Q1 2026 Stitch Fix Inc Earnings Call

December 4, 2025

Operator: Ladies and gentlemen, thank you for standing by. My name is Desiree, and I will be your conference operator today. At this time, I would like to welcome everyone to the Stitch Fix Q1 2026 earnings call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question-and-answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question again, press the star one. I would now like to turn the conference over to Cherryl Valenzuela, Head of Investor Relations. You may begin.

Ladies and gentlemen, thank you for standing by. My name is Desiree, and I will be your conference operator today. At this time, I would like to welcome everyone to the Stitch Fix Q1 2026 earnings call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question-and-answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question again, press the star one. I would now like to turn the conference over to Cherryl Valenzuela, Head of Investor Relations. You may begin.

Speaker #1: All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad.

Speaker #1: If you would like to withdraw your question again, press the star one. I would now like to turn the conference over to Cherryl Valenzuela, Head of Investor Relations.

Speaker #1: You may begin.

Speaker #2: Good afternoon, and thank you for joining us today for the Stitch Fix first quarter fiscal 2026 earnings call. With me on the call are Matthew Baer, Chief Executive Officer, and David Aufderhaar, Chief Financial Officer.

Cherryl Valenzuela: Good afternoon, and thank you for joining us today for the Stitch Fix First Quarter Fiscal 2026 earnings call. With me on the call are Matt Baer, Chief Executive Officer, and David Aufderhaar, Chief Financial Officer. We have posted complete First Quarter 2026 financial results in a press release on the quarterly results section of our website, investors.stitchfix.com. We would like to remind everyone that we will be making forward-looking statements on this call, which involve risks and uncertainties. Actual results could differ materially from those contemplated by our forward-looking statements. Reported results should not be considered as an indication of future performance. Please review our filings with the SEC for a discussion of the factors that could cause the results to differ.

Speaker #2: We have posted complete first quarter 2026 financial results in the press release on the quarterly results section of our website investors.stitchfix.com. We would like to remind everyone that we will be making forward-looking statements on this call, which involves risks and uncertainties.

Speaker #2: Actual results could differ materially from those contemplated by our forward-looking statements. Reported results should not be considered as an indication of future performance. Please review our filings with the SEC for a discussion of the factors that could cause the results to differ.

Speaker #2: In particular, our press release issued and filed today as well as our annual report on Form 10-K for fiscal 2025 and subsequent periodic reports filed with the SEC.

Cherryl Valenzuela: In particular, our press release issued and filed today, as well as our annual report on Form 10-K for Fiscal 2025 and subsequent periodic reports filed with the SEC. Also note that the forward-looking statements on this call are based on information available to us as of today's date. We disclaim any obligation to update any forward-looking statements except as required by law. Please note that Fiscal 2024 was a 53-week year due to an extra week in the fourth quarter. As such, references to our year-over-year revenue growth rates and consecutive quarters of revenue growth in our women's and men's businesses on this call are based on an adjusted 52-week basis, removing the impact of the extra week to provide a comparison that we believe more accurately reflects our performance. During this call, we will discuss certain non-GAAP financial measures.

In particular, our press release issued and filed today, as well as our annual report on Form 10-K for Fiscal 2025 and subsequent periodic reports filed with the SEC. Also note that the forward-looking statements on this call are based on information available to us as of today's date. We disclaim any obligation to update any forward-looking statements except as required by law. Please note that Fiscal 2024 was a 53-week year due to an extra week in the fourth quarter. As such, references to our year-over-year revenue growth rates and consecutive quarters of revenue growth in our women's and men's businesses on this call are based on an adjusted 52-week basis, removing the impact of the extra week to provide a comparison that we believe more accurately reflects our performance. During this call, we will discuss certain non-GAAP financial measures.

Speaker #2: Also note that the forward-looking statements on this call are based on information available to us as of today's date. We disclaim any obligation to update any forward-looking statements except as required by law.

Speaker #2: Please note that fiscal 2024 was a 53-week year due to an extra week in the fourth quarter. As such, references to our year-over-year revenue growth rates and consecutive quarters of revenue growth in our women's and men's businesses on this call are based on an adjusted 52-week basis, removing the impact of the extra week to provide a comparison that we believe more accurately reflects our performance.

Speaker #2: During this call, we will discuss certain non-GAAP financial measures. Reconciliations to the most directly comparable GAAP financial measures are provided in the press release on our investor relations website.

Cherryl Valenzuela: Reconciliations to the most directly comparable GAAP financial measures are provided in the press release on our Investor Relations website. These non-GAAP measures are not intended to be a substitute for our GAAP results. Finally, this call in its entirety is being webcast on our Investor Relations website, and a replay of this call will be available on the website shortly. And now, let me turn the call over to Matt.

Reconciliations to the most directly comparable GAAP financial measures are provided in the press release on our Investor Relations website. These non-GAAP measures are not intended to be a substitute for our GAAP results. Finally, this call in its entirety is being webcast on our Investor Relations website, and a replay of this call will be available on the website shortly. And now, let me turn the call over to Matt.

Speaker #2: These non-GAAP measures are not intended to be a substitute for our GAAP results. Finally, this call in its entirety is being webcast on our investor relations website and a replay of this call will be available on the website shortly.

Speaker #2: And now let me turn the call over to Matt.

Speaker #3: Thank you, Cheryl, and good afternoon, everyone. Q1 was a strong start to the year. Revenue exceeded our outlook and accelerated 7.3% year-over-year to $342.1 million.

Matt Baer: Thank you, Cherryl, and good afternoon, everyone. Q1 was a strong start to the year. Revenue exceeded our outlook and accelerated 7.3% year-over-year to $342.1 million. Adjusted EBITDA also exceeded our outlook and was nearly 4% of revenue at $13.4 million. We are increasingly becoming the retailer of choice for more of our clients' apparel and accessories needs. We are doing this by leveraging the latest in generative AI technology, the expertise of our human stylists, and our assortment of leading brands, in service of our aim to deliver the most client-centric and personalized shopping experience. Given our Q1 performance, combined with the robust demand we've seen so far this quarter, we are guiding to a third quarter of accelerating growth in Q2 and raising our full-year guidance. The outperformance is the direct result of the compounding benefits we're seeing from the disciplined execution of our transformation strategy.

Speaker #3: Adjusted EBITDA also exceeded our outlook and was nearly 4% of revenue at $13.4 million. We are increasingly becoming the retailer of choice for more of our clients' apparel and accessories needs.

Speaker #3: We are doing this by leveraging the latest in generative AI technology, the expertise of our human stylists, and our assortment of leading brands, in service of our aim to deliver the most client-centric and personalized shopping experience.

Speaker #3: Given our Q1 performance, combined with the robust demand we've seen so far this quarter, we are guiding to a third quarter of accelerating growth in Q2 and raising our full-year guidance.

Speaker #3: The outperformance is the direct result of the compounding benefits we're seeing from the disciplined execution of our transformation strategy. We've strengthened the foundation of our business by embedding retail best practices and building significantly more leverage into our operating model.

Matt Baer: We've strengthened the foundation of our business by embedding retail best practices and building significantly more leverage into our operating model. We have fundamentally reimagined our client experience. We zeroed in on four areas to deliver a more modern and dynamic Stitch Fix. First, delivering enhanced client engagement features. Second, cultivating deeper client-stylist relationships. Third, offering a best-in-class assortment. And fourth, increasing the flexibility of our business model. For example, our increased flexibility now includes dynamic, larger fixes, the ability to turn a freestyle shopping journey into a styled fix, curated theme fixes for specific occasions and use cases, and family accounts, which unlock the Stitch Fix experience for the extended family. This comprehensive and customer-driven approach is clearly resonating with clients. Our Fix AOV was up nearly 10% in Q1.

We've strengthened the foundation of our business by embedding retail best practices and building significantly more leverage into our operating model. We have fundamentally reimagined our client experience. We zeroed in on four areas to deliver a more modern and dynamic Stitch Fix. First, delivering enhanced client engagement features. Second, cultivating deeper client-stylist relationships. Third, offering a best-in-class assortment. And fourth, increasing the flexibility of our business model. For example, our increased flexibility now includes dynamic, larger fixes, the ability to turn a freestyle shopping journey into a styled fix, curated theme fixes for specific occasions and use cases, and family accounts, which unlock the Stitch Fix experience for the extended family. This comprehensive and customer-driven approach is clearly resonating with clients. Our Fix AOV was up nearly 10% in Q1.

Speaker #3: We have fundamentally reimagined our client experience. We zeroed in on four areas to deliver a more modern and dynamic Stitch Fix. First, delivering enhanced client engagement features.

Speaker #3: Second, cultivating deeper client-stylist relationships. Third, offering a best-in-class assortment. And fourth, increasing the flexibility of our business model. For example, our increased flexibility now includes dynamic, larger fixes, the ability to turn a freestyle shopping journey into a styled fix, curated theme fixes for specific occasions and use cases, and family accounts, which unlock the Stitch Fix experience for the extended family.

Speaker #3: This comprehensive and customer-driven approach is clearly resonating with clients. Our fixed AOV was up nearly 10% in Q1. The ninth consecutive quarter, AOV has increased year-over-year.

