Further, although we focus on full funnel marketing, our marketing spend has prioritized, and is expected to continue to prioritize, paid marketing over upper funnel, brand marketing investments, which may have a negative impact on brand awareness and growth. In addition, our marketing efforts may be unsuccessful for various reasons, including a failure to effectively reach potential customers or to be cost-effective (particularly as we have seen costs consistently increase for performance marketing), changes in regulations (e.g., privacy, pricing, and auto-renew regulations) or third-party interferenceactions that could limit the effectiveness of search engines, social media platforms, and other tools for marketing, and the possibility that potential customers may decide not to rent through our platform or the spend of new customers may not yield the intended return on investment, any of which could negatively affect our results of operations. Further, as described elsewhere in these Risk Factors, we rely on a third-party CRM and other marketing and communication vendors to execute our marketing strategies, manage customer lifecycles, and deliver timely communications via email and SMS to customers, the failure of which could have a negative impact on our business, We also may incur marketing expenses significantly in advance of the time we anticipate recognized revenue associated with such expenses. In addition, the success of our marketing initiatives overall depends upon our marketing team and leadership, which is lean and has experienced (and is expected to continue to experience) transition asdue weto focus on building creativepersonnel and strategicvendor talentchanges onand theevolving team.priorities. If our team building efforts or marketing strategies are not successful or are not executed successfully, our growth may decline and we may not achieve our growth and/or profitability goals.

Further, customer preferences may change and customers may not rent through our platform as frequently or spend as much with us. Customers may also react negatively to policy changes that we make from time to time, such as pricing increases or more stringent late fees or pricingcustomer increases,service refund policies, which could cause them to cancel their subscriptions. We strive to drive conversion of new subscribers from current and former customers; however, if their behavior changes or they are not satisfied with our offering for any reason, our ability to grow subscribers may be impacted. If we are not able to continue to expand our customer base through cost-effective methods, we may not meet our revenue and profitability goals, our revenue may grow slower than expected or decline, and investors may lose confidence in our business. Relatedly, an inability to attract and retain customers could harm our ability to attract and retain brand partners, who may decide to partner with alternative platforms.

A high proportion of our revenue comes from longer-tenured subscribers. A decrease in the number of customers, their tenures with us, and/or a reduction in the amount customers spend on our offerings could negatively affect our operating results. Notably, a high proportion of our revenue comes from longer-tenured subscribers.

•changes in consumer preferencespreferences, such as regarding the use of pre-loved apparel;

If existing customers no longer find our offerings and products appealing, appropriately priced or easy to use, or if we are unable to provide high-quality support to customers to help them resolve issues in a timely and acceptable manner, they may stop using our offerings, we may experience negative publicity and word-of-mouth and other referrals may be hampered. For example, we implementedhave aincreased the price increase for our Subscription plans and began enforcing a more stringent late fee policy in fiscal year 2025. We also added a new shipping charge onof our Subscription plans in Junethe 2026.past and added new or increased shipping charges across our offerings, which have caused short-term increases in Subscription cancellation rates in the past. We anticipate that we will likely increase prices again in the future. If our customers no longer perceive our Subscription plansofferings as appropriately priced and cancel or pause their subscriptions,Subscriptions, our business and financial results could be harmed. We are focused on investing in the customer experience and delivering greater value to her, including by nearly doubling our rental product selection in fiscal year 2025 and maintaining these levels in fiscal year 2026,her and emphasizing the value proposition of our offering in our marketing materials, among other initiatives; however these or other initiatives to retain customers may not be successful at improving customer satisfaction, subscriber retention and/or revenues and may require additional costs or lead to unanticipated consequences. For example, we may offer discounts to retain subscribers who have heightened price sensitivity and who may not be willing to continue to pay full price for a Subscription. Reductions or changes to when and under what circumstances such Subscription discounts are offered may impact retention. Even if our existing customers continue to find our offerings and products appealing and our customer service satisfactory, they may decide to downgrade to a less frequent, lower cost subscriptionSubscription plan, and/or rent or buy fewer or lower priced items due to price sensitivity and/or changing demand or other reasons. If customers downgrade their subscriptionsSubscription plan, reduce their add-on Subscription items, or make fewer or lower priced rentals,Reserve rentals or Resale purchases, our financial results could be negatively affected.

We had a net income (loss) of $(18.931.8) million and $22.6 million for the threesix months ended AprilJuly 30,31, 2026 and year ended January 31, 2026, respectively, and have in the past had recurring net losses. We reported net income for the year ended January 31, 2026 due to the recognition of a Gain on Debt Restructuring of $96.3 million. As of AprilJuly 30,31, 2026, we had an accumulated deficit of $(1,119.31,132.2) million. Further, for a variety of reasons, it is difficult for us to predict our future operating results. We will need to generate and sustain increased revenue and manage our costs to achieve profitability. Even if we do, we may not be able to sustain or increase our profitability.

Additionally, our success is dependent on the ability of our brand partners to anticipate, identify and respond to the latest fashion trends and consumer demands and to translate such trends and demands into product options in a timely manner. The failure of our brand partners to anticipate, identify or respond swiftly and appropriately to new and changing styles, trends or desired consumer preferences, to accurately anticipate and forecast demand for certain product offerings or to provide relevant and timely product offerings to rent or buy on our platform may lead to lower demand for our offerings, which could have a material adverse effect on our business and financial condition.

We have been focused on expanding our relationships with brand partners and continuing to developevolve our Exclusive Designs and Share by RTR arrangements, which are our more capital-efficient ways of acquiring rental product, particularly in light of our 2025 and 2026 rental product strategy. For our Exclusive Designs, RTR traditionally has sourced the materials and relied upon third-party manufacturing partners to produce products; however, we have updated our Exclusive Designs model and, starting in fiscal year 2025, certain brands source and manufacture the products themselves, which are exclusively available on our site for a period of time. This new Exclusive Designs approach is similar to the approach for Wholesale and Share by RTR items, for which we enter into contracts in advance of a particular season and brand partners frequently agree to incur costs related to sourcing and manufacturing products before we have paid for them, which requires the brand partners to continue to trust us. If we were viewed as less financially viable by our brand partners and/or their financing partners or factoring companies, we may receive less favorable terms and conditions from our brand partners, including requiring more upfront payments or other demonstrations of credit. The cash flow benefits we currently experience from our brand partners’ willingness to revenue share could be adversely affected if revenue share terms change or if brand partners no longer wish to revenue share due to lack of trust in us, lack of revenue earned in comparison to the projections we provided, or their inability to continue to spread their earnings out over the time period that the products are earning revenue on our website, among other reasons. For our Exclusive Design arrangements, we must continueensure to increase the number ofsuccessful brand partners with whom we work,relationships, design an assortment of styles that meet customer demand, maintain and enhance our third-party manufacturing capabilities and partner relationships and ensure the products manufactured meets brand partners’, customers’ and our quality standards. Our ability to obtain a sufficient selection or volume of products on a timely basis at competitive prices could suffer as a result of any deterioration or change in our partner relationships or events that adversely affect them and, in turn, could have a material adverse effect on our business.

