Yahoo Finance

• Revenue: $312.1 million, down 5.5% year over year and 2% quarter over quarter.

• Adjusted EBITDA: $15.9 million, representing a 5.1% margin, up 380 basis points year over year.

• Contribution Margin: 33%, marking the fourth consecutive quarter above 30%.

• Gross Margin: 44.5%, up 110 basis points year over year.

• Active Clients: 2.4 million, down 16% year over year and 2.6% quarter over quarter.

• Revenue per Active Client (RPAC): $537, up 4% year over year.

• Advertising Expense: 7.8% of revenue, down 160 basis points quarter over quarter.

• Net Inventory: $109.6 million, down 13% year over year and 8% quarter over quarter.

• Free Cash Flow: Negative $19 million for Q2.

• Cash and Investments: $230 million with no debt.

• Annual Revenue Guidance: Between $1.225 billion and $1.240 billion.

• Annual Adjusted EBITDA Guidance: Between $40 million and $47 million.

• Q3 Revenue Guidance: Between $311 million and $316 million.

• Q3 Adjusted EBITDA Guidance: Between $7 million and $10 million.

• Full Year Gross Margin Guidance: Approximately 44% to 45%.

• Warning! GuruFocus has detected 3 Warning Sign with SFIX.

Release Date: March 11, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Stitch Fix Inc (NASDAQ:SFIX) exceeded expectations in Q2 with revenue of $312.1 million and adjusted EBITDA of $15.9 million.

• The company achieved a 710 basis point sequential improvement in year-over-year revenue comps and a contribution margin of 33%, marking the fourth consecutive quarter above 30%.

• Both the Men's business and Freestyle channel returned to year-over-year revenue growth, indicating positive momentum.

• Investments in improving the quality of the assortment and inventory management have led to a 9% year-over-year increase in Average Order Value (AOV).

• The company raised its annual guidance for fiscal 2025, reflecting confidence in continued performance improvements and strategic investments.

Negative Points

• Net revenue for Q2 was down 5.5% year over year and 2% quarter over quarter, indicating ongoing challenges in achieving consistent revenue growth.

• Active clients ended the quarter at 2.4 million, down 16% year over year and 2.6% quarter over quarter, highlighting difficulties in client retention and acquisition.

• Free cash flow was negative $19 million in Q2, attributed to timing of working capital requirements related to inventory purchases.

• The company anticipates continued active client declines into FY26, which could impact future revenue growth.

• Despite improvements, the company faces potential challenges from tariffs and macroeconomic uncertainties, which could affect future performance.