Matt Baer: The ninth consecutive quarter, AOV has increased year-over-year as our larger Fix offerings and our improved assortment continue to resonate with our clients and better meet their outfitting needs. We are strengthening our competitive position and gaining market share in our core apparel business. Our strategic expansion into non-apparel categories is further accelerating this growth. By helping clients complete their outfits and dress them from head to toe, we are capturing a greater share of their wallet from other retailers. Our 7.3% year-over-year revenue growth in Q1 meaningfully outpaced Circana's estimated 1% growth for the broader US apparel, accessories, and footwear market. Our growth is broad-based, with both our women's and men's businesses continuing to accelerate. In women's, we saw a strong start to fall sales across key seasonal categories such as sweaters, coats, jackets, and vests, which combined grew 19% year-over-year.

The ninth consecutive quarter, AOV has increased year-over-year as our larger Fix offerings and our improved assortment continue to resonate with our clients and better meet their outfitting needs. We are strengthening our competitive position and gaining market share in our core apparel business. Our strategic expansion into non-apparel categories is further accelerating this growth. By helping clients complete their outfits and dress them from head to toe, we are capturing a greater share of their wallet from other retailers. Our 7.3% year-over-year revenue growth in Q1 meaningfully outpaced Circana's estimated 1% growth for the broader US apparel, accessories, and footwear market. Our growth is broad-based, with both our women's and men's businesses continuing to accelerate. In women's, we saw a strong start to fall sales across key seasonal categories such as sweaters, coats, jackets, and vests, which combined grew 19% year-over-year.

Speaker #3: As our larger fix offerings and our improved assortment continue to resonate with our clients and better meet their outfitting needs, we are strengthening our competitive position and gaining market share in our core apparel business.

Speaker #3: Our strategic expansion into non-apparel categories is further accelerating this growth. By helping clients complete their outfits and dress them from head to toe, we are capturing a greater share of their wallets from other retailers.

Speaker #3: Our 7.3% year-over-year revenue growth in Q1, meaningfully outpaced Circana's estimated 1% growth for the broader US apparel accessories and footwear market. Our growth is broad-based, with both our women's and men's businesses continuing to accelerate.

Speaker #3: In women's, we saw a strong start to fall sales across key seasonal categories, such as sweaters, coats, jackets, and vests, which combined grew 19% year-over-year.

Speaker #3: Sneakers, which were up 63% year-over-year, driven by New Balance, GOLA, and Adidas, and wide-leg denim, was up 217%, driven by outsized performance in Days denim, Pistola, and Madewell.

Matt Baer: Sneakers, which were up 63% year-over-year driven by New Balance, Gola, and Adidas. Wide-leg denim was up 217% driven by outsized performance in Daze Denim, Pistola, and Madewell. We've also seen great client responses to new brands, especially within activewear and footwear such as Varley, Birkenstock, and Rhone, and we're excited to continue to add new brands to our assortment in the coming months. Our men's business delivered a second consecutive quarter of double-digit revenue growth by leaning more into the elevated everyday and athleisure styles our clients are looking for. Seasonal categories such as fleece, sweaters, and outerwear grew 57% combined, while denim grew 30% and sneakers grew 24% year-over-year. Brands like TravisMathew and Vuori delivered outsized growth and remain trusted client favorites for style, versatility, and quality, while new brands such as Katin, Industry, and NN07 have introduced more style and trend into our assortment.

Sneakers, which were up 63% year-over-year driven by New Balance, Gola, and Adidas. Wide-leg denim was up 217% driven by outsized performance in Daze Denim, Pistola, and Madewell. We've also seen great client responses to new brands, especially within activewear and footwear such as Varley, Birkenstock, and Rhone, and we're excited to continue to add new brands to our assortment in the coming months. Our men's business delivered a second consecutive quarter of double-digit revenue growth by leaning more into the elevated everyday and athleisure styles our clients are looking for. Seasonal categories such as fleece, sweaters, and outerwear grew 57% combined, while denim grew 30% and sneakers grew 24% year-over-year. Brands like TravisMathew and Vuori delivered outsized growth and remain trusted client favorites for style, versatility, and quality, while new brands such as Katin, Industry, and NN07 have introduced more style and trend into our assortment.

Speaker #3: We've also seen great client responses to new brands, especially within activewear and footwear, such as Varley, Birkenstock, and Roan. We're excited to continue adding new brands to our assortment in the coming months.

Speaker #3: Our men's business, delivered a second consecutive quarter of double-digit revenue growth by leaning more into the elevated everyday and athleisure styles our clients are looking for.

Speaker #3: Seasonal categories, such as fleece, sweaters, and outerwear, grew 57% combined, while denim grew 30% and sneakers grew 24% year-over-year. Brands like Travis Matthew and Vuori delivered outsized growth and remained trusted client favorites for style, versatility, and quality.

Speaker #3: While new brands such as Caton, Industry, and NN07 have introduced more style and trend into our assortment, we believe that our expanded relevance in activewear and athleisure, footwear, and accessories, in particular, could unlock a significant wallet share opportunity. Our fair share with our existing client base in these categories is approximately $1 billion of incremental revenue.

Matt Baer: We believe that our expanded relevance in activewear and athleisure, footwear and accessories in particular, could unlock a significant wallet share opportunity and that our fair share with our existing client base in these categories is approximately $1 billion of incremental revenue. We are confident in our ability to capture increased market share in the future. Just as importantly, we're focused on achieving profitable active client growth. We ended the quarter with 2.3 million active clients at the high end of our expectations. Q1 marked the sixth consecutive quarter of improvement in active client year-over-year growth rates and a return to sequential active client growth in our men's business. We continue to expect a sequential increase in net adds in Q3 of our current fiscal year.

We believe that our expanded relevance in activewear and athleisure, footwear and accessories in particular, could unlock a significant wallet share opportunity and that our fair share with our existing client base in these categories is approximately $1 billion of incremental revenue. We are confident in our ability to capture increased market share in the future. Just as importantly, we're focused on achieving profitable active client growth. We ended the quarter with 2.3 million active clients at the high end of our expectations. Q1 marked the sixth consecutive quarter of improvement in active client year-over-year growth rates and a return to sequential active client growth in our men's business. We continue to expect a sequential increase in net adds in Q3 of our current fiscal year.

Speaker #3: We are confident in our ability to capture increased market share in the future. Just as importantly, we're focused on achieving profitable active client growth.

Speaker #3: We ended the quarter with 2.3 million active clients, at the high end of our expectations. Q1 marked the sixth consecutive quarter of improvement in active client year-over-year growth rates and a return to sequential active client growth in our men's business.

Speaker #3: We continue to expect a sequential increase in net ads in Q3 of our current fiscal year. Our methodical approach to rebuilding our client base around long-term fit with our service and higher lifetime value, paired with a continuously improving client experience, is working.

Matt Baer: Our methodical approach to rebuilding our client base around long-term fit with our service and higher lifetime value, paired with a continuously improving client experience, is working. With respect to new clients, three-month LTVs have grown year-over-year for nine consecutive quarters and remain at three-year highs. We also have had more new clients on recurring Fix shipments at the end of Q1 than in any of the prior six quarters. Q1 also benefited from higher re-engagements, with a significantly higher percentage of re-engaged clients enrolling in recurring shipments compared to last year. We believe these positive trends confirm the improved quality of our new and returning client cohorts and will lead to greater client retention, higher revenue predictability, and improved profitability over the long term.

Our methodical approach to rebuilding our client base around long-term fit with our service and higher lifetime value, paired with a continuously improving client experience, is working. With respect to new clients, three-month LTVs have grown year-over-year for nine consecutive quarters and remain at three-year highs. We also have had more new clients on recurring Fix shipments at the end of Q1 than in any of the prior six quarters. Q1 also benefited from higher re-engagements, with a significantly higher percentage of re-engaged clients enrolling in recurring shipments compared to last year. We believe these positive trends confirm the improved quality of our new and returning client cohorts and will lead to greater client retention, higher revenue predictability, and improved profitability over the long term.

Speaker #3: With respect to new clients, three-month LTVs have grown year-over-year for nine consecutive quarters and remain at three-year highs. We also had more new clients on recurring fixed shipments at the end of Q1 than in any of the prior six quarters.

Speaker #3: Q1 also benefited from higher re-engagements, with a significantly higher percentage of re-engaged clients enrolling in recurring shipments compared to last year. We believe these positive trends confirm the improved quality of our new and returning client cohorts.

Speaker #3: And will lead to greater client retention, higher revenue predictability, and improved profitability over the long term. To build on this momentum and ensure we sustain this improved client quality, we are also focused on delivering growth by leveraging our competitive differentiation in data science and AI.

Matt Baer: To build on this momentum and ensure we sustain this improved client quality, we are also focused on delivering growth by leveraging our competitive differentiation in data science and AI. AI is not new to Stitch Fix. When we launched nearly 15 years ago, we disrupted retail with a proprietary data-driven approach. Over time, we've amassed billions of insights on our clients' fit, style, and budget preferences that, combined with the human judgment of our stylists, enable us to uniquely deliver ultra-personalization at scale. We're capitalizing on this competitive advantage through a suite of AI-powered innovations that aim to drive greater client engagement and retention. For example, Vision, our Generative AI-powered style visualization experience, provides our clients with an entirely new and inspiring approach to style discovery, offering personalized, shoppable images of each client based on their unique style profile and the latest trends.