Furthermore, we must execute our cleaning and repair protocols and reverse logistics operations efficiently and at a significant scale to maximize the utilization of units and help ensure adequate availability levels the failure of which may adversely affect our operating results. We cannot control products while they are out of our possession or prevent all damage while in our fulfillment centers, during shipping, or while with customers, third-party suppliers or partners. We are focused on enhancing our automation and quality control processes to ensure that we are appropriately managing our rental product across our Subscription, Reserve, and Resale offerings; however, we may deactivate rental product prematurely, which could reduce availability to our customers, or we may deactivate rental product too slowly, which could increase costs and harm our reputation if customers and potential customers believe that our products are not of high quality or may be damaged.

Our industry is characterized by rapidly changing technology, new service and product introductions, and changing customer demands and preferences, and we are not able to predict the effect of these changes on our business. In addition, we believe that our future success depends, in part, on our ability to anticipate and respond effectively to new technology disruption and developments and keep pace more generally with technological changes and trends. These include new software applications or related services based on AI, including agentic search and machine learning, augmented reality, or robotics or more generally evolving trends in e-commerce. For example, we continue to focus on improving the performance and design of our website and mobile application for our customers, including by leveraging AI tools and resourcescapabilities and increased personalization and styling; however, our efforts may be unsuccessful. The technologies that we currently use to support our business platform are highly interconnected and complex (as discussed elsewhere in these risk factors) and may become inadequate or obsolete, and the cost of incorporating new technologies into our offerings and services may be substantial.substantial, and third-party vendors providing technologies to us may experience their own business disruptions or challenges (as described elsewhere in these Risk Factors). In addition, any failure by us to adequately integrate technological developments in our approach to data management could harm our ability to leverage data, including customer data, collected through our technology and our systems, which could have a negative effect on our business. If we are unable to adequately utilize our data in support of our operations due to technical or other limitations, our ability to drive leverage in operational efficiencies and to attract new customers and retain existing customers could be impaired. In addition, if we are unable to successfully leverage new technology to automate and otherwise enhance and drive efficiencies in our operations, our business, results of operations and financial condition could be harmed. For risks related to our adoption and use of AI, see “Our use of AI may subject us to new or heightened legal, regulatory, ethical, operational or other challenges.”

Additionally, as we invest in and experiment with new offerings or changes to our platform, our partners and customers may find these changes to be disruptive and may perceive them negatively. For example, we are focused on increasing personalization and introducing AI styling tools for our customers. We have also recently launched a pilot of a marketplace offering designed to sell customers complementary products, such as clothing basics, shapewear and shoes, that are not available on our core platform. These new offerings and updates do not have demonstrably long track records of success for us and could result in higher costs, increased liability, not meet our expectations and goals, be a distraction from our core business goals, dilute our brand, and/or have other unforeseen impacts on the business. In addition, developing new offerings and services is complex, and the timetable for their public launch is difficult to predict and may vary from our expectations. As a result, the introduction of new offerings may occur after anticipated release dates, or they may be introduced as pilot programs, which may not be continued for various reasons. In addition, new offerings may not be successful due to defects or errors, negative publicity, or our failure to market them effectively. New offerings may not drive revenue growth, customer acquisition or retention, may require substantial investment and planning, and may bring us more directly into competition with companies that are better established or have greater resources than we do. If we do not continue to cost-effectively develop new offerings that satisfy our brand partners and customers, then our competitive position and growth prospects may be harmed. In addition, changes to subscription plans or new offerings may have lower margins than we anticipate or than existing offerings, and our revenue from new offerings may not be enough to offset the cost of developing and maintaining them, which could adversely affect our business, financial performance, and growth. Finally, the success of our technology and product initiatives overall depends upon our engineering and product teams and leadership, which have experienced recent transition and may continue to experience transition in the future. If our team building efforts or engineering and product strategies and plans are not successful or are not executed successfully, our growth may decline and we may not achieve our profitability goals.

We currently use AI in connection with our business and operations and expect to expand our uses of AI. There are significant risks involved in utilizing AI, and no assurance can be provided that such use will enhance our business or operations or result in our business or operations being more efficient or profitable. For example, AI models and algorithms, and the data and other material or content on which they rely, could be flawed, insufficient, of poor quality, reflect unwanted forms of bias, or contain other errors or inadequacies, any of which may not be easily detectable. AI has also been known to produce false or “hallucinatory” inferences or outputs and AI can subject users to new or heightened legal, regulatory, ethical, operational, or other challenges. Inappropriate or controversial data practices by developers and end-users, or other factors adversely affecting public opinion of AI, could impair the acceptance of AI solutions. If the AI solutions that we use are or are perceived to be deficient, inaccurate or controversial, we could suffer operational inefficiencies, competitive harm, legal liability, brand or reputational harm, or other adverse impacts on our business, operations and financial results. If we do not have sufficient rights to use the models, algorithms, data or other material or content on which our AI solutions rely, or the outputinputs or outputs thereof, we could also incur liability through the violation of applicable laws and regulations, third-party intellectual property, privacy or other rights, or contracts to which we are a party. If any of our employees, contractors, vendors or service providers use any third-party AI solutions in connection with the services they provide to us, it may lead to the inadvertent disclosure of our confidential information, including inadvertent disclosure of our confidential information into publicly available third-party training sets, which may impact our ability to realize the benefit of, or adequately protect and enforce, our intellectual property rights or confidential information, harming our competitive position and business. Further, any content created by us using generative AI may not be subject to copyright protection which may adversely affect our intellectual property rights in, or ability to commercialize or use, any such content. Content created using generative AI may also be perceived by consumers to be deficient, received in the context of changing community sentiment regarding AI-generated content, or subject to rapidly evolving laws governing the use and disclosure of generative AI outputs. In addition, the use of AI solutions by companies has resulted in, and may in the future result in, failures, interruptions and security breaches of their information technology networks and systems and data privacy, data security, data protection and consumer protection violations that implicate the personal or confidential information of users of such AI solutions. Our competitors may also adopt or develop more effective AI-based solutions,tools, solutions or products, which could place us at a competitive disadvantage.

We rely heavily on the Internet, computer systems, hardware, in-house proprietary technology, third-party software and infrastructure, and customized off-the-shelf technology solutions across our business (collectively, our “IT Systems”). We own and manage some of these IT Systems but also rely on third parties for a range of IT Systems and related products and services. Our ability to effectively manage all areas of our business, particularly our product management, fulfillment operations, marketing tools, and financial systems, depends significantly on the reliability and capacity of these IT Systems. Implementing new systems, migrating services, or updating existing integrations of our IT Systems carries operational risks, which could delay and/or negatively impact our ability to execute our strategies effectively and operate our business. We are critically dependent on the integrity, connectivity, security and consistent operations of our IT Systems, which are highly dependent on coordination of our internal business, operations, product and engineering teams. For example, in September 2019, we experienced a software outage at our Secaucus, New Jersey facility, during which we were unable to fulfill thousands of Reserve and Subscription orders on a timely basis and made the decision to stop taking new orders until the issue was adequately resolved. We also experienced significant negative customer reviews and negative press as a result of the outage, which we believe damaged our customer relationships, reputation and brand. The outage also resulted in substantial financial losses and increased costs largely due to: lost revenues, customer refunds, credits, promotions and/or related payments, and incremental labor and shipping costs. Our insurance policy covered a substantial portion of these losses but not all of them. While we have taken remediation measures in response to the outage, additional outages or other disruptions have occurred from time to time and are likely to occur in the future, which could harm our ability to meet customer expectations, fulfill orders, manage our products, and achieve our objectives for operating efficiencies and profitability.

