Dive Brief:
- Rent the Runway plans to improve its product discovery experience through AI-powered enhancements that will roll out over the coming quarters, co-founder and CEO Jennifer Hyman said on a Q4 2025 earnings call Tuesday.
- The company will present entire curated outfits on the product display pages of individual items and add more options to view products on different models, in different sizes and in motion.
- Rent the Runway will also introduce conversational search that lets customers get more specific about the specifics of a query. For example, a customer can search for a dress to wear to a destination wedding in Italy, rather than searching for just a formal dress.
Dive Insight:
Rent the Runway is encouraged by the results its inventory and CX investments have generated. However, the investments have yet to return the company to profitability.
The company has been working on a CX-powered turnaround for some time. Last year, Rent the Runway revamped its homepage to improve personalization, grew inventory to increase customer choice, and restructured its customer service team to focus on proactive support.
The company’s investments have improved its subscription net promoter score, which was up 39% year over year in 2025, according to Hyman. Rent the Runway’s subscription NPS has been steadily rising in recent quarters and more than tripled since 2022.
Now, Rent the Runway is pairing its earlier improvements with a focus on product discovery. In February, the company introduced a new search algorithm that has led to an approximately 10% increase in subscription conversion rates, according to an earnings report.
“Traditional e-commerce often makes you search for one unit at a time in a sea of endless grid pages, which can exhaust the user and drive online conversion to be lower than offline conversion,” Hyman said on the call. “We're working to transform our experience to help our customers discover complete looks and curated aesthetics.”
Rent the Runway grew its active subscriber base by about 20% year over year in the fourth quarter of 2025, ending the year with about 143,800 subscribers, according to the earnings report. Total subscribers, which includes members who paused or ended their subscription during the quarter, rose about 12% year over year to nearly 183,600.
Revenue rose 20% year over year to $91.7 million in the fourth quarter of 2025, and its net loss shrank to $1.4 million from $13.4 million in the fourth quarter of 2024. However, free cash flow dropped to negative $46 million for fiscal year 2025, down from negative $7.2 million in fiscal year 2024.
Inventory investments made to improve the customer experience and increase subscriber growth were the primary cause for the decline, according to CFO Sid Thacker.