To build on this momentum and ensure we sustain this improved client quality, we are also focused on delivering growth by leveraging our competitive differentiation in data science and AI. AI is not new to Stitch Fix. When we launched nearly 15 years ago, we disrupted retail with a proprietary data-driven approach. Over time, we've amassed billions of insights on our clients' fit, style, and budget preferences that, combined with the human judgment of our stylists, enable us to uniquely deliver ultra-personalization at scale. We're capitalizing on this competitive advantage through a suite of AI-powered innovations that aim to drive greater client engagement and retention. For example, Vision, our Generative AI-powered style visualization experience, provides our clients with an entirely new and inspiring approach to style discovery, offering personalized, shoppable images of each client based on their unique style profile and the latest trends.

Speaker #3: AI is not new to Stitch Fix. When we launched nearly 15 years ago, we disrupted retail with a proprietary data-driven approach. Over time, we've amassed billions of insights on our clients' fit, style, and budget preferences that, combined with the human judgment of our stylists, enable us to uniquely deliver ultra-personalization at scale.

Speaker #3: We're capitalizing on this competitive advantage through a suite of AI-powered innovations that aim to drive greater client engagement and retention. For example, Vision, our generative AI-powered style visualization experience, provides our clients with an entirely new and inspiring approach to style discovery.

Speaker #3: Offering personalized, shoppable images of each client based on the unique style profile, and the latest trends. Another great example is our AI style assistant, which leverages GenAI to engage in a dialogue with clients and is helping our clients better articulate their individual requests to their stylist.

Matt Baer: Another great example is our AI Style Assistant, which leverages GenAI to engage in a dialogue with clients and is helping our clients better articulate their individual requests to their stylist. The Style Assistant draws on each client's style file and the extensive data we already know about them, and the more it's used, the smarter it gets, helping ensure each Fix delivers on the client's individual needs. The scope of our GenAI strategy goes beyond client-facing features. We are taking an enterprise-wide approach, incorporating these capabilities across every area of the business to drive further efficiencies and deepen our competitive advantage as a leading innovator in retail. For example, our merchandising team is using GenAI to fundamentally transform private brand product development and inventory management.

Another great example is our AI Style Assistant, which leverages GenAI to engage in a dialogue with clients and is helping our clients better articulate their individual requests to their stylist. The Style Assistant draws on each client's style file and the extensive data we already know about them, and the more it's used, the smarter it gets, helping ensure each Fix delivers on the client's individual needs. The scope of our GenAI strategy goes beyond client-facing features. We are taking an enterprise-wide approach, incorporating these capabilities across every area of the business to drive further efficiencies and deepen our competitive advantage as a leading innovator in retail. For example, our merchandising team is using GenAI to fundamentally transform private brand product development and inventory management.

Speaker #3: The style assistant draws on each client's style file, and the extensive data we already know about them. And the more it's used, the smarter it gets.

Speaker #3: Helping ensure each fix delivers on the client's individual needs. The scope of our GenAI strategy goes beyond client-facing features. We are taking an enterprise-wide approach, incorporating these capabilities across every area of the business to drive further efficiencies and deepen our competitive advantage as a leading innovator in retail.

Speaker #3: For example, our merchandising team is using GenAI to fundamentally transform private brand product development and inventory management. Our GenAI-assisted design process leverages our proprietary data to develop complete fashion lines.

Matt Baer: Our GenAI-assisted design process leverages our proprietary data to develop complete fashion lines, which will enable us to respond to trends more quickly and bring products to market faster. Beyond design, AI provides predictive intelligence for trend forecasting, optimizing inventory, and setting intelligent pricing, ensuring every piece of merchandise we sell is calibrated for both profitability and client satisfaction. The innovations we've introduced across our business will enable us to better serve clients this holiday season. We entered this critical period with our most seasonally relevant assortment and competitive pricing and promotions, enhanced by new and inspiring shopping experiences, including Vision, Theme Fixes, and fixes built around a Freestyle item. We also launched Stylist Connect, a platform for near-real-time client-stylist collaboration, and introduced Family Accounts to better support gifting during the season. Holiday performance has been strong, with record Freestyle sales for the Black Friday to Cyber Monday period.

Our GenAI-assisted design process leverages our proprietary data to develop complete fashion lines, which will enable us to respond to trends more quickly and bring products to market faster. Beyond design, AI provides predictive intelligence for trend forecasting, optimizing inventory, and setting intelligent pricing, ensuring every piece of merchandise we sell is calibrated for both profitability and client satisfaction. The innovations we've introduced across our business will enable us to better serve clients this holiday season. We entered this critical period with our most seasonally relevant assortment and competitive pricing and promotions, enhanced by new and inspiring shopping experiences, including Vision, Theme Fixes, and fixes built around a Freestyle item. We also launched Stylist Connect, a platform for near-real-time client-stylist collaboration, and introduced Family Accounts to better support gifting during the season. Holiday performance has been strong, with record Freestyle sales for the Black Friday to Cyber Monday period.

Speaker #3: Which will enable us to respond to trends more quickly and bring products to market faster. Beyond design, AI provides predictive intelligence for trend forecasting, optimizing inventory, and setting intelligent pricing.

Speaker #3: Ensuring every piece of merchandise we sell is calibrated for both profitability and client satisfaction. The innovations we've introduced across our business will enable us to better serve clients this holiday season.

Speaker #3: We entered this critical period with our most seasonally relevant assortment and competitive pricing and promotions, enhanced by new and inspiring shopping experiences, including Vision, Theme Fixes, and Fixes built around a freestyle item.

Speaker #3: We also launched stylist connect, a platform for near real-time client stylist collaboration, and introduced family accounts to better support gifting during the season. Holiday performance has been strong, with record freestyle sales for the Black Friday to Cyber Monday period.

Speaker #3: In closing, we have strong momentum in our business, remain focused on exceeding our clients' expectations, and will continue to play offense in order to deliver increased market share gains.

Matt Baer: In closing, we have strong momentum in our business, remain focused on exceeding our clients' expectations, and will continue to play offense in order to deliver increased market share gains. Now, I'll turn the call over to David to share more details of our financial results and future outlook.

In closing, we have strong momentum in our business, remain focused on exceeding our clients' expectations, and will continue to play offense in order to deliver increased market share gains. Now, I'll turn the call over to David to share more details of our financial results and future outlook.

Speaker #3: Now, I'll turn the call over to David to share more details of our financial results and future outlook.

Speaker #2: Thanks, Matt. And good afternoon, everyone. We delivered a strong first quarter that underscores the success of our strategy and the momentum Matt outlined. We're accelerating growth and gaining market share while maintaining financial discipline to ensure that growth is profitable and sustainable.

David Aufderhaar: Thanks, Matt, and good afternoon, everyone. We delivered a strong first quarter that underscores the success of our strategy and the momentum Matt outlined. We're accelerating growth and gaining market share while maintaining financial discipline to ensure that growth is profitable and sustainable. FY26 is about leaning into innovation and the client experience to strengthen our competitive advantage while continuing to identify savings that fuel reinvestment. Now, let's turn to the numbers. Revenue was $342.1 million, up 7.3% year-over-year, exceeding our outlook. Average order value rose 9.6%, driven by more items per fix and higher AUR, reflecting strong demand for larger fixes and our improved assortment. We ended Q1 with 2.3 million active clients at the high end of our expectations. Revenue per active client reached $559, up 5.3% year-over-year, marking the seventh consecutive quarter of year-over-year growth.

Speaker #2: FY26 is about leaning into innovation and the client experience to strengthen our competitive advantage. While continuing to identify savings that fuel reinvestment. Now let's turn to the numbers.

Speaker #2: Revenue is $342.1 million, up 7.3% year-over-year, exceeding our outlook. Average order value rose 9.6%, driven by more items per fix and higher AUR, reflecting strong demand for larger fixes and our improved assortment.

Speaker #2: We ended Q1 with 2.3 million active clients at the high end of our expectations. Revenue per active client reached $559, up 5.3% year-over-year, marking the seventh consecutive quarter of year-over-year growth.

Speaker #2: The growth in our pack confirms that our strategy is effectively leading to increased client engagement and spend, ultimately driving a higher share of wallet from our clients.

David Aufderhaar: The growth in our Fix confirms that our strategy is effectively leading to increased client engagement and spend, ultimately driving a higher share of wallet from our clients. Gross margin was 43.6%, in line with our FY26 range of 43% to 44%, with contribution margins remaining strong above 30% for the seventh straight quarter. Advertising was 9.9% of revenue in Q1, up 50 basis points year-over-year. Q1 Adjusted EBITDA came in at $13.4 million, or 3.9% margin, outperforming expectations on strong revenue. We ended Q1 with $244.2 million in cash and short-term investments and no debt, giving us flexibility to invest in growth. Inventory was $141.5 million, up 18.8% year-over-year, reflecting investments in our larger Fix offerings. Turning to our outlook for Q2 and FY26, we are increasing our full-year guide to take into account the positive trends we are seeing in the business.

The growth in our Fix confirms that our strategy is effectively leading to increased client engagement and spend, ultimately driving a higher share of wallet from our clients. Gross margin was 43.6%, in line with our FY26 range of 43% to 44%, with contribution margins remaining strong above 30% for the seventh straight quarter. Advertising was 9.9% of revenue in Q1, up 50 basis points year-over-year. Q1 Adjusted EBITDA came in at $13.4 million, or 3.9% margin, outperforming expectations on strong revenue. We ended Q1 with $244.2 million in cash and short-term investments and no debt, giving us flexibility to invest in growth. Inventory was $141.5 million, up 18.8% year-over-year, reflecting investments in our larger Fix offerings. Turning to our outlook for Q2 and FY26, we are increasing our full-year guide to take into account the positive trends we are seeing in the business.