The technology underlying our platform is highly interconnected and complex, and we detect bugs, errors, and vulnerabilities from time to time in the ordinary course of business. Because of the complexity of our technology, it is likely to contain additional undetected bugs, errors or vulnerabilities, some of which may have a material adverse effect on our business or operations. We are unable to comprehensively apply patches or confirm that measures are in place to mitigate all such vulnerabilities, or that patches will be applied before vulnerabilities are exploited by a threat actor. Moreover, due to the interconnected nature of our IT Systems, updates to parts of our code (including for product launches), third-party code, and application programming interfaces, on which we rely and that maintain the functionality of our IT Systems, are often very complex and could have an unintended impactimpacts on other sections of our code, which mayhave resultin the past resulted in errors or vulnerabilities to our platform and/or launch delays that negatively impact the customer experience and functionality of our offerings.offerings and could result in serious errors, vulnerabilities or delays in the future. Our use of AI-assisted coding may increase the potential for errors or vulnerabilities in our code base. In some cases, such as our mobile application, certain errors are only able to be correctable through updates distributed through slower, third-party mechanisms, such as app stores, and may need to comply with third-party policies and procedures to be made available, which may add additional delays due to app review and customer delay in updating their mobile apps. In addition, our IT Systems and business operations are increasingly reliant on AI systems and technologies, which are complex, expected to pose new or unknown cybersecurity risks and challenges, and may have errors or inadequacies that are not easily detectable. As discussed elsewhere in these risk factors, these systems and technologies may inadvertently reduce the efficiency of our IT Systems or may cause unintentional or unexpected outputs that are incorrect, do not match our business goals, do not comply with our policies, or otherwise are inconsistent with our brand, guiding principles and mission. Any errors or vulnerabilities discovered in our code or IT Systems generally could also result in damage to our reputation, loss of our customers, unauthorized disclosure of personal and confidential information, loss of revenue or liability for damages, any of which could adversely affect our growth prospects and our business.

Additionally, despite various security measures that have been implemented, our IT Systems and those of our third-party service providers and business partners as well as the Confidential Information stored thereon are vulnerable to numerous and rapidly evolving cybersecurity risks that threaten their confidentiality, integrity and availability, including security incidents, technology developments (including, but not limited to, AI developments), attacks by a variety of threat actors (including hackers, hacktivists, and state-sponsored organizations), acts of vandalism, malware, social engineering, denial or degradation of service attacks, computer viruses, software bugs or vulnerabilities, supply chain attacks, phishing attacks, ransomware attacks, credential stuffing attacks, misplaced or lost data, human errors, malicious insiders, inadvertent disclosures or other similar events. Notably, AI technologiestechnologies, including generative AI, agentic AI and AI-enabled automation technologies, have introduced new and complex cybersecurity risks, including, but not limited to, more sophisticated AI-powered social engineering and phishing campaignscampaigns, AI-driven generation and refinement of malicious code, accelerated discovery and exploitation of vulnerabilities, automated reconnaissance and targeting, rapid iteration on attack techniques, and the potential for novel attack vectors usinginvolving AI,AI (such as prompt injection, model poisoning, and loop exploits to drain tokens), which broadens the scope, intensity and sophistication of campaigns, reduces the time available to identify and mitigate emerging threats, and presents a significant challenge for the Company and our third-party providers and business partners. Rapid development and increasing use of advanced AI models, algorithms and autonomous or semi-autonomous agents create new attack surfaces, methods for adversaries and cybersecurity risks and risks of employee non-compliance, with which our business policies and internal security controls may not keep pace. Additionally, our third-party AI service providers may fail to comply with their obligations regarding the confidentiality or security of inputs or outputs, otherwise use the data that we may provide in ways that may result in the unauthorized access to or disclosure of our Confidential Information, or experience security breaches or other incidents which may result in the unauthorized access to our Confidential Information or IT Systems. If unauthorized parties gain access to our Confidential Information, IT Systems or other information, or those of our third-party service providers or business partners, they may be able to steal, publish, sell, delete, use inappropriately or modify private and sensitive information, including credit card information and personally identifiable information or proprietary business information, any or all of which could harm our business, financial condition and results of operations.

Certain of the aforementioned types of cyberattacks and security incidents have occurred in the past to us and our third-party providers, and may occur in the future, resulting in unauthorized, unlawful, or inappropriate access to, inability to access, disclosure of, or loss of Confidential Information. For example, although no sensitive information was affected, our platform has been the subject of phishing attempts, credential stuffing attacks and brute force attacks (i.e., attempts to try different username and password credentials to gain access to our platform), and other account takeover tactics. The security measures we employ to prevent, detect, and mitigate unauthorized use of user credentials and potential harm to our users from the theft of or misuse of user credentials on our network (including, but not limited to, our ability to keep pace with evolving AI capabilities and threats) may not be, and have not always been, effective in every instance.

As an e-commerce business, we encounter risks and difficulties frequently experienced by businesses with significant internet operations. The successful operation of our business as well as our ability to provide a positive customer experience that will generate Subscription, Reserve and Resale orders depend on efficient and uninterrupted e-commerce order-taking and fulfillment operations. If we are unable to allow real-time and accurate visibility to product availability when customers are ready to order, quickly and efficiently fulfill our customers’ orders using the fulfillment and payment methods they demand, provide a convenient and consistent experience for our customers regardless of the ultimate channel or effectively manage our online sales, our ability to compete and our results of operations could be adversely affected. We have two fulfillment centers in Arlington, Texas and Secaucus, New Jersey that we depend on for our fulfillment operations. We currently lease these facilities. Although we renewed our lease in Secaucus, NJ in 2023, weWe cannot guarantee that we will be able to renew or negotiate new or renewed leases in the future at this location or in Texas on terms acceptable to us or at all. If we are unable to secure such leases, or if we can only secure such leases on economic terms that are less than optimal for us, it may materially adversely impact our results of operations.

•our failure to successfully execute planned enhancements to our website and mobile application performance in order to keep pace with industry standards and meet customer expectations, including with respect to the implementation of AI tools and resourcescapabilities;

We rely on third parties to support our business, including, among other things, portions of our technology development and support and certain payment processing services. We have experienced, and may in the future experience, adverse changes to the terms of our agreements with vendors and other commercial partners based on perception of our creditworthiness. If we are viewed as less financially viable by third-party providers, including as a result of our Nasdaq listing compliance and status, we may receive less favorable terms and conditions, including requiring upfront payments or other demonstrations of credit.

