Stitch Fix(SFIX) - 2025 Q4 - Annual Results

Financial Results Overview Stitch Fix reported mixed Q4 and full fiscal year 2025 results, with revenue decreases but improved gross margin and Adjusted EBITDA, driven by strategic execution and client experience enhancements Q4 and Full Fiscal Year 2025 Highlights Stitch Fix reported mixed results for Q4 and full fiscal year 2025, with Q4 net revenue decreasing 2.6% YoY but increasing 4.4% YoY on a 13-week adjusted basis, while full fiscal year 2025 net revenue decreased 5.3% YoY, or 3.7% YoY adjusted, with gross margin expanding for the full year to 44.4% and improved Adjusted EBITDA despite net losses | Metric | Q4 FY25 (Actual) | Q4 FY25 (Adjusted YoY Change) | FY25 (Actual) | FY25 (Adjusted YoY Change) | FY24 (Actual) | | :-------------------------------- | :--------------- | :---------------------------- | :------------ | :--------------------------- | :------------ | | Net Revenue | $311.2 million | +4.4% | $1.27 billion | -3.7% | $1.34 billion | | Gross Margin | 43.6% | -100 bps YoY | 44.4% | +10 bps YoY | 44.3% | | Net Loss | $8.6 million | N/A | $28.8 million | N/A | $128.8 million | | Diluted Loss Per Share | $0.07 | N/A | $0.22 | N/A | $1.07 | | Adjusted EBITDA | $8.7 million | N/A | $49.1 million | N/A | $29.3 million | | Adjusted EBITDA Margin | 2.8% | N/A | 3.9% | N/A | 2.2% | | Active Clients | 2.309 million | -7.9% YoY | N/A | N/A | 2.508 million | | Net Revenue Per Active Client (RPAC) | $549 | +3.0% YoY | N/A | N/A | $533 | CEO Commentary and Strategic Direction CEO Matt Baer highlighted fiscal 2025 as a milestone year, driven by successful execution of the transformation strategy, leading to improved client experience and assortment, achieving the second consecutive quarter of adjusted year-over-year revenue growth and market share gains in the US apparel market, with future growth fueled by AI, leading brands, and human stylists for personalized shopping experiences - Fiscal 2025 was a milestone year, achieving the second consecutive quarter of year-over-year revenue growth on an adjusted basis and gaining share in the US apparel market[3] - Positive momentum was driven by the successful execution of the transformation strategy, including improvements to client experience and assortment[3] - Future growth will be fueled by harnessing AI, assortment of leading brands, and the human connection of Stylists to deliver client-centric and personalized shopping experiences[3] Financial Outlook Stitch Fix provides positive revenue and Adjusted EBITDA guidance for Q1 and full fiscal year 2026, anticipating continued growth and free cash flow positivity Q1 Fiscal Year 2026 Outlook Stitch Fix provided guidance for the first quarter of fiscal year 2026, projecting net revenue between $333 million and $338 million, representing 4.4% to 6.0% year-over-year growth, with Adjusted EBITDA expected to be between $8 million and $11 million, at a margin of 2.4% to 3.3% | Metric | Q1 2026 Guidance | YoY Change | | :---------------- | :----------------------- | :--------- | | Net Revenue | $333 million - $338 million | 4.4% - 6.0% | | Adjusted EBITDA | $8 million - $11 million | 2.4% - 3.3% margin | Full Fiscal Year 2026 Outlook For the full fiscal year 2026, Stitch Fix anticipates net revenue between $1.28 billion and $1.33 billion, a 1.0% to 5.0% year-over-year increase, with Adjusted EBITDA projected to be $30 million to $45 million, at a margin of 2.3% to 3.4%, alongside expectations for gross margin between 43% and 44%, advertising expense between 9% and 10% of revenue, and positive free cash flow | Metric | FY 2026 Guidance | YoY Change | | :---------------- | :----------------------- | :--------- | | Net Revenue | $1.28 billion - $1.33 billion | 1.0% - 5.0% | | Adjusted EBITDA | $30 million - $45 million | 2.3% - 3.4% margin | - Full fiscal year 2026 gross margin is expected to be between 43% and 44%[8] - Full fiscal year 2026 advertising expense as a percentage of revenue is expected to be between 9% and 10%[8] - The company expects to be free cash flow positive for the full fiscal year 2026[8] Discontinued Operations Stitch Fix ceased its UK business operations in Q1 fiscal 2024, now reported as a discontinued operation UK Business Cessation During the first quarter of fiscal 2024, Stitch Fix ceased operations of its UK business, which is now reported as a discontinued operation in its unaudited condensed consolidated financial statements for all periods presented - Stitch Fix ceased operations of its UK business in Q1 fiscal 2024, reporting it as a discontinued operation[10] Company Information This section provides an overview of Stitch Fix as a personal styling service, outlines forward-looking statements and associated