Speaker #2: Gross margin was 43.6%, in line with our FY26 range of 43% to 44%, with contribution margins remaining strong above 30% for the seventh straight quarter.

Speaker #2: Advertising was 9.9% of revenue in Q1, up 50 basis points year-over-year. Q1 adjusted EBITDA came in at $13.4 million, or a 3.9% margin, outperforming expectations on strong revenue.

Speaker #2: We ended Q1 with $244.2 million in cash and short-term investments and no debt, giving us the flexibility to invest in growth. Inventory was $141.5 million, up 18.8% year-over-year, reflecting investments in our larger fix offerings.

Speaker #2: Turning to our outlook for Q2 and FY26, we are increasing our full-year guidance to take into account the positive trends we are seeing in the business.

Speaker #2: For full-year FY26, we expect total revenue to be between $1.32 billion and $1.35 billion. We expect total adjusted EBITDA for the year to be between $38 million and $48 million.

David Aufderhaar: For full-year FY26, we expect total revenue to be between $1.32 and $1.35 billion. We expect total Adjusted EBITDA for the year to be between $38 and $48 million, and we expect to be free cash flow positive for the full year. For Q2, we expect total revenue to be between $335 and $340 million. We expect Q2 Adjusted EBITDA to be between $10 and $13 million. With respect to revenue, we are really encouraged with the trends we have seen in our business so far this year. The resilience and client demand that we saw in Q1 and through the first part of Q2 gives us confidence to guide to another quarter of growth acceleration in Q2 and to raise our guidance for the full year in FY26.

For full-year FY26, we expect total revenue to be between $1.32 and $1.35 billion. We expect total Adjusted EBITDA for the year to be between $38 and $48 million, and we expect to be free cash flow positive for the full year. For Q2, we expect total revenue to be between $335 and $340 million. We expect Q2 Adjusted EBITDA to be between $10 and $13 million. With respect to revenue, we are really encouraged with the trends we have seen in our business so far this year. The resilience and client demand that we saw in Q1 and through the first part of Q2 gives us confidence to guide to another quarter of growth acceleration in Q2 and to raise our guidance for the full year in FY26.

Speaker #2: And we expect to be free cash flow positive for the full year. For Q2, we expect total revenue to be between $335 million and $340 million.

Speaker #2: We expect Q2 adjusted EBITDA to be between $10 and $13 million. With respect to revenue, we are really encouraged with the trends we have seen in our business so far this year.

Speaker #2: The resilience and client demand that we saw in Q1 and through the first part of Q2 gives us confidence to guide to another quarter of growth acceleration in Q2 and to raise our guidance for the full year in FY26.

Speaker #2: Given the current trends in consumer confidence and the impact of inflation on discretionary spending, we think it's prudent to assume some headwinds in the back half of this year.

David Aufderhaar: Given the current trends in consumer confidence and the impact of inflation on discretionary spending, we think it's prudent to assume some headwinds in the back half of this year. As a reminder, we will also face tougher AOV comps as we begin to lap the double-digit growth we saw in the second half of FY25. Both of these considerations have been included within our outlook. For active clients, we believe our methodical approach to rebuilding our active client base is working. We expect active client year-over-year growth rates to continue to improve in Q2. Additionally, we remain on track to deliver a sequential increase in net adds in Q3 FY26. We continue to expect full-year gross margin to be approximately 43% to 44% and full-year advertising costs to be between 9% and 10% of revenue.

Given the current trends in consumer confidence and the impact of inflation on discretionary spending, we think it's prudent to assume some headwinds in the back half of this year. As a reminder, we will also face tougher AOV comps as we begin to lap the double-digit growth we saw in the second half of FY25. Both of these considerations have been included within our outlook. For active clients, we believe our methodical approach to rebuilding our active client base is working. We expect active client year-over-year growth rates to continue to improve in Q2. Additionally, we remain on track to deliver a sequential increase in net adds in Q3 FY26. We continue to expect full-year gross margin to be approximately 43% to 44% and full-year advertising costs to be between 9% and 10% of revenue.

Speaker #2: As a reminder, we will also face tougher AOV comps as we begin to lap the double-digit growth we saw in the second half of FY25.

Speaker #2: Both of these considerations have been included within our outlook. For active clients, we believe our methodical approach to rebuilding our active client base is working.

Speaker #2: We expect active client year-over-year growth rates to continue to improve in Q2. Additionally, we remain on track to deliver a sequential increase in net ads in Q3 FY26.

Speaker #2: We continue to expect full-year gross margin to be approximately $43 to $44%, and full-year advertising costs to be between $9 and $10% of revenue.

Speaker #2: We're investing thoughtfully in AI and innovation, which we expect to drive stronger client engagement and retention over time. These investments are already included in our outlook, and we will scale them judiciously.

David Aufderhaar: We're investing thoughtfully in AI and innovation, which we expect to drive stronger client engagement and retention over time. These investments are already included in our outlook, and we'll scale them judiciously. Our strong Q1 demonstrates the health of our business. A commitment to client engagement and operational discipline drove revenue and market share gains. Looking ahead, we remain confident in our strategy, which prioritizes sustainable, profitable growth. With that, Operator, we can open the line for Q&A.

We're investing thoughtfully in AI and innovation, which we expect to drive stronger client engagement and retention over time. These investments are already included in our outlook, and we'll scale them judiciously. Our strong Q1 demonstrates the health of our business. A commitment to client engagement and operational discipline drove revenue and market share gains. Looking ahead, we remain confident in our strategy, which prioritizes sustainable, profitable growth. With that, Operator, we can open the line for Q&A.

Speaker #2: Our strong first quarter demonstrates the health of our business. A commitment to client engagement and operational discipline drove revenue and market share gains. Looking ahead, we remain confident in our strategy, which prioritizes sustainable, profitable growth.

Speaker #2: With that, operator, we can open the line for

Speaker #2: Q&A. Thank you.

Operator: Thank you. We will now begin the question and answer session. If you have dialed in and would like to ask a question, please press star one on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, simply press star one again. If you are called upon to ask your question and are listening via speakerphone on your device, please pick up your handset to ensure that your phone is not on mute when asking your question. We do request for today's session that you please limit to one question, and you may requeue for any additional questions. Thank you. Our first question comes from the line of Dylan Carden with William Blair. Your line is open.

Speaker #3: We will now begin the question and answer session. If you have dialed in and would like to ask a question, please press star one on your telephone keypad to raise your hand and join the queue.

Speaker #3: If you would like to withdraw your question, simply press Star 1 again. If you are called upon to ask your question and are listening via speakerphone on your device, please pick up your handset to ensure that your phone is not on mute when asking your question.

Speaker #3: We do request for today's session that you please limit to one question, and you may requeue for any additional questions. Thank you. And our first question comes from the line of Dilan Carden with William Blair.

Speaker #3: Your line is open.

Speaker #4: Hi, you guys got me?

Dylan Carden: Hi, you guys got me?

Marcus Belanger: Hi, you guys got me?

Speaker #5: Yeah, we do.

Matt Baer: Yeah, we do.

Speaker #4: Awesome. This is Marcus Balanger on for Dilan Carden. Thank you for taking my question. I was just curious, could you provide a little bit more color on new customer behavior and just your general view on their stickiness?

Dylan Carden: Awesome. This is Marcus Belanger on for Dylan Carden. Thank you for taking my question. I was just curious, could you provide a little bit more color on new customer behavior and just your general view on their stickiness? What metrics are you tracking that inform this view outside of the 30-day LTV that you mentioned?

Marcus Belanger: Awesome. This is Marcus Belanger on for Dylan Carden. Thank you for taking my question. I was just curious, could you provide a little bit more color on new customer behavior and just your general view on their stickiness? What metrics are you tracking that inform this view outside of the 30-day LTV that you mentioned?

Speaker #4: What metrics are you tracking that inform this view outside of the 30-day LTV that you mentioned?

Speaker #5: Yeah, hey, Marcus. I appreciate the question. I'll share some insights, and David, feel free to add anything additional. When we look at the client behavior that we're seeing across the board, we're extremely enthusiastic in terms of what we've been seeing.

Matt Baer: Yeah. Hey, Marcus. Appreciate the question. I'll share some insights, and David, feel free to add anything additional. When we look at the client behavior that we're seeing across the board, we're extremely enthusiastic in terms of what we've been seeing. We shared in the prepared remarks that we've seen nine consecutive quarters of improving LTV for new client acquisition. We're also up last quarter for both year-over-year and quarter-over-quarter, which gives us a lot of confidence that we're going to continue to see more health in our overall client base moving forward. We're also seeing strength within our re-engagement with our re-engaged clients or formerly dormant clients. They continue as they rejoin the service to stay longer and spend more, which, again, is really encouraging to continue to improve the overall health of our client base.

Speaker #5: We shared in the prepared remarks that we've seen nine consecutive quarters of improving LTV for new client acquisition. New clients have also been, we're also up last quarter for both year-over-year and quarter-over-quarter.

Speaker #5: Which gives us a lot of confidence that we're going to continue to see more health in our overall client base moving forward. We're also seeing strength within our re-engagement with our re-engaged clients, or formerly dormant clients.