We are currently conducting a search for a new permanentexperiencing CEO and CFO and managing our CEO and CFO transitions with interim leadership.transitions. We rely on the experience and expertise of our senior management team, key technical and strategic employees and hourly personnel.

We believe that our success and future growth depend largely upon the leadership and services of our senior management team. From time to time, there have been and may be future changes in our executive management team resulting from the hiring or departure of these executives. Following the recent resignations of our CEO and CFO, we have appointed ana interimpermanent CEO [and interim CFO] and, ultimately, intend to appoint a permanent hireshire to thesethe roles.CFO role. If we do not successfully manage these leadership transitions and timely hire new executives, we could experience increased regrettable attrition and fail to achieve our business goals. All employees, including our executive officers are employed on an at-will basis, which means they may terminate their employment with us at any time. Further,These intypes additionof management changes have the potential to disrupt our operations due to the CEOoperational and CFOadministrative transition,inefficiencies, uncertaintyadded duringcosts, increased likelihood of turnover, and the currentloss transitionof periodpersonnel followingwith thevital Recapitalizationinstitutional Transactions,knowledge, including the related Board transitions, or a perception that the new management incentive planexperience and compensationexpertise, in general is not sufficiently motivating,which could result in regrettablesignificant attrition.disruptions to our operations. The loss of additional senior leaders, the failure to appropriately manage and integrate the current executive and Board transitions, or the failure of the management team and Board to collaborate effectively and lead our Company could materially harm our business. We do not maintain key man life insurance with respect to any member of management or other employee.

•the failure to successfully integrate AI tools and resourcescapabilities into the day-to-day operations of our teams;

Disruptions in the supply chain due to a variety of macroeconomic factors and the recent inflationary environment have increased raw material costs, impacted pricing of our products, and caused shipping delays. In addition to the general uncertainty and overall risk from changes in global trade policies, tariffs, treatises and supply chains, as we make business decisions in the face of such uncertainty, we may incorrectly anticipate the outcomes, miss out on business opportunities, or fail to effectively adapt our business strategies and manage the adjustments that are necessary in response to such changes. For example, to respond to inflationary and tariff pressures, in August 2025, we implementedhave increased pricesthe forprice of our Subscription plans and, in Junethe 2026past implementedand aadded new or increased shipping chargecharges foracross Subscriptionour plans.offerings. Any future developments of these issues, or the perception regarding such developments, could increase the costs associated with procuring rental product, negatively impact our brand partners’ business operations which could in turn negatively impact us, reduce the supply of materials used in the design and manufacture of our rental products; and negatively impact customer demand for our products, any of which could have a material adverse effect on our business, financial condition and results of operation.

Failure to manage updates to our Board transition and related changes could materially adversely affect our business.

To facilitate the Recapitalization Transactions, the Board was restructured in 2025, and has beencontinued restructured,to experience changes, including new and departing members, changes to the Audit Committee composition, and theupdates designationto ofBoard Mr.leadership, Fonseca as Executive Chair, and this transitionwhich may cause temporary uncertainty and disruption. Additionally, the Investor Group (defined below) has indicated that it is continuing to use commercially reasonable efforts to identify and designate a third Investor Group director to the Board, which could take place in the near future.

The potential uncertainty and disruption resulting from thethese Board transition and related changes, along with the ongoing efforts to identify a third Investor Group director,updates could have an adverse effect on our business, financial condition and results of operations. For more information on the Board transition,transition relating to the Recapitalization Transactions, see “Note 6 - Long-Term Debt” in the Notes to the Condensed Consolidated Financial Statements for more information.

We have funded our operations since inception primarily through equity and debt financings and revenue generated from our offerings. Our goal is to be a profitable company over time; however, we cannot be certain when or if our operations will generate sufficient cash to fully fund our ongoing operations or the growth of our business. We also intend to continue to make investments to develop and grow our business. For example, in the future, we may need additional funding to satisfy our debt obligations, to obtain rental products, for marketing, and for headcount or other operating expenses and capital expenditures, to develop new features or enhance our offerings, to improve our operating infrastructure, and/or to acquire complementary businesses and technologies. However, our market capitalization, business performance and/or level of indebtedness and/or governance structure may adversely impact efforts to raise additional capital. Our principal sources of liquidity are existing cash and cash equivalents and cash flows from operating activities. There is no remaining borrowing availability under our New Credit Agreement. If we are unable to obtain adequate financing or financing on terms satisfactory to us, our ability to support our business growth, and respond to business challenges could be significantly impaired, and our business may be adversely affected. Additionally, in recent periods, there has been volatility in and disruptions to the global economy, including the equity and debt financial markets. Such weakness and volatility in capital markets and the economy in general could limit our access to capital markets and increase our costs of borrowing.

Under the terms of the Recapitalization Transactions, we entered into an amended and restated credit agreement (the “New Credit Agreement”), by and among the Company, as borrower, CHS (US) Management LLC, as administrative agent (the “Agent”), and CHS US Investments LLC (“Lender”), Gateway Runway, LLC (“Nexus”) and S3 RR Aggregator, LLC, as lenders (“STORY3” and, collectively with Lender and Nexus, the “Investor Group”). The New Credit Agreement amended and restated our prior credit agreement, dated as of July 23, 2018, by and among the Company, as borrower, the lenders from time to time party thereto and the Agent (as successor-in-interest to Double Helix Pte Ltd.) (the “ExistingPrior Credit Agreement”). The New Credit AgreementAgreement, containsincluding subsequent amendments thereto, contain negative covenants that limit our ability to, among other things, incur additional indebtedness, pay dividends, redeem stock or make other distributions, amend our material agreements, make investments, incur liens, make negative pledges, consolidate, merge, sell or otherwise dispose of all or substantially all of our assets, and enter into certain transactions with affiliates. Our obligation to comply with such covenants could decrease our operating flexibility and our ability to achieve our operating objectives, which could have an adverse effect on our business, financial condition and results of operations.

Further, in the past we have sought waivers and/or concessions from our Lender and the Investor Group to ensure our continued compliance with certain covenants under our ExistingPrior Credit Agreement,Agreement and we may in the future be unable to comply with the covenants under the New Credit Agreement.Agreement and/or to support our liquidity needs. If we were unable to comply with our covenants and successfully negotiate with the Investor Group for a waiver or dispensation of such covenants under the New Credit Agreement, the Agent would have the right to accelerate repayment of all outstanding obligations under the New Credit Agreement, which would become immediately due and payable, and exercise all other rights and remedies available under the New Credit Agreement. While our Lender has previously granted waivers or entered into amendments to the Existing Credit Agreement to avoid certain events of default, thereThere can be no assurance that the Investor Group will be willing to doprovide sowaivers or concessions or negotiate our debt terms in the future. In addition, the rights of the Investor Group under the New Credit Agreement are transferable and assignable, and any transferee may not be willing to grant such waivers or enter into such amendments, or have interests that align with us and our stockholders. Therefore, any failure to comply with the covenants under the New Credit Agreement and negotiate with the Investor Group could have a material adverse effect on our business, financial condition and results of operations.