risks, and details investor communication channels About Stitch Fix, Inc. Stitch Fix is a leading online personal styling service founded in 2011, headquartered in San Francisco, combining expert stylists with AI and recommendation algorithms to offer personalized clothing selections from exclusive and national brands, aiming to simplify style discovery for clients - Stitch Fix is a leading online personal styling service that helps clients discover styles that fit perfectly[12] - The service pairs expert stylists with best-in-class AI and recommendation algorithms, leveraging an assortment of exclusive and national brands[12] Forward-Looking Statements This section contains forward-looking statements regarding future financial performance, strategic initiatives, and market expectations, which involve substantial risks and uncertainties, including macroeconomic conditions, consumer behavior, ability to acquire and retain clients, supply chain issues, and the impact of tariffs, cautioning readers not to rely on these statements as predictions of future events - Forward-looking statements cover expectations for future financial performance, profitability, long-term targets, and guidance for Q1 and full fiscal year 2026[13] - Key strategic areas include the impact of the transformation strategy, client experience improvements, expanded Fix options, investments in client-Stylist relationships, generative AI, and product assortment[13][15] - Statements involve substantial risks and uncertainties, such as macroeconomic environment, ability to generate sufficient revenue, changing consumer behavior, tariffs, client acquisition/retention, and supply chain risks[15] Conference Call and Webcast Information Stitch Fix's CEO and CFO hosted a conference call on September 24, 2025, at 2:00 p.m. Pacific Time to discuss financial results and outlook, with a live webcast and replay made available on the investor relations section of the company's website - A conference call was held on September 24, 2025, at 2:00 p.m. Pacific Time to discuss financial results and outlook[11] - A live webcast and replay are accessible on the investor relations section of the Stitch Fix website[11] Investor and Public Relations Contacts Contact information for investor relations and public relations inquiries is provided - IR Contact: ir@stitchfix.com[28] - PR Contact: media@stitchfix.com[28] Consolidated Financial Statements (Unaudited) Unaudited consolidated financial statements present the company's balance sheets, statements of operations, and cash flows for fiscal years 2024 and 2025, highlighting key financial positions and performance Consolidated Balance Sheets As of August 2, 2025, Stitch Fix reported total assets of $480.6 million, a slight decrease from $486.9 million in the prior year, with cash and cash equivalents decreasing while short-term investments and inventory increased, and total liabilities also decreased, leading to an increase in total stockholders' equity | Metric (in thousands) | August 2, 2025 | August 3, 2024 | Change (YoY) | | :-------------------------------- | :------------- | :------------- | :----------- | | Cash and cash equivalents | $113,952 | $162,862 | -$48,910 | | Short-term investments | $120,901 | $84,106 | +$36,795 | | Inventory, net | $118,370 | $97,903 | +$20,467 | | Total current assets | $373,872 | $366,710 | +$7,162 | | Total assets | $480,622 | $486,864 | -$6,242 | | Total current liabilities | $206,227 | $203,551 | +$2,676 | | Total liabilities | $277,644 | $299,842 | -$22,198 | | Total stockholders' equity | $202,978 | $187,022 | +$15,956 | Consolidated Statements of Operations and Comprehensive Loss For Q4 FY25, net revenue was $311.2 million, a decrease from $319.6 million in Q4 FY24, with gross margin decreasing to 43.6% from 44.6%, and the company reported a net loss of $8.6 million, a significant improvement from $36.5 million in Q4 FY24, while for the full fiscal year 2025, net revenue was $1.27 billion, down from $1.34 billion, but net loss improved substantially to $28.7 million from $128.8 million in FY24 | Metric (in thousands) | Q4 FY25 | Q4 FY24 | FY25 | FY24 | | :-------------------------------- | :------ | :------ | :----- | :------- | | Revenue, net | $311,227 | $319,550 | $1,267,171 | $1,337,468 | | Cost of goods sold | $175,512 | $177,073 | $704,232 | $745,430 | | Gross profit | $135,715 | $142,477 | $562,939 | $592,038 | | Gross margin | 43.6% | 44.6% | 44.4% | 44.3% | | Operating loss | $(11,206) | $(41,888) | $(38,905) | $(133,427) | | Net loss from continuing operations | $(8,577) | $(35,741) | $(28,844) | $(118,885) | | Net loss | $(8,576) | $(36,498) | $(28,739) | $(128,840) | | Diluted loss per share | $(0.07) | $(0.30) | $(0.22) | $(1.07) | Consolidated