Speaker #5: They continue as they rejoin the service to stay longer and spend more, which again is really encouraging to continue to improve the overall health of our client base.

Speaker #5: And then finally, when we're looking at our clients that might otherwise go dormant, we just completed a quarter in which we had the lowest number of dormant clients in five years.

Matt Baer: Then finally, when we're looking at our clients that might otherwise go dormant, we just completed a quarter in which we had the lowest number of dormant clients in five years. Some additional signals that show the strength overall in our client base, as we shared in our prepared remarks, is that our men's business has returned to sequential increases in our overall active clients. That is one of many things that give us further confidence that we will return to overall sequential active client growth in Q3. Those clients that we have, they're staying longer, they're spending more. The new features that we've launched are driving incremental engagement, and we're also seeing, and then those new clients that have joined, we're also seeing them stay longer and spend more. We're really proud of the overall widespread and holistic impact with everything that we've done.

Then finally, when we're looking at our clients that might otherwise go dormant, we just completed a quarter in which we had the lowest number of dormant clients in five years. Some additional signals that show the strength overall in our client base, as we shared in our prepared remarks, is that our men's business has returned to sequential increases in our overall active clients. That is one of many things that give us further confidence that we will return to overall sequential active client growth in Q3. Those clients that we have, they're staying longer, they're spending more. The new features that we've launched are driving incremental engagement, and we're also seeing, and then those new clients that have joined, we're also seeing them stay longer and spend more. We're really proud of the overall widespread and holistic impact with everything that we've done.

Speaker #5: Some additional signals that show the strength overall in our client base, as we shared in our prepared remarks, is that our men's business has returned to sequential increases in our overall active clients.

Speaker #5: And that is one of many things that give us further confidence that we will return to overall sequential active client growth in Q3. So those clients that we have, they're staying longer, they're spending more.

Speaker #5: The new features that we've launched are driving incremental engagement, and we're also seeing that those new clients who have joined are staying longer and spending more.

Speaker #5: So we're really proud of the overall widespread and holistic impact with everything that we've done.

Speaker #4: Awesome, thank

Dylan Carden: Awesome. Thank you.

Marcus Belanger: Awesome. Thank you.

Speaker #4: you. Our next question comes from

Operator: Our next question comes from the line of Anisha Sherman with Bernstein. Her line is open.

Speaker #3: the line of Anisha Sherman with Bernstein. Your line is open.

Speaker #6: Thank you so much and congratulations on the quarter. Matt, you talked about gaining share and you said it's in pretty strong numbers about share gains versus the total apparel accessories and footwear sector.

Aneesha Sherman: Thank you so much, and congratulations on the quarter. Matt, you talked about gaining share, and you cited some pretty strong numbers about share gains versus the total apparel, accessories, and footwear sector. Can you talk about where do you think that market share is coming from? I mean, is it from other multi-brand retailers? Is it from trade down? I mean, what are you hearing from the brands that you talk to about where those share gains are coming from? And then on gifting, now I was surprised to hear you say that gifting was so strong. It's typically not a very strong use case for you. Do you think that's changing? And especially as you move more into Freestyle, is gifting becoming, gifting or maybe even holiday use becoming more of an occasion for you? And if I could throw in one more quick follow-up for David around advertising.

Speaker #6: Can you talk about where do you think that market share is coming from? I mean, is it from other multi-brand retailers? Is it from trade down?

Speaker #6: I mean, what are you hearing from the brands that you talk to about where those share gains are coming from? And then, on gifting, I was surprised to hear you say that gifting was so strong.

Speaker #6: It's typically not a very strong use case for you. Do you think that's changing and especially as you move more into freestyle, is gifting becoming gifting or maybe even holiday use becoming more of an occasion for you?

Speaker #6: And if I could throw in one more quick follow-up for David around advertising. 9 to 10%, it sounds like the sales numbers are working, the client numbers are working.

Aneesha Sherman: 9% to 10%, it sounds like the sales numbers are working, the client numbers are working. How do you think about maybe leaning in on that more to drive more of the top line if needed? Thank you.

9% to 10%, it sounds like the sales numbers are working, the client numbers are working. How do you think about maybe leaning in on that more to drive more of the top line if needed? Thank you.

Speaker #6: How do you think about maybe leaning in on that more to drive more of the top line if needed? Thank you.

Speaker #5: Yeah, hey Anisha, it's Matt. I'll answer the first two on market share and holiday performance. And as you noted, David can chime in on the advertising and any additional commentary.

Matt Baer: Yeah. Hey, Aneesha, it's Matt. I'll answer the first two on market share and holiday performance. As you noted, David can chime in on the advertising, and any additional commentary. First, appreciation for the recognition. The team deserves it. They're doing a phenomenal job in order to deliver these incredibly impressive results and market share gains. Speaking of those market share gains, it's a great question, and the work that the team has done to improve the client experience is clearly resonating. The work that we've done to continue to improve the trends overall in our active client growth rates continues to demonstrate that as well. With regards to who we're taking market share from, what we're doing is we're focused on delivering the most client-centric and personalized shopping experience. In doing so, we're picking up share from where other retailers aren't delivering.

Speaker #5: First, appreciation for the recognition. The team deserves it. They're doing a phenomenal job in order to deliver these incredibly impressive results and market share gains.

Speaker #5: Speaking of those market share gains, it's a great question and the work that the team has done to improve the client experience is clearly resonating.

Speaker #5: The work that we've done to continue to improve the trends overall in our active client growth rates continues to demonstrate that as well. With regards to who we're taking market share from, what we're doing is focusing on delivering the most client-centric and personalized shopping experience, and in doing so, we're picking up share from where other retailers aren't delivering.

Speaker #5: And we're taking that share from a wide range of retailers who don't and cannot offer the personalization consumers want and expect, which is so core to our business.

Matt Baer: And we're taking that share from a wide range of retailers who don't and cannot offer the personalization consumers want and expect, which is so core to our business. And as you noted, we're hearing loud and clear from the brands that we work with that we are delivering outsized growth relative to others that they might be working with. In terms of our holiday performance, as I noted in the prepared remarks, we really entered this holiday season with the most seasonally relevant assortment, competitive pricing, really compelling promotions, and a lot of new ways for our consumers to engage with us and to shop. For example, themed Fixes or Fixes built around a Freestyle item. Also, a significant improvement in terms of some of the engagement experiences like Stitch Fix Vision and Stylist Connect.

And we're taking that share from a wide range of retailers who don't and cannot offer the personalization consumers want and expect, which is so core to our business. And as you noted, we're hearing loud and clear from the brands that we work with that we are delivering outsized growth relative to others that they might be working with. In terms of our holiday performance, as I noted in the prepared remarks, we really entered this holiday season with the most seasonally relevant assortment, competitive pricing, really compelling promotions, and a lot of new ways for our consumers to engage with us and to shop. For example, themed Fixes or Fixes built around a Freestyle item. Also, a significant improvement in terms of some of the engagement experiences like Stitch Fix Vision and Stylist Connect.

Speaker #5: And as you noted, we're hearing loud and clear from the brands that we work with that we are delivering outsized growth relative to others they might be working with.

Speaker #5: In terms of our holiday performance, as I noted in the prepared remarks, we really entered this holiday season with the most seasonally relevant assortment, competitive pricing, really compelling promotions.

Speaker #5: And a lot of new ways for our consumers to engage with us and to shop. For example, themed fixes or fixes built around a freestyle item also show significant improvement in terms of some of the engagement experiences, like Stitch Fix Vision and Stylus Connect.

Speaker #5: Specifically in terms of gifting, the more recent launch of Family Accounts has delivered results that have exceeded our expectations. With Family Accounts, we heard loud and clear from our clients that they were looking to bring the Stitch Fix experience to their entire family.

Matt Baer: Specifically in terms of gifting, the more recent launch of Family Accounts has delivered results that have exceeded our expectations. With Family Accounts, we heard loud and clear from our clients that they were looking to bring the Stitch Fix experience to their entire family. They loved the service that we provided, and they wanted to make sure that they were able to use it for spouse, partners, children, and any other loved ones as well. In fact, 92% of our women's clients shop on behalf of a spouse or partner. So when we created the ability to launch Family Accounts, we saw phenomenal engagement right out of the gate, and that was really the entryway for us in order to start to deliver a gifting business over the holiday season.

Specifically in terms of gifting, the more recent launch of Family Accounts has delivered results that have exceeded our expectations. With Family Accounts, we heard loud and clear from our clients that they were looking to bring the Stitch Fix experience to their entire family. They loved the service that we provided, and they wanted to make sure that they were able to use it for spouse, partners, children, and any other loved ones as well. In fact, 92% of our women's clients shop on behalf of a spouse or partner. So when we created the ability to launch Family Accounts, we saw phenomenal engagement right out of the gate, and that was really the entryway for us in order to start to deliver a gifting business over the holiday season.

Speaker #5: They love the service that we provided, and they wanted to make sure that they were able to use it for spouses, partners, children, and any other loved ones as well.

Speaker #5: In fact, 92% of our women clients shop on behalf of a spouse or partner. So, when we created the ability to launch Family Accounts, we saw phenomenal engagement right out of the gate.

Speaker #5: And that was really the entryway for us in order to start to deliver a gifting business over the holiday season. In addition to the gifting, though, as you well know, a lot of the purchases that happen over this time period aren't just gifts for others; they're gifts for self.

