“Finances” at the airport? Absolutely this year. Investors are solely interested in making investments.
Rent the Runway’s stock (Book) reached a peak in 2024 on Friday, displaying a month-on-month surge of over 260 percent.
This surge coincides with investors seeking avenues to allocate their funds to the whimsical intelligence trend. During an investors’ call on Thursday, Rent the Runway’s CEO, Jennifer Hyman, mentioned that the company has leveraged these systems to enhance customer satisfaction.
“We have made significant strides in enhancing site performance and speed across all our platforms in 2023, making it easier for users to discover products they adore through improved search features like Rent the Look, AI exploration, new filtering, and upgraded visuals and styling,” she explained.
Several of the features mentioned above seem to support the company’s focus on personalization, a use case for AI systems that brands and retailers believe could be transformative. According to recent data from Twilio, over three-quarters of business leaders consider personalized customer service a “high or critical priority” for 2024.
Hyman highlighted the company’s dedication as a key metric.
“Throughout 2023, we implemented substantial changes to our customer experience, which are reflected in our metrics. The subscription net promoter score has surged by 20 points from a low in Q2 2023 to peaks in Q4 [2023], which are ongoing. It has reached its highest sustained levels in quite some time,” she informed investors during the call, noting a 10% year-over-year increase in customer retention rates.
Hyman outlined the company’s ongoing focus on “digital solution development” throughout 2024, aiming to further enhance customer retention and loyalty among subscribers and customers.
Moreover, RTR’s AI segment saw a 0.6% year-over-year revenue growth.
In its earnings call, the rental company acknowledged its plans for AI and emerging technologies.
The company’s Q1 2023 financial report from last June highlighted the very aspect that excited investors this week, noting that it had “made foundational investments in AI.”
By introducing an AI-driven search beta, RTR took a significant step in utilizing AI models to improve the research and discovery experience, as mentioned in last year’s Q1 report. This feature, designed to simplify and streamline the product discovery process, enables users to navigate RTR’s existing search tools and product catalog using common phrases or clothing terms.
Although stock prices surged on the day of that announcement, investors did not rush to make purchases as they have this week.
While AI and digital transformation undoubtedly fueled investor enthusiasm this time, the company’s optimistic outlook also played a role. According to its Q4 2023 report, RTR anticipates a revenue growth of 1% to 6% for fiscal year 2024, in line with fiscal year 2023 figures. It also forecasts an adjusted EBITDA margin of 15 to 16 cents.
