Quick Facts
- Rent the Runway launched a marketplace pilot in March 2026 offering curated wardrobe essentials to select subscribers
- Company reported 20% revenue growth in Q4 2025 to $91.7 million and turned profitable with $22.6 million net income
- Active subscribers reached 143,796 at year-end 2025, up 20.1% year-over-year
Rent the Runway is testing a marketplace model to sell complementary items as the fashion rental company seeks new revenue streams beyond its core subscription business.
The company launched the marketplace pilot in March 2026, offering curated wardrobe essentials including shoes, beauty products, and basics to a subset of loyal subscribers. The goal is to increase order attach rates by providing items that complete rental looks.
“The marketplace is designed to fill the gap that exists in our customers’ wardrobe, between her rental assortment and the total look she desires,” CEO Jennifer Hyman said. Nearly 90% of customers expressed interest in buying complementary items in a 2025 survey.
The strategic shift comes as Rent the Runway reported strong Q4 2025 results. Revenue grew 20% year-over-year to $91.7 million, while full-year revenue reached $329.8 million, up 7.7% from 2024. The company achieved net income of $22.6 million in 2025, a turnaround from a $69.9 million loss the previous year.
Active subscribers increased to 143,796 at fiscal year-end 2025. However, gross margin compressed to 32.6% from 37.9% a year ago. Average subscribers now visit the app 15 times per month, up almost 50% from 2024 levels.
AI-Driven Discovery Focus
Hyman emphasized technology as a key differentiator for 2026. “If 2025 was about inventory acquisition, 2026 is about discovery,” she said. The company launched a new AI search algorithm in February 2026 that improved subscription conversion rates by approximately 10%.
The AI-powered discovery model allows customers to browse outfit groupings and use conversational search features. Hyman described the transformation as “centered on providing a stylist in your pocket.”
Revenue Diversification Strategy
Beyond the marketplace, Rent the Runway is expanding third-party dry cleaning services and developing advertising revenue from brand partners. These initiatives aim to monetize the company’s fulfillment infrastructure and reduce reliance on subscription growth alone.
The company plans to launch more than 30 new brands this year and expand everyday and workwear assortments by about 20% each. For 2026, management projects double-digit revenue growth and adjusted EBITDA margin of 4-7%.
Despite positive results, the stock declined 11.74% following earnings as investors weighed the company’s execution risk in scaling new revenue streams. Rent the Runway faces competition from Urban Outfitters’ profitable Nuuly rental service as it expands beyond special occasion wear.
Read more: Rent the Runway turns to marketplace, other sideline businesses to stoke revenue