Matt Baer: In addition to the gifting, though, as you well know, a lot of the purchases that happen over this time period aren't just gifts for others. They're gifts for self. And that's where we have really led the way, and that's what helped us deliver record-breaking sales over the Black Friday to Cyber Monday time period. And then, Anisha, on the advertising, this quarter we did lean in a little bit on advertising. We ended up at the high end of that 9% to 10% range at 9.9%. And I think it goes back to what we've talked about in the past about that methodical approach to advertising and really holding ourselves accountable to those CAC to LTV ratios. And because of that, we tend to see some seasonality in our marketing spend. And so we leaned in in Q1. Q1 and Q3 tend to be our stronger quarters.

In addition to the gifting, though, as you well know, a lot of the purchases that happen over this time period aren't just gifts for others. They're gifts for self. And that's where we have really led the way, and that's what helped us deliver record-breaking sales over the Black Friday to Cyber Monday time period. And then, Anisha, on the advertising, this quarter we did lean in a little bit on advertising. We ended up at the high end of that 9% to 10% range at 9.9%. And I think it goes back to what we've talked about in the past about that methodical approach to advertising and really holding ourselves accountable to those CAC to LTV ratios. And because of that, we tend to see some seasonality in our marketing spend. And so we leaned in in Q1. Q1 and Q3 tend to be our stronger quarters.

Speaker #5: And that's where we have really led the way and that's what helped us deliver record-breaking sales over the Black Friday to Cyber Monday time period.

Speaker #4: And then, Anisha, on the advertising, this quarter we did lean in a little bit on advertising. We ended up at the high end of that 9% to 10% range.

Speaker #4: At 9.9%. I think it goes back to what we've talked about in the past about that methodical approach to advertising and really holding ourselves accountable to those CAC to LTV ratios.

Speaker #4: And because of that, we tend to see some seasonality in our marketing spend. So we leaned in in Q1. Q1 and Q3 tend to be our stronger quarters.

Speaker #4: So you'll probably see us spending more at the lower end of that range in Q2. And all of that is just to make sure that we are really focused on not just adding clients to add clients, but really making sure, to Matt's point, that we're bringing in really healthy clients.

Matt Baer: So you'll probably see us spending more at the lower end of that range in Q2. And all of that is just to make sure that we are really focused on not just adding clients to add clients, but really making sure, to Matt's point, that we're bringing in really healthy clients. And sort of what he highlighted earlier, that new client LTV is something that we really keep an eye on. And this last quarter, it was up almost 17% year over year. And that's really just a very clear indication that the marketing efforts are working and we're bringing in clients that truly engage with the service and see value in the service. And we'll continue with that methodical approach. And where we do find opportunity, we're very comfortable leaning in.

So you'll probably see us spending more at the lower end of that range in Q2. And all of that is just to make sure that we are really focused on not just adding clients to add clients, but really making sure, to Matt's point, that we're bringing in really healthy clients. And sort of what he highlighted earlier, that new client LTV is something that we really keep an eye on. And this last quarter, it was up almost 17% year over year. And that's really just a very clear indication that the marketing efforts are working and we're bringing in clients that truly engage with the service and see value in the service. And we'll continue with that methodical approach. And where we do find opportunity, we're very comfortable leaning in.

Speaker #4: And so, to what he highlighted earlier, that new client LTV is something that we really keep an eye on. This last quarter, it was up almost 17% year over year.

Speaker #4: And that's really just a very clear indication that the marketing efforts are working and we're bringing in clients that truly engage with the service and see value in the service.

Speaker #4: And we'll continue with that methodical approach and where we do find opportunity, like we're very comfortable leaning

Speaker #4: in. Thank you.

Aneesha Sherman: Thank you. Really helpful.

Speaker #6: Really

Speaker #6: helpful. Next question comes from the

Operator: Next question comes from the line of David Bellinger with Mizuho. Your line is open.

Speaker #3: line of David Bellinger with Mizuho. Your line is

Speaker #5: Hey everyone, thanks for the question. I want to ask about the consumer-facing AI and visualization tools. Any read on the early adoption there? Any numbers you could share with us or in what ways are consumers using it and engaging in these tools early on?

David Bellinger: Hey, everyone. Thanks for the question. I want to ask about the consumer-facing AI and visualization tools. Any read on the early adoption there? Any numbers you could share with us? Or in what ways are consumers using and engaging in these tools early on?

Speaker #5: Yeah, great question. And we're really excited about this truly innovative feature that we've created, Stitch Fix Vision, where clients can upload a couple of pictures of themselves and see a generative AI image visualization of their likeness dressed head to toe in Stitch Fix apparel.

Matt Baer: Yeah. Great question. We're really excited about this truly innovative feature that we've created, Stitch Fix Vision, where clients can upload a couple of pictures of themselves and see a generative AI image visualization of themselves, of their likeness, dressed head to toe in Stitch Fix apparel. That experience is completely shoppable and fully shareable across all social media platforms. We're seeing engagement from our clients that far exceeded our expectations when we rolled out the beta just a couple of months ago. We're seeing clients use it in many different ways. We're seeing clients that are using their Stitch Fix Vision images and sharing it back with their stylist to help inform what they're looking for in their next fix. We're seeing clients purchase directly from the Stitch Fix Vision image itself.

Speaker #5: That experience is completely shoppable and fully shareable across all social media platforms. We're seeing engagement from our clients that far exceeded our expectations when we rolled out the beta just a couple of months ago.

Speaker #5: And we're seeing clients use it in many different ways. We're seeing clients that are using their Stitch Fix Vision images and sharing them back with their stylist to help inform what they're looking for in their next Fix.

Speaker #5: We're seeing clients purchase directly from the Stitch Fix Vision image itself, and we're also seeing a lot of what we call Stitch Fix Vision in the wild, where clients are actually sharing it across their social platforms. They're sharing it with friends and family, and it's creating a bit of a virality and organic growth for us from a client acquisition standpoint as well.

Matt Baer: And we're also seeing a lot of what we call Stitch Fix Vision in the wild, where clients are actually sharing it across their social platforms. They're sharing it with friends and family, and it's creating a bit of a virality and organic growth for us from a client acquisition standpoint as well. So we're really encouraged by the early adoption that we're seeing across the board. And we're even more excited about how we'll lean into it into the future with additional applications.

And we're also seeing a lot of what we call Stitch Fix Vision in the wild, where clients are actually sharing it across their social platforms. They're sharing it with friends and family, and it's creating a bit of a virality and organic growth for us from a client acquisition standpoint as well. So we're really encouraged by the early adoption that we're seeing across the board. And we're even more excited about how we'll lean into it into the future with additional applications.

Speaker #5: So we're really encouraged by the early adoption that we're seeing across the board, and we're even more excited about how we're leaning into it in the future with additional applications.

Speaker #5: Thanks for that. If I could just get one other one in, a question on the gross margin performance for David. I know it's down 180 basis points versus last year, still within your full year range or so, but can you just help us bridge that decline and anything we should expect for the Q2 period?

David Bellinger: Thanks for that. If I can just get one other one in.

Matt Baer: Sure.

David Bellinger: Question on the gross margin performance for David. I know it's down 180 basis points versus last year. Still within your full-year range or so, but could you just help us bridge that decline and anything we should expect for the Q2 period?

Speaker #4: Yeah, David, I can give you more color on that. I think we might have highlighted this a little bit on the last earnings call, but the decline from a year-over-year perspective is three factors.

Matt Baer: Yeah, David, I can give you more color on that. I think we might have highlighted this a little bit on the last earnings call, but the decline from a year-over-year perspective is three factors. First is transportation expenses. Our transportation teams have done a great job over the last three or four years of really driving leverage in our transportation costs through carrier diversification, negotiations, even last-mile carriers. And in FY25, it was probably the lowest percent of revenue we've seen in a very, very long time. And this year, it's more around those general rate increases that you're seeing. USPS is a big part of that, and seeing those general rate increases. And so that's part of the gross margin decline.

Speaker #4: First is transportation expenses. Our transportation teams have done a great job over the last three or four years of really driving leverage in our transportation costs.

Speaker #4: Through carrier diversification, negotiations, and even last-mile carriers, in FY25, it was probably the lowest percent of revenue we've seen in a very, very long time.

Speaker #4: And this year, it's more around those general rate increases that you're seeing. USPS is a big part of that, and we're seeing those general rate increases.

Speaker #4: And so that's part of the gross margin decline. And then the second part is really investing in different categories from a merchandising perspective, which we really consider a great investment and a great ROI.

Matt Baer: And then the second part is really investing in different categories from a merchandising perspective, which we really consider a great investment and a great ROI, really leaning into some of those categories that we feel like we have market share opportunity. Footwear is a great example where they just have lower margins, but we're able to outfit a client entirely. And I think that will really drive a higher LTV from a full client perspective. And so we're really happy with that investment as well. And then the third, and honestly, the smallest of the three, is tariffs. There was a small impact to tariffs, but again, our teams have done a very good job negotiating and really minimizing that impact from tariffs. So I'd say that was probably the smallest of the three.

Speaker #4: Really leaning into some of those categories that we feel like we have market share opportunity, like footwear is a great example where they just have lower margins, but we're able to outfit a client entirely and I think that will really drive a higher LTV from a full client perspective and so we're really happy with that investment as well.

Speaker #4: And then the third, and honestly the smallest of the three is tariffs. There was a small impact to tariffs, but again, our teams have done a very good job negotiating and really minimizing that impact from tariffs.

