The Q4 IPO season is now well and truly underway, which is great news for everyone. New S-1 paperwork from Udemy, Rent the Runway, and others have recently arrived for those of us who prefer IPO filings to fundraising announcements. Nevertheless, those two are the ones we are most interested in because they are listings from venture-backed companies that we have featured on TechCrunch in the past.
We will go into each company’s basic business results this morning, analyzing how they make money and the health of their recent results. This entry will focus on Rent the Runway, followed by a look at Udemy. It is a rare two-Exchange day today. You are more than welcome. To begin with, I’m intrigued to see how the pandemic affected Rent the Runway’s results — after all, no one required a loaner gown for months — and how solid its gross margins have remained over time. I would also like to know how much it costs to purchase all of the wardrobe items that the firm requires, as well as how those expenses are reported.
Rent the Runway raised hundreds of millions of dollars in equity capital and the occasional loan round when the company was still private. A $125 million Series F investment disclosed March 2019 as the company’s most recent big investment. Crunchbase data shows that the company was valued at $1.0 billion after the purchase. During its private life, Fidelity, Bain Capital Ventures, Highland Capital Partners, Kleiner Perkins, TCV, and others invested in the company. Let us have a look at how it has done.
You have probably heard of the Rent the Runway concept: It buys high-end women’s clothes and rents them out to members and clients for a fraction of the retail price. Customers desire a more diverse wardrobe and want to wear products that they would not be able to purchase on their own, according to the concept. Customers can either subscribe to the service or rent particular things on a piecemeal basis. Your servant got his first actual tour of the Rent the Runway product a few days ago by chance, so I am reasonably knowledgeable about how it works in practice. Rent the Runway provides a huge assortment of products, and it is a lot of fun shopping for designer clothes at rental pricing.
Is it, however, a profitable venture? It is difficult for me to say, but I am not inclined to say yes. Rent the Runway had a bad time with COVID-19. This is reasonable. Clothes were meant to be worn in specific areas, yet the epidemic kept the majority of us at home. As a result, revenue fell during the company’s fiscal 2020, a 12-month period that ended on January 31, 2021.