Statements of Cash Flow For fiscal year 2025, net cash provided by operating activities from continuing operations was $25.6 million, a decrease from $28.2 million in FY24, while net cash used in investing activities from continuing operations decreased to $59.1 million from $78.7 million, primarily due to changes in securities, and net cash used in financing activities remained stable at $15.0 million, with the company ending the year with $114.0 million in cash and cash equivalents | Metric (in thousands) | FY25 | FY24 | | :-------------------------------------------------- | :----- | :----- | | Net cash provided by operating activities from continuing operations | $25,575 | $28,207 | | Net cash used in investing activities from continuing operations | $(59,121) | $(78,742) | | Net cash used in financing activities from continuing operations | $(14,967) | $(15,493) | | Net decrease in cash and cash equivalents | $(48,910) | $(76,575) | | Cash and cash equivalents at end of period | $113,952 | $162,862 | Non-GAAP Financial Measures This section reconciles non-GAAP financial measures, Adjusted EBITDA and Free Cash Flow, to their most directly comparable GAAP measures, illustrating core operational performance Adjusted EBITDA Reconciliation Adjusted EBITDA is defined as net loss from continuing operations excluding interest income, other income/expense, income taxes, depreciation and amortization, stock-based compensation, restructuring and other one-time costs, and non-ordinary course legal fees, with Q4 FY25 Adjusted EBITDA at $8.7 million (2.8% margin) and FY25 at $49.1 million (3.9% margin), showing significant improvement from FY24 - Adjusted EBITDA is a non-GAAP measure excluding specific non-core or non-recurring items from net loss from continuing operations to provide a clearer view of core business performance[21][23] | Metric (in thousands) | Q4 FY25 | Q4 FY24 | FY25 | FY24 | | :-------------------------------- | :------ | :------ | :----- | :----- | | Net loss from continuing operations | $(8,577) | $(35,741) | $(28,844) | $(118,885) | | Stock-based compensation expense | $13,069 | $16,845 | $56,727 | $76,756 | | Restructuring and other one-time costs | $121 | $26,356 | $3,228 | $50,463 | | Adjusted EBITDA | $8,713 | $9,523 | $49,139 | $29,281 | | Adjusted EBITDA margin | 2.8% | 3.0% | 3.9% | 2.2% | Free Cash Flow Reconciliation Free Cash Flow is defined as net cash flows from operating activities from continuing operations minus purchases of property and equipment, and for fiscal year 2025, it was $9.3 million, a decrease from $14.2 million in FY24 - Free Cash Flow is a non-GAAP measure representing cash available after operating activities and capital expenditures[21][24] | Metric (in thousands) | Q4 FY25 | Q4 FY24 | FY25 | FY24 | | :-------------------------------------------------- | :------ | :------ | :----- | :----- | | Net cash provided by operating activities from continuing operations | $7,003 | $8,200 | $25,575 | $28,207 | | Purchases of property and equipment | $(4,228) | $(3,706) | $(16,293) | $(13,965) | | Free Cash Flow | $2,775 | $4,494 | $9,282 | $14,242 | Operating Metrics Key operating metrics, including active clients and net revenue per active client, are presented to show client engagement and revenue efficiency trends Active Clients Active clients are defined as those who checked out a Fix or were shipped an item via Freestyle in the preceding 52 weeks, and as of August 2, 2025, active clients decreased to 2.309 million, a 1.9% QoQ decrease and 7.9% YoY decrease - An active client is defined as a client who checked out a Fix or was shipped an item via Freestyle in the preceding 52 weeks[26] | Date | Active Clients (in thousands) | QoQ Change | YoY Change | | :----------------- | :---------------------------- | :--------- | :--------- | | August 2, 2025 | 2,309 | -1.9% | -7.9% | | May 3, 2025 | 2,353 | -0.76% | N/A | | February 1, 2025 | 2,371 | -2.59% | N/A | | November 2, 2024 | 2,434 | -2.9% | N/A | | August 3, 2024 | 2,508 | N/A | N/A | Net Revenue per Active Client (RPAC) Net revenue per active client (RPAC) is calculated based on net revenue over the preceding four fiscal quarters divided by active clients, and RPAC increased 3.0% year-over-year to $549 as of August 2, 2025 - Net revenue per active client (RPAC) is calculated based on net revenue over the preceding four fiscal quarters divided by the number of active clients[27] | Date | Net Revenue per Active Client | YoY Change | | :----------------- | :---------------------------- | :--------- | | August 2, 2025 | $549 | +3.0% | | May 3, 2025 | $542 | N/A | | February 1, 2025 | $537 | N/A | | November 2, 2024 | $531 | N/A | | August 3, 2024 | $533 | N/A |