Speaker #4: So, I'd say that was probably the smallest of the three. And the other thing I'd highlight is it's another reason why we've been calling out contribution margins.

Matt Baer: The other thing I'd highlight is it's another reason why we've been calling out contribution margins over the past few quarters, is we've done a lot of work in making sure that we're driving efficiency within our warehouse and stylist teams. Because of that, having contribution margins that are still well over 30%, they were 32.5% this last quarter, we feel really confident that we can continue to drive leverage in the business. For Q2, I would expect margins to be in a similar place than they were this quarter, pretty much right in the middle of where our full-year guidance range is.

Speaker #4: Over the past few quarters, we've done a lot of work in making sure that we're driving efficiency within our warehouse and stylist teams. And because of that, having contribution margins that are still well over 30%, they were 32.5% this last quarter, we feel really confident that we can continue to drive leverage in the business.

Speaker #4: And for Q2, I would expect margins to be in a similar place than they were this quarter. Pretty much right in the middle of where our full year guidance range

Speaker #4: is. Thanks,

Speaker #5: Very good. Thank you

David Bellinger: Very good. Thank you both.

Speaker #5: both.

Matt Baer: Thanks, David.

Speaker #3: Next question comes Dave. from the line of JSOL with UBS. Your line is

Operator: Next question comes from the line of Jay Sole with UBS. Your line is open.

Speaker #3: open. Great, thank you so much.

David Bellinger: Great. Thank you so much. I have a couple of questions. Matt, can you just first of all break down just for us the opportunity with different brands? Because you mentioned you're bringing in some great brands, you're having success. What is it that's attracting brands, or is it really you just going out and reaching for more brands now that you can sell them? Just explain to us how the quality of the third-party brand profile is improving because you talked about how the private label is improving. And then just on net revenue per active client, I think it was a 5% year over year. I think that's the seventh quarter in a row you've had growth. Can you just kind of break down the drivers of it? And then just on active clients, you did touch on this.

Jay Sole: Great. Thank you so much. I have a couple of questions. Matt, can you just first of all break down just for us the opportunity with different brands? Because you mentioned you're bringing in some great brands, you're having success. What is it that's attracting brands, or is it really you just going out and reaching for more brands now that you can sell them? Just explain to us how the quality of the third-party brand profile is improving because you talked about how the private label is improving. And then just on net revenue per active client, I think it was a 5% year over year. I think that's the seventh quarter in a row you've had growth. Can you just kind of break down the drivers of it? And then just on active clients, you did touch on this.

Speaker #1: I have a couple of questions. Matt, can you just first of all break down for us the opportunity with different brands? Because you mentioned you're bringing in some great brands, and you're having success.

Speaker #1: Is it what is it that's attracting brands, or is it really you just going out and reaching for more brands now that you can sell them?

Speaker #1: Just explain to us how the quality of the third-party brand profiles is improving because you talked about how the private label is improving. And then just on net revenue per active client, I think it was up 5% year over year.

Speaker #1: I think that's the seventh quarter in a row you've had growth. Can you just kind of break down the drivers of it? And then just on active clients, you did touch on this.

Speaker #1: I think it was down 5%, but it continues to improve. I guess where are the drivers there? And could you give us any color on some of the demographics and some of the newer customers that you’re bringing in? What are the demographics of those newer customers?

David Bellinger: I think it was down 5%, but it continues to improve. I guess, what are the drivers there? And just give us any color on some of the demographics and some of the newer customers that you bring in, what the demographics of those newer customers are. Thank you.

I think it was down 5%, but it continues to improve. I guess, what are the drivers there? And just give us any color on some of the demographics and some of the newer customers that you bring in, what the demographics of those newer customers are. Thank you.

Speaker #1: Thank you.

Speaker #5: Yeah, absolutely. Happy to answer that. I'll start with the brands question. David, if you want to start with RPAC and then active clients, and I'll add some additional insight probably after that as well.

Matt Baer: Yeah, absolutely. Happy to answer that. I'll start with the brands question. David, if you want to start with RPAC and then active clients, and I'll add some additional insight probably after that as well. The Stitch Fix service is an incredibly attractive value proposition for third-party brands to work with. We create a phenomenal experience for our clients, and in turn, that creates a really positive experience for the brands themselves. As a closed ecosystem, brands that work with us, they don't have to worry about seeing their product on deep discounts fully visible to the entire market and all consumers. They don't have to worry about the adjacency of seeing their product hanging on racks or on digital shelves next to products of inferior quality. Everything that we do is personalized to the individual.

Speaker #5: The Stitch Fix service is an incredibly attractive value proposition for third-party brands to work with. We create a phenomenal experience for our clients, and in turn, that creates a really positive experience for the brands themselves.

Speaker #5: As a closed ecosystem, brands that work with us don’t have to worry about seeing their product on deep discounts, fully visible to the entire market and all consumers.

Speaker #5: They don't have to worry about the adjacency of seeing their product hanging on racks or on digital shelves next to products of inferior quality.

Speaker #5: Everything that we do is personalized to the individual. So when their product shows up, either on our site or delivered to their home in a fix, it’s with other brands that they’d be proud to see from an adjacency standpoint, and we treat the brands with respect throughout the process.

Matt Baer: So when their product shows up either on our site or delivered to their home in a Fix, it's with other brands that they'd be proud to see from an adjacency standpoint, and we treat the brands with respect throughout the process. We also do a phenomenal job in terms of, based on everything that we know about our clients, to ensure that we're getting price, style, and budget right. So when we deliver product to a client, it's a product that they're going to have a high level of resonance with. It's a product that they're going to be excited to get and that they're going to keep at a really high rate. And that experience that we provide for brands becomes really attractive and is part of the reason why they're so eager to work with us.

So when their product shows up either on our site or delivered to their home in a Fix, it's with other brands that they'd be proud to see from an adjacency standpoint, and we treat the brands with respect throughout the process. We also do a phenomenal job in terms of, based on everything that we know about our clients, to ensure that we're getting price, style, and budget right. So when we deliver product to a client, it's a product that they're going to have a high level of resonance with. It's a product that they're going to be excited to get and that they're going to keep at a really high rate. And that experience that we provide for brands becomes really attractive and is part of the reason why they're so eager to work with us.

Speaker #5: We also do a phenomenal job in terms of, based on everything that we know about our clients, to ensure that we're getting price, style, and budget right.

Speaker #5: So, when we deliver a product to a client, it's a product that they're going to have a high level of resonance with. It's a product that they're going to be excited to get and that they're going to keep at a really high rate.

Speaker #5: And that experience that we provide for brands becomes really attractive and is part of the reason why they're so eager to work with us.

Speaker #5: And then when they do, why they have such an exceptional experience as a partner of ours. It's also why so many coveted brands, we are the largest or one of the largest retail partners that they have, and also why some of the brands we are their exclusive retail partner other than their direct-to-consumer platform.

Matt Baer: And then, when they do, why they have such an exceptional experience as a partner of ours. It's also why, so many coveted brands, we are the largest or one of the largest retail partners that they have, and also why, some of the brands, we are their exclusive retail partner other than their direct-to-consumer platform. As we've continued to expand that brand portfolio, our clients are absolutely recognizing it, and it's part of the reason that they continue to engage more, and it's part of what's continued to drive up our average order values as well as our overall client LTVs. So it's just a really great experience we provide and a really good partnership that we offer each of them. And then, Jay, on the RPAC side, really definitely encouraged with what we're seeing there.

And then, when they do, why they have such an exceptional experience as a partner of ours. It's also why, so many coveted brands, we are the largest or one of the largest retail partners that they have, and also why, some of the brands, we are their exclusive retail partner other than their direct-to-consumer platform. As we've continued to expand that brand portfolio, our clients are absolutely recognizing it, and it's part of the reason that they continue to engage more, and it's part of what's continued to drive up our average order values as well as our overall client LTVs. So it's just a really great experience we provide and a really good partnership that we offer each of them.

Speaker #5: As we've continued to expand that brand portfolio, our clients are absolutely recognizing it, and it's part of the reason that they continue to engage more. It's part of what's continued to drive up our average order values as well as our overall client LTVs.

Speaker #5: So it's just a really great experience we provide and a really good partnership that we offer each of them.

David Aufderhaar: And then, Jay, on the RPAC side, really definitely encouraged with what we're seeing there.

Speaker #4: And NJ, on the RPAC side, is really definitely encouraged with what we're seeing there. It was up 5% year over year this last quarter, and I think we highlighted that it was the seventh quarter in a row that we improved from a year-over-year perspective.

Matt Baer: It was up 5% year over year this last quarter, and I think we highlighted that it was the seventh quarter in a row that we improved from a year-over-year perspective. A big part of that is what we're calling out with those new client LTVs. That, when you see that, it's really a big part of what you're seeing because as those new clients become a larger share of the base, that's really starting to impact RPAC. And I think the other thing that highlights that really well is average order value. Average order value was up almost 10% year over year, and it was the ninth consecutive quarter that it's been up. So definitely something that is driving a lot of strength. And within average order value, there are probably two things I'd call out. Excuse me.