As of AprilJuly 30,31, 2026, we had $157.1$157.5 million aggregate amount of borrowings, consisting of principal and debt (premium) discount under the New Credit Agreement. If we are unable to successfully manage our long-term debt obligations, our liquidity, results of operations, cash flows, and financial condition may be materially adversely impacted. See Risks Related to the Recapitalization Transactions and Note 6 —Long-Term Debt in the Notes to the Condensed Consolidated Financial Statements for more information on our indebtedness and the Recapitalization Transactions.

Our ability to make interest and principal payments and to fund our planned capital expenditures will depend on our ability to generate cash flows. Our ability to generate cash flows is, to a certain extent, subject to general economic, financial, competitive, legislative, regulatory and other factors that are beyond our control, such as an environment of rising or continuously high interest rates. To the extent we are impacted by macroeconomic trends, or other factors, including, but not limited to, lower demand for our business, increased rental product spend or tariffs, we plan to reduce fixed and variable costs accordingly and have established plans to preserve existing cash liquidity, which includes additional reductions to labor, operating expenses, and/or capital expenditures. However, these actions may not provide sufficient incremental liquidity to fund our debt service obligations when they become current. If our cash flows, capital resources and any measures to reduce fixed and variable costs are insufficient to fund our debt service obligations, we may be forced to reduce or delay investments and capital expenditures or to sell assets, seek additional capital or restructure or refinance our indebtedness. Our ability to restructure or refinance our current or future debt, if needed, will depend on the condition of the capital markets and our financial condition at such time, as well as cooperation with our lender.Lenders. Any refinancing of our debt could be at higher interest rates and may require us to comply with more onerous covenants, which could further restrict our business operations. The terms of existing or future debt instruments may restrict us from adopting some of these alternatives. We cannot provide assurance that our business will be able to generate sufficient levels of cash or that future borrowings or other financings will be available to us in an amount sufficient to enable us to service our indebtedness and fund our other liquidity needs. If we need to generate additional levels of cash to service our indebtedness or meet our covenant obligations, we may need to undertake additional cost-cutting measures. These financing risks, in addition to potential rising interest rates and changes in market conditions, if realized, could negatively impact our business, financial condition and results of operations. See “Note 6 —Long-Term Debt” in the Notes to the Condensed Consolidated Financial Statements for more information on our indebtedness and the Recapitalization Transactions.

We identified material weaknesses in our internal control over financial reporting, as described below. As of AprilJuly 30,31, 2026, these material weaknesses remain unremediated. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.

From time to time, we may be subject to claims, lawsuits, government investigations, and other proceedings involving products liability, competition and antitrust, intellectual property, data privacy, data security and data protection, consumer protection, securities, tax, labor and employment, commercial disputes, environmental regulations, and other matters that could adversely affect our business operations and financial condition. For example, on November 14, 2022, a purported stockholder of the Company filed a putative class action lawsuit in the Eastern District of New York against the Company, certain of its officers and directors, and the underwriters of its IPO, entitled Rajat Sharma v. Rent the Runway, Inc., et al. The complaint, which has since been amended, alleges that we violated sections of the Securities Act of 1933, as amended, by making allegedly materially misleading statements, and by omitting material facts necessary to make the statements made therein not misleading. The lawsuit seeks, among other things, compensatory damages, attorneys’ fees and costs and such other relief as deemed just and proper by the court.. See “Note 14, Commitments and Contingencies” in the Notes to the Condensed Consolidated Financial Statements for more details about material litigation matters, including the settlement of our previously reported class action and other matters.action.

In addition, in recent years, we have seen a rise in the number and potential significance of these disputes and inquiries and evolving areas of focus for regulators and private plaintiffs. For example, there has been an increase in consumer class action lawsuits and mass arbitrations relating to subscription products.products, fees, and data privacy practices. Litigation and regulatory proceedings may be protracted and expensive, and the results are difficult to predict. Certain of these matters include speculative claims for substantial or indeterminate amounts of damages and include claims for injunctive relief. Additionally, the costs we incur could be significant and our insurance coverage and assets may be insufficient to cover these cost. Adverse outcomes with respect to claims, litigation or any of these legal proceedings may result in significant settlement costs or judgments, damages, penalties and fines, or require us to modify our products and offerings or other business processes, which could negatively affect our financial performance or our revenue growth and/or cash balances. The results of litigation, investigations, claims, and regulatory proceedings cannot be predicted with certainty, and determining reserves for pending litigation and other legal and regulatory matters requires significant judgment. There can be no assurance that our expectations will prove correct, and even if these matters are resolved in our favor or without significant cash settlements, these matters, and the time and resources necessary to litigate or resolve them, could harm our business, financial condition, and results of operations.

We rely on third parties to provide payment processing infrastructure, to accept card payments from customers, process and administer gift cards, andand, through our banking partners, to remit payments to suppliers. These third parties may refuse to renew our agreements with them on commercially reasonable terms or at all. Furthermore, we rely on a single payment processor, which may increase our risks of being unable to process payments and deliver our products in a timely and cost-effective manner. In the event of interruption, we may not be able to develop alternate or secondary processing without incurring material additional costs and substantial delays. If these providers become unwilling or unable to provide these services to us on acceptable terms or at all, our business may be disrupted. For certain payment methods, including credit and debit cards, we pay interchange fees and other processing and gateway fees, and such fees result in significant costs. Online payment providers have also required, and may in the future require, us to provide demonstrations of credit based on providers’ perceptions of our creditworthiness. In addition, online payment providers pay fees to banks to settle funds, and there is no assurance that such online payment providers will not pass any costs on to us, as and when such costs increase. If these fees or other obligations increase over time, our operating costs will increase, which could adversely affect our business, financial condition, and results of operations.

•the impact of pandemics like COVID-19 or future pandemics on our business or the fashion industry and sharing economy generally;

Our investors may not realize any return on their investment in us and may lose some or all of their investment. In addition, stock markets, and the trading of e-commerce companies’ and technology companies’ stocks in particular, have experienced significant price and volume fluctuations that have affected and continue to affect the market prices of equity securities of many companies. Stock prices of many companies have fluctuated in a manner often unrelated to the operating performance of those companies. It is common for stockholders to institute securities class action litigation following periods of stock volatility. WeCurrent areor currently subject tofuture securities litigation which could divert resources and the attention of management from our business, and materially adversely affect our business, financial condition and results of operations, and we could be subject to additional securities litigation in the future.operations.

In the future, we may sell additional Class A common stock, other series of common stock, convertible securities, or other equity securities, including preferred securities, in one or more transactions at prices and in a manner we determine from time to time, including but not limited to pursuant to our shelf registration statement on Form S-3. For example, on April 15, 2026, we entered into an At-the-Market Sales Agreement with BTIG, LLC, as agent, for the issuance and sale in an “at the market offering” as defined in Rule 415(a)(4) under the Securities Act, of our Class A common stock with an aggregate offering price of up to $40,000,000. We also expect to issue Class A common stock to employees, consultants, and directors pursuant to our equity incentive plans. If we sell Class A common stock, other series of common stock, convertible securities, or other equity securities in subsequent transactions, or Class A common stock or Class B common stock is issued pursuant to equity incentive plans, investors may be materially diluted. New investors in subsequent transactions could gain rights, preferences, and privileges senior to those of holders of our Class A common stock.

