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Chart by Shane Burke

How Money-Losing Tech Firms Redefine Profits

Photo: Chart by Shane Burke

Last month, Rent the Runway CEO Jennifer Hyman announced that the e-commerce company, used by tens of thousands of fashion aficionados on a budget, had turned a tiny profit during the second quarter after several years of losses—at least, that is, by the firm’s favorite metric of profitability.

But that definition of profitability ignored one of the biggest costs of Rent the Runway’s business: purchases of the designer clothes it rents out to customers. Using standard accounting methods, Rent the Runway lost $33.9 million in the quarter, the company also disclosed. Rent the Runway is just one of several unprofitable firms, also including Robinhood, WeWork and Qualtrics, where use of unofficial accounting metrics paints a much brighter picture of profitability than is apparent from standard accounting measures, according to an analysis by The Information.

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