It was up 5% year over year this last quarter, and I think we highlighted that it was the seventh quarter in a row that we improved from a year-over-year perspective. A big part of that is what we're calling out with those new client LTVs. That, when you see that, it's really a big part of what you're seeing because as those new clients become a larger share of the base, that's really starting to impact RPAC. And I think the other thing that highlights that really well is average order value. Average order value was up almost 10% year over year, and it was the ninth consecutive quarter that it's been up. So definitely something that is driving a lot of strength. And within average order value, there are probably two things I'd call out. Excuse me.

Speaker #4: A big part of that is what we're calling out with those new client LTVs. That when you see that, it's really a big part of what you're seeing because as those new clients become a larger share of the base, that's really starting to impact RPAC.

Speaker #4: And I think the other thing that highlights that really well is average order value, is average order value was up almost 10% year over year and it was the ninth consecutive quarter that it's been up.

Speaker #4: So definitely something that is driving a lot of strength. And within average order value, there are probably two things I'd call out. Excuse me.

Speaker #4: One of those is just a higher average number of items sent in fixes, where that larger fix offering is really resonating with our clients, and we're seeing a lot of adoption there.

Matt Baer: One of those is just a higher average number of items sent in Fixes where that larger Fix offering is really resonating with our clients, and we're seeing a lot of adoption there. And then we're also seeing some upside in AUR as well. That was up 3% year over year. And that was really more about that mix shift into some of these newer categories that we've been leaning into. And so definitely seeing encouraging signs across all of those metrics that are coming through in that revenue per active clients. On the active client side, we were really encouraged with what we saw this last quarter. We ended at the high end of our expectations, really just slightly down for the quarter.

One of those is just a higher average number of items sent in Fixes where that larger Fix offering is really resonating with our clients, and we're seeing a lot of adoption there. And then we're also seeing some upside in AUR as well. That was up 3% year over year. And that was really more about that mix shift into some of these newer categories that we've been leaning into. And so definitely seeing encouraging signs across all of those metrics that are coming through in that revenue per active clients. On the active client side, we were really encouraged with what we saw this last quarter. We ended at the high end of our expectations, really just slightly down for the quarter.

Speaker #4: And then we're also seeing some upside in AUR as well. That was up 3% year over year, and that was really more about that mix shift into some of these newer categories that we've been leaning into.

Speaker #4: And so, we are definitely seeing encouraging signs across all of those metrics that are coming through in that revenue per active client. On the active client side, we were really encouraged with what we saw this last quarter.

Speaker #4: We ended at the high end of our expectations really just slightly down for the quarter. And what we're re seeing, I think Matt highlighted a little bit of this earlier, but really across all three of the views of active clients where new client acquisition was up year over year and we continue to see strength there.

Matt Baer: And what we're seeing, I think Matt highlighted a little bit of this earlier, but really across all three of the views of Active Clients where new client acquisition was up year over year, and we continue to see strength there. Re-engaged clients is an area where we've really seen some great strength. Re-engaged clients were up 8% year over year this last quarter. And so definitely an area that we're leaning into in really bringing some of those clients back into a really new experience and experience with a very different level of assortment. And so seeing strength there. And then dormancy, our client retention continues to get better. And so just playing forward those three lines is really how we have the confidence in being able to continue to say that in Q3, we expect a quarter-over-quarter inflection. There is definitely seasonality to our Active Clients.

And what we're seeing, I think Matt highlighted a little bit of this earlier, but really across all three of the views of Active Clients where new client acquisition was up year over year, and we continue to see strength there. Re-engaged clients is an area where we've really seen some great strength. Re-engaged clients were up 8% year over year this last quarter. And so definitely an area that we're leaning into in really bringing some of those clients back into a really new experience and experience with a very different level of assortment. And so seeing strength there. And then dormancy, our client retention continues to get better. And so just playing forward those three lines is really how we have the confidence in being able to continue to say that in Q3, we expect a quarter-over-quarter inflection. There is definitely seasonality to our Active Clients.

Speaker #4: Re-engaged clients is an area where we've really seen some great strength. Re-engaged clients were up 8% year over year this last quarter. And so definitely an area that we're leaning into in really bringing some of those clients back into a really new experience and experience with a very different level of assortment.

Speaker #4: And so, seeing strength there, and then dormancy, our client retention continues to get better. And so, just playing forward those three lines is really how we have the confidence in being able to continue to say that in Q3 we expect a quarter-over-quarter inflection.

Speaker #4: There is definitely seasonality to our active clients. There's also seasonality to our marketing spend as well. In Q2, it tends to be a seasonally slower quarter for us from a client acquisition perspective.

Matt Baer: There's also seasonality to our marketing spend as well. So in Q2, it tends to be a seasonally slower quarter for us from a client acquisition perspective. So we'll probably expect active clients to be slightly down from a quarter-over-quarter perspective, but then still very confident that in Q3, we expect a quarter-over-quarter increase. A couple of other points that I think are relevant I'll call out here that impact both, are relevant for both RPAC and active clients overall. First, we're just incredibly encouraged that we're seeing strength across all income segments from our client base. And that gives us a lot of additional confidence in terms of that increased guide within both Q2 and our full year.

There's also seasonality to our marketing spend as well. So in Q2, it tends to be a seasonally slower quarter for us from a client acquisition perspective. So we'll probably expect active clients to be slightly down from a quarter-over-quarter perspective, but then still very confident that in Q3, we expect a quarter-over-quarter increase. A couple of other points that I think are relevant I'll call out here that impact both, are relevant for both RPAC and active clients overall. First, we're just incredibly encouraged that we're seeing strength across all income segments from our client base. And that gives us a lot of additional confidence in terms of that increased guide within both Q2 and our full year.

Speaker #4: And so we'll probably expect active clients to be slightly down from a quarter-over-quarter perspective. But then we're still very confident that in Q3 we expect a quarter-over-quarter increase.

Speaker #4: increase. A couple of other points that

Speaker #5: I think are relevant, I'll call out here that impact both RPAC and active clients overall. First, we're just incredibly encouraged that we're seeing strength across all income segments from our client base.

Speaker #5: And that gives us a lot of additional confidence in terms of that increased guide within both Q2 and our full year. The service that we offer is one that serves clients well, no matter what the macroeconomic environment is, because of the deep and enduring relationship that clients have with their stylist and the ability for us to tailor each of those experiences to their budget at any given time.

Matt Baer: As the service that we offer is one that serves well clients no matter what the macroeconomic environment is because of the deep and enduring relationship that clients have with their stylists, and the ability for us to tailor each of those experiences to their budget at any given time. And then the second is that the growth that we have, that's being driven by both increased client engagement as well as increased unit sales. It's not being driven by inflation. So the growth that we're delivering is that healthy growth that's going to lead to sustainable and profitable overall enterprise growth.

As the service that we offer is one that serves well clients no matter what the macroeconomic environment is because of the deep and enduring relationship that clients have with their stylists, and the ability for us to tailor each of those experiences to their budget at any given time. And then the second is that the growth that we have, that's being driven by both increased client engagement as well as increased unit sales. It's not being driven by inflation. So the growth that we're delivering is that healthy growth that's going to lead to sustainable and profitable overall enterprise growth.

Speaker #5: And then the second is that the growth we have is being driven by both increased client engagement as well as increased unit sales.

Speaker #5: It's not being driven by inflation. So the growth that we're delivering is that healthy growth that's going to lead to sustainable and profitable overall enterprise.

Speaker #5: growth. Got it.

David Bellinger: Got it. Okay. Thank you. Very helpful.

Jay Sole: Got it. Okay. Thank you. Very helpful.

Speaker #3: Okay. Thank you. Very helpful.

Speaker #1: And again, if you would like to ask a question, press star, then the number one on your telephone keypad. There are no further questions at this time.

Operator: And again, if you would like to ask a question, press star, then the number one on your telephone keypad. There are no further questions at this time. I would like to turn the call back over to our CEO, Matt Baer.

Speaker #1: I would like to turn the call back over to our CEO, Matthew Baer.

Speaker #5: Thanks. To close, I'd like to recognize the entire Stitch Fix team for their exceptional execution this quarter. I'm proud of how we're increasingly establishing Stitch Fix as our clients' retailer of choice for more of their apparel and accessories needs.

Matt Baer: Thanks. To close, I'd like to recognize the entire Stitch Fix team for their exceptional execution this quarter. I'm proud of how we're increasingly establishing Stitch Fix as our client's retailer of choice for more of their apparel and accessories needs. And that's evidenced by the revenue growth in the quarter and the considerable market share gains we captured, which we discussed. Our results this quarter, they're a testament to the superior retail experience we provide. We believe we offer a higher level of convenience, personalization, service, inspiration, and innovation than anyone else in the market. I appreciate your interest in our business. And we believe the continued execution of our strategy will further fuel the momentum we have in our business and drive long-term, sustainable, profitable growth. And I look forward to sharing our continued progress.

Speaker #5: And that's evidenced by the revenue growth in the quarter and the considerable market share gains we captured, which we discussed. Our results this quarter are a testament to the superior retail experience we provide.

Speaker #5: We believe we offer a higher level of convenience, personalization, service, inspiration, and innovation than anyone else in the market. I appreciate your interest in our business.

Speaker #5: And we believe the continued execution of our strategy will further fuel the momentum we have in our business and drive long-term sustainable, profitable growth.

Speaker #5: And I look forward to sharing our continued progress.

Operator: Ladies and gentlemen, that concludes today's call. Thank you all for joining, and you may now disconnect.

Q1 2026 Stitch Fix Inc Earnings Call

Request a DemoDemo

SFIX

Stitch Fix

Earnings