CHS is also a Lender pursuant to our New Credit Agreement. If CHS loses confidence in our business or if their investment strategy evolves and we are no longer an attractive investment, it could materially adversely affect our business, financial condition and results of operations. If at any time we cease to be a “controlled company” under Nasdaq listing rules, our board of directors will take all action necessary to comply with Nasdaq’s corporate governance rules, including establishing certain committees composed entirely of independent directors, subject to a permitted “phase-in” period. Notwithstanding our status as a controlled company, we will remain subject to the Nasdaq corporate governance standards that require us to have an audit committee with at least three independent directors, as well as to be composed entirely of independent directors. See “We are currently noncompliant with Nasdaq Listing Rule 5605(c)(2)(A), which requires listed companies to have at least three audit committee members.”

Certain provisions in our corporate charter documents and under Delaware law may prevent or hinder attempts by our stockholders to change our managementBoard or to acquire a controlling interest in us, and the trading price of our Class A common stock may be lower as a result.

There are provisions in our Amended Charter and SecondThird Amended and Restated Bylaws (“Amended Bylaws”) that may make it difficult for a third party to acquire, or attempt to acquire, control of our Company, even if a change in control were considered favorable by our stockholders. These anti-takeover provisions include:

•the ability of our directors to fill all board vacancies, subject to the rights granted pursuant to the stockholders’investor rights agreement;

We give customers ongoing access to our “unlimited closet” — with thousands of styles by hundreds of designer brands — through our Subscription offering or the ability to rent a-la-carte through our Reserve offering. We also give our subscribers and customers the ability to buy our products through our Resale offering, which offers customers pre-loved styles from our closet at a discount to retail price, up to 90% off of designer retail value. These offerings allow us to engage and serve our subscribers and customers across diverse use cases from everyday life to special occasions. We have served approximately 3.5 million lifetime customers across all of our offerings and we had 196,147186,019 ending Total Subscribers1 (active and paused) as of AprilJuly 30,31, 2026. We had 155,692140,826 Active Subscribers as of AprilJuly 30,31, 2026. The majority of our revenue is highly recurring and is generated by our subscribers. For the threesix months ended AprilJuly 30,31, 2026 and 2025, respectively, 90% and 88%89% of our total revenue (including Reserve and Resale revenue) was generated by subscribers while they were active or paused.

The variety, breadth and quantity of products we carry is important to our business, and we strategically manage the capital efficient acquisition of a high volume of items every year. We have successfully disproved the myth thatThe fashion apparel items and accessories onlywe offer often last beyond one season as we are able to rent or “turn” our products multiple times over manymultiple years. We price our rental items at a fraction of their retail or comparable value, creatingaiming to create an attractive price and value proposition for our subscribers and customers.

Key Fiscal FirstSecond Quarter and Recent Business Highlights:

Key Operating and Financial Results. We have achieved the following operating and financial results for the three months ended AprilJuly 30,31, 2026 and 2025, respectively:

•155,692140,826 and 147,157146,373 ending Active Subscribers2, respectively, representing ana increasechange of 5.8%(3.8)% year-over-year;

•Net Loss was $(18.912.9) million and $(26.126.4) million, respectively. Net Loss as a percentage of revenue was (21.013.2)% and (37.532.6)%, respectively; and

•Adjusted EBITDA was $(0.8)$12.6 million and $(1.3)$3.6 million, respectively, representing an Adjusted EBITDA marginMargin of (0.9)%12.9% and (1.9)%,4.4%, respectively;respectively.

•Cash and Cash EquivalentsRevenue was $37.1$187.6 million and $70.4$150.5 million, respectively.respectively, representing 24.7% growth year-over-year;

In fiscal year 2025, 31% of new items were acquired through Wholesale, 57% through Share by RTR and 12% through Exclusive Designs, compared to 30% Wholesale, 48% Share by RTR and 22% Exclusive Designs in fiscal year 2024. In total, approximately 69% of new items were acquired through Share by RTR and Exclusive Designs, our more capital-efficient channels in fiscal year 2025 and approximately 70% in fiscal year 2024. Both our purchasing power and the diversification into Share by RTR and Exclusive Designs have led to a decrease in rental product capital expenditures (or Purchases of Rental Product as presented in the Condensed Consolidated Statement of Cash Flows) as a percentage of revenue over time. We plan to acquire fewer rental product units year-over-year in fiscal year 2026 and we expect the total percentage of units acquired through our more capital-efficient channels to increase in fiscal year 2026 versus fiscal year 2025, with an increase in the percentage of units acquired through our Share by RTR and Exclusive Designs programs versus fiscal year 2025. We plan to further decrease the percentage of units acquired through Wholesale and increase the percentage of units acquired through our more capital-efficient channels over the longer term. We expect to incur lower capital expenditures for purchases of rental product in fiscal year 2026 relative to fiscal year 2025 primarily due to a lower proportion of rental product acquired through Wholesale in fiscal year 2026.

We provide a flexible offering that allows our subscribers to customize their subscription as their everyday life changes, choosing to pause and reactivate their membership as needed. We have also historically seen that many subscribers who cancel their subscription will return and resubscribe when membership again makes sense for their everyday life. Customer acquisition is dependent on organic growth, the effectiveness of our paid marketing strategy and the availability of and satisfaction with our rental product. WeIn the second half of fiscal year 2026, we are focused on ourprioritizing community-driven organic growthpaid marketing strategy that is intended to drive improved brand awarenessoptimization and acquisition.efficiency. Our acquisitions are also reliant on new customer promotions. Our promotional strategy is subject to change depending on business and market conditions.

Ability to Achieve Leverage in our Cost Structure. Improving operational efficiency of our platform is imperative to increasingimproving profitability. We expect certain of our operating costs to increase as order volume increases and as we make investments to grow subscribers and revenue and to enhance the customer experience. Though we anticipate quarterly fluctuations in operating leverage, over time we anticipate that our operating costs will grow more slowly than our total revenue on an annual basis.

Over time, we expect to improve our margins, profitability and cash flow, and we believe we will continue to benefit from economies of scale. We are focused on driving additional efficiencies in our operating expenses and growingimproving profitability to also cover rental product depreciation, in addition to fulfillment, revenue share and operating expenses.

We use Adjusted EBITDA to assess our operating performance and the operating leverage of our business prior to capital expenditures. We also measure the cash consumption of the business including capital expenditures by assessing net cash used in operating activities and net cash used in investing activities on a combined basis. See also “Note 3 —- Liquidity” and “Note 6 - Long-Term Debt” in the Notes to the Condensed Consolidated Financial Statements for more details regarding our New Credit Agreement and Recapitalization Transactions, which we expect to improve our overall liquidity.

Active Subscribers: Active Subscribers represents the number of subscribers with an active membership as of the last day of any given period and excludes paused subscribers. As of AprilJuly 30,31, 2026, we had 155,692140,826 Active Subscribers, ana increasedecrease from 147,157146,373 as of AprilJuly 30,31, 2025. The increasedecrease in Active Subscribers was driven primarily by a year-over-year increase in the rate of pause and a year-over-year decrease in the number of subscribers acquired, partially offset by a higher base of active subscribers at the end of the fourthfirst quarter of fiscal year 20252026 compared to the fourthfirst quarter of fiscal year 2024,2025, in addition to higher subscriber acquisitions partially offset by a year-over-year increase in the rate of pause and year-over-year decrease in retention.

Average Active Subscribers: Average Active Subscribers represents the mean of the beginning of quarter and end of quarter Active Subscribers for a quarterly period; and for other periods, represents the mean of the Average Active Subscribers of every quarter within that period. As of AprilJuly 30,31, 2026, we had 149,744148,259 Average Active Subscribers, an increase from 133,468146,765 as of AprilJuly 30,31, 2025. The year-over-year increase in Average Active Subscribers was primarily due to a higher base of active subscribers at the end of the fourthfirst quarter of fiscal year 20252026 compared to the fourthfirst quarter of fiscal year 2024, in addition to higher subscriber acquisitions2025, partially offset by a year-over-yearlower increasebase inof active subscribers at the rateend of pausethe andsecond year-over-yearquarter decreaseof infiscal retention.year 2026 compared to the second quarter of fiscal year 2026.

Gross Profit was $23.3$35.3 million for the three months ended AprilJuly 30,31, 2026 compared to $21.9$24.3 million for the three months ended AprilJuly 30,31, 2025, representing Gross Margins of 25.9%36.1% and 31.5%,30.0%, respectively. Gross Profit was $58.6 million for the six months ended July 31, 2026 compared to $46.2 million for the six months ended July 31, 2025, representing Gross Margins of 31.2% and 30.7%, respectively. Gross Profit for the three and six months ended AprilJuly 30,31, 2026 increased primarily due to higher Revenue partially offset by higher Rental Product Depreciation and Revenue Share costs, as well as higher Fulfillment expenses. Gross Margin for the three months ended AprilJuly 30,31, 2026 decreasedincreased because of lower Fulfillment costs and lower Rental Product Deprecation and Revenue Share costs as a percentage of Revenue. Gross Margin for the six months ended July 31, 2026 increased primarily due to lower Fulfillment costs as a percentage of revenue partially offset by higher Rental Product Depreciation and Revenue Share costs as a percentage of Revenue partially offset by lower Fulfillment costs as a percentage of Revenue.

Adjusted EBITDA and Adjusted EBITDA Margin: We define Adjusted EBITDA as net loss, adjusted to exclude interest expense, rental product depreciation, other depreciation and amortization, share-based compensation expense, write-off of liquidated assets, non-recurring adjustments, non-ordinary course legal expenses, non-ordinary course executive transition costs, income tax (benefit) expense, other income and expense, and other gains / losses. Adjusted EBITDA margin is defined as Adjusted EBITDA calculated as a percentage of total revenue, net for a period.

NetAdjusted LossEBITDA was $(18.9)$12.6 million for the three months ended AprilJuly 30,31, 2026 compared to $(26.1)$3.6 million for the three months ended AprilJuly 30,31, 2025, representing margins of (21.0)%12.9% and (37.5)%, respectively. Net Loss decreased year-over-year primarily due to lower reported Interest Expense, higher Gross Profit, and lower Marketing and Technology costs partially offset by higher General and Administrative expenses. Adjusted EBITDA was $(0.8) million for the three months ended April 30, 2026 compared to $(1.3) million for the three months ended April 30, 2025, representing margins of (0.9)% and (1.9)%,4.4%, respectively. Adjusted EBITDA increased year-over-year primarily due to higher Revenue partially offset by higher Revenue Share costs within Rental Product Depreciation and Revenue Share, Fulfillment costs,Share and higher GeneralFulfillment and Administrative Expenses.costs. Adjusted EBITDA Margin increased year-over-year primarily due to lower Technology, Marketing, and General and AdministrativeAdministrative, Fulfillment, Technology, and Marketing expenses as a percentage of Revenue partially offset by higher Revenue Share expenses as a percentage of Revenue. Adjusted EBITDA was $11.8 million for the six months ended July 31, 2026 compared to $2.3 million for the six months ended July 31, 2025, representing margins of 6.3% and 1.5%, respectively. Adjusted EBITDA increased year-over-year primarily due to higher Revenue partially offset by higher Revenue Share costs within Rental Product Depreciation and Revenue Share and higher General and Administrative Expenses. Adjusted EBITDA Margin increased year-over-year primarily due to lower General and Administrative, Fulfillment, Technology, and Marketing expenses as a percentage of Revenue partially offset by higher Revenue Share expenses as a percentage of Revenue.

Subscription and Reserve Rental Revenue. We generate Subscription and Reserve rental revenue from Subscription and Reserve rental fees. The majority of our revenue is generated by our Subscription offering, which we are prioritizing.offering. We recognize subscriptionSubscription fees ratably over the subscription period, commencing on the date the subscriber enrolls in a subscriptionSubscription program. These fees are collected upon enrollment and any revenue from an unrecognized portion of the subscription period is deferred to the following fiscal period. We implemented a price increase for our subscriptionSubscription plans in August 2025, which increased revenue per subscriber in the third quarter of fiscal year 2025 and which we expect will continue to do so over the comingsubsequent quarters. We also implemented a shipping charge for subscriptionSubscription plans in June 2026 which we expect to be temporary. This charge is expected to increaseincreased revenue per subscriber beginning in Q2 2026. We recognize Reserve fees over the rental period, which starts on the date of delivery of the product to the customer. Reserve orders can be placed up to four months prior to the rental start date and the customer’s payment form is charged upon order confirmation. We defer recognizing the rental fees and any related promotions for Reserve rentals until the date of delivery, and then recognize those fees evenly over the four- or eight-day rental period.

Other Revenue. We generate Other revenue primarily from our Resale offering, i.e., the sale of products while they are in rental condition. We offer the ability for subscribers and customers to purchase products at a discount to retail price. Payment for the sale of products occurs upon order confirmation while the associated revenue is recognized either at the time the sold product is delivered or when purchased, if the item is already at home with the customer. From time to time, Other revenue may include revenue generated from pilots and other growth and business development initiatives which may cause quarterly fluctuations in the Other revenue line.

Other Income / (Expense). Other income / (expense) consists primarily of proceedsrecoveries fromon monetizinglost tax credits associated with growthshipments and Irish refundable tax credits.

Comparison of the three months ended AprilJuly 30,31, 2026 and 2025

Total Revenue, Net. Total revenue, net was $89.9$97.7 million for the three months ended AprilJuly 30,31, 2026, an increase of $20.3$16.8 million, or 29.2%,20.8%, compared to $69.6$80.9 million for the three months ended AprilJuly 30,31, 2025. This increase was driven by higher Subscription and Reserve rental revenue and higher Other revenue. In fiscal year 2026, we expect revenue to increase due to higher Subscription prices and a larger subscriptionSubscription customer base due to a particular focus on increasing our Active Subscribers year-over-year.

Subscription and Reserve Rental Revenue. Subscription and Reserve rental revenue was $77.7$83.8 million for the three months ended AprilJuly 30,31, 2026, an increase of $15.7$14.6 million, or 25.3%,21.1%, compared to $62.0$69.2 million for the three months ended AprilJuly 30,31, 2025. This increase was primarily driven by higher revenue per subscriber and higher average activeActive subscribers,Subscribers, partially offset by lower Reserve rental revenue.

Other Revenue. Other revenue was $12.2$13.9 million for the three months ended AprilJuly 30,31, 2026, an increase of $4.6$2.2 million, or 60.5%,18.8%, compared to $7.6$11.7 million for the three months ended AprilJuly 30,31, 2025. This increase was primarily driven by higheran increase in items purchased per Average Active Subscriber, higher average selling price per item and higher Average Active Subscribers. Other revenue represented 13.6%14.2% of total revenue, compared to 10.9%14.5% in the same period last year.

Costs and Expenses. Total costs and expenses were $109.6$105.5 million for the three months ended AprilJuly 30,31, 2026, an increase of $20.3$4.5 million, or 22.7%,4.5%, compared to $89.3$101.0 million for the three months ended AprilJuly 30,31, 2025. This increase was primarily driven by higher Rental Product Depreciation and Revenue Share costs,costs and higher Fulfillment costs, higher G&A costs,expenses, partially offset by lower Marketing,G&A expenses and Other Depreciation &and Amortization and Technology costs.

Fulfillment. Fulfillment expenses were $23.6$23.5 million for the three months ended AprilJuly 30,31, 2026, an increase of $3.2$1.0 million, or 15.7%,4.4%, representing 26.3%24.1% of revenue, compared to $20.4$22.5 million for the three months ended AprilJuly 30,31, 2025, representing 29.3%27.8% of revenue. The increase in fulfillment dollars was primarily driven by an increase in orders due to higher average active subscribers, higher transportation costs due to carrier rate increases,increases and increases in warehouse processing costs. Fulfillment costs decreased as a percentage of revenue due primarily to higher revenue per order partially offset by higher transportation and processing costs per order.

Technology. Technology expenses were $9.4$9.8 million for the three months ended AprilJuly 30,31, 2026, a decrease of $(0.2) million, or (2.1)%, comparedflat to $9.6 million for the three months ended AprilJuly 30,31, 2025. Technology expenses were 10.5%10.0% of revenue for the three months ended AprilJuly 30,31, 2026 compared to 13.8%12.1% for the same period last year primarily due to operating leverage from higher Revenue. Technology related share-based compensation expense was $0.2$0.1 million for the three months ended AprilJuly 30,31, 2026 and was $0.3$0.2 million for the same period last year.

Marketing. Marketing expenses were $8.0$7.4 million for the three months ended AprilJuly 30,31, 2026, a decrease of $(0.6) million, or (7.0)%, comparedflat to $8.6 million for the three months ended AprilJuly 30,31, 2025. ThisMinimal decreaseincreases was driven primarily by lowerin paid marketing expenses andwere loweroffset by decreases in marketing employee expenses. Marketing expenses unrelated to personnel costs were $7.3$6.7 million in the three months ended AprilJuly 30,31, 2026 and 8.1%6.9% of revenue, compared to $7.9$6.5 million and 11.4%8.0% of total revenue for the same period last year.

General and Administrative. General and administrative (“G&A”) expenses were $23.4$23.8 million for the three months ended AprilJuly 30,31, 2026, ana increasedecrease of $2.7$(0.8) million, or 13.0%,(3.3)%, compared to $20.7$24.6 million for the three months ended AprilJuly 30,31, 2025. This increasedecrease was driven primarily by anexpenses increase in credit card fees duerelating to the increaseRecapitalization Transactions that occurred in revenue,July an increase in employee, occupancy and other G&A expenses.2025. G&A expenses as a percentage of revenue were 26.0%,24.4%, compared to 29.7%30.4% last year, as we saw increased operating leverage.year. G&A related share-based compensation expense was $1.3$0.6 million for the three months ended AprilJuly 30,31, 2026 and was $1.2 million for the three months ended AprilJuly 30,31, 2025.

Rental Product Depreciation and Revenue Share. Rental product depreciation and revenue share was $43.0$38.9 million for the three months ended AprilJuly 30,31, 2026, an increase of $15.7$4.8 million, or 57.5%,14.1%, compared to $27.3$34.1 million for the three months ended AprilJuly 30,31, 2025. The increase was primarily driven by higher revenue share expenses due to higher Share by RTR units acquired and utilized during the period. Rental product depreciation and revenue share was 47.8%39.8% of revenue in the three months ended AprilJuly 30,31, 2026, updown from 39.2%42.2% in the same period last year primarily due to the factors discussed above.year.

Other Depreciation and Amortization. Other depreciation and amortization was $2.2$2.1 million for the three months ended AprilJuly 30,31, 2026, a decrease of $(0.5) million, or (18.519.2)%, compared to $2.7$2.6 million for the three months ended AprilJuly 30,31, 2025. This decrease was primarily driven by lower depreciation and amortization associated with machinery and equipment.

Interest Income / (Expense), Net. Interest expense, net was $(0.30.2) million for the three months ended AprilJuly 30,31, 2026, a decrease in expense of $6.0$6.7 million, or (95.297.1)%, compared to $(6.36.9) million for the three months ended AprilJuly 30,31, 2025. The decrease was driven by reduced interest expense following the New Credit Agreement, as the modification of the existing debt, which was part of the October 2025 recapitalization transactions, was accounted for as a troubled debt restructuring. This decrease was partially offset by interest expense recognized on the new term loans issued to Nexus and STORY3 as part of the recapitalization transactionstransactions, interest expense recognized as a result of the Second Amendment to the New Credit Agreement, and lower interest income. Of the $(0.30.2) million total interest expense in the three months ended AprilJuly 30,31, 2026, $2.2$2.3 million related to debt premium amortization, $(2.7) million related to paid-in-kind interest, and $0.2 million was the net of interest earned, financing lease and other interest, compared to $0.6$(7.2) million related to paid-in-kind interest, $(3.6) million of the net of cash interest, interest earned, financing lease and other interest and $(6.9)$3.9 million of debt discount amortization in the three months ended AprilJuly 30,31, 2025.

Other Income / (Expense), Net. Other income / (expense), net was $1.1$1.3 million for the three months ended AprilJuly 30,31, 2026, an increase from $0.1$0.6 million for the three months ended AprilJuly 30,31, 2025 primarily due to taxtariff creditsrefunds and recoveries on lost shipments.