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Stitch Fix, Inc. (SFIX)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 FY2025 delivered a return to year-over-year revenue growth: net revenue $325.0M (+0.7% YoY), adjusted EBITDA $11.0M, and diluted EPS of -$0.06; management highlighted broad-based AOV strength and growth in Women’s/Fix channels, with Men’s and Freestyle growing for the second consecutive quarter .
  • Results beat Wall Street consensus: revenue of $325.0M vs ~$314.3M consensus*, EPS of -$0.06 vs ~-$0.11 consensus*; prior two quarters also beat both revenue and EPS, underscoring consistent outperformance* .
  • Guidance raised: FY2025 net revenue to $1.254B–$1.259B (from $1.225B–$1.240B) and FY2025 adjusted EBITDA to $43M–$47M (tightened from $40M–$47M); Q4 revenue guided to $298M–$303M and adjusted EBITDA to $3M–$7M, with gross margin expected at the lower end of 44%–45% .
  • Strategic drivers: AOV up ~10% YoY on larger Fixes (up to 8 items), better keep rate and AUR; assortment “newness” (athleisure +>30%, sneakers +35%) and adjacent categories (footwear, accessories) supported engagement .
  • Risk watch: gross margin fell 130bps YoY to 44.2% on mix/product margins, advertising rose to 10.2% of revenue; tariffs and macro uncertainty could pressure FY2026 costs and comps, though company expects minimal tariff impact in Q4 .

Note: Asterisks indicate values retrieved from S&P Global.

What Went Well and What Went Wrong

What Went Well

  • Return to YoY revenue growth and raised FY guidance driven by strong execution of transformation strategy; Women’s and Fix channels returned to growth, with Men’s and Freestyle growing for the second consecutive quarter .
  • AOV up ~10% YoY for the seventh consecutive quarter; larger Fixes (6–8 items) more than doubled penetration from Q1 to Q3, lifting items per Fix, keep rate, and AUR; “athleisure” up >30% and sneakers up 35% YoY .
  • Operational leverage maintained: contribution margin >33% again, enabling flexibility to pursue assortment newness even with gross margin fluctuations; free cash flow $16.0M in Q3 and cash/investments $242.1M, no debt .

Management quotes:

  • “Q3 revenue was $325 million, and adjusted EBITDA was $11 million… AOV grew 10%, with items per fix, keep rate, and AUR all up year-over-year for the second straight quarter.”
  • “Contribution margin was above 33% again this quarter… That really gives us the flexibility to… do what’s client right from an assortment standpoint.”

What Went Wrong

  • Gross margin declined 130bps YoY to 44.2% (down ~30bps QoQ) due primarily to lower product margins and mix (lean-in to newness and non-apparel categories) .
  • Active clients fell 10.6% YoY and 0.8% QoQ to 2.353M; management expects seasonal sequential declines in Q4 (down ~2% QoQ) before a potential inflection in FY2026, contingent on macro .
  • Advertising scaled to 10.2% of revenue (up 130bps YoY and 240bps QoQ) to drive acquisition/engagement; while healthy LTV supports lean-in, it pressures near-term margins .

Financial Results

Quarterly P&L and Margins

MetricQ1 2025Q2 2025Q3 2025
Revenue ($USD Millions)$318.818 $312.110 $325.016
Diluted EPS ($USD)-$0.05 -$0.05 -$0.06
Gross Margin (%)45.4% 44.5% 44.2%
Adjusted EBITDA ($USD Millions)$13.494 $15.919 $11.013
Adjusted EBITDA Margin (%)—5.1% 3.4%
Net Loss Margin (%)——2.3%

Notes:

  • Adjusted EBITDA margin not explicitly provided for Q1; Q2 margin disclosed in narrative (5.1%); Q3 margin disclosed in press release (3.4%) .

Year-over-Year Comparison (Q3)

MetricQ3 2024Q3 2025
Revenue ($USD Millions)$322.731 $325.016
Gross Margin (%)45.5% 44.2%
Diluted EPS ($USD)-$0.18 -$0.06
Adjusted EBITDA ($USD Millions)$6.681 $11.013

Actual vs Wall Street Consensus (S&P Global)

MetricQ1 2025 Consensus*Q1 2025 ActualQ2 2025 Consensus*Q2 2025 ActualQ3 2025 Consensus*Q3 2025 Actual
Revenue ($USD Millions)~$306.931*$318.818 ~$298.044*$312.110 ~$314.343*$325.016
Primary EPS ($USD)~-0.141*-0.05 ~-0.112*-0.05 ~-0.109*-0.06

Values retrieved from S&P Global.

KPIs and Operating Metrics

KPIApr 27, 2024Aug 3, 2024Nov 2, 2024Feb 1, 2025May 3, 2025
Active Clients (000s)2,633 2,508 2,434 2,371 2,353
Net Revenue per Active Client ($)$525 $533 $531 $537 $542

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Net Revenue ($USD Millions)Q4 2025N/A$298 – $303 New
Adjusted EBITDA ($USD Millions)Q4 2025N/A$3 – $7 New
Gross Margin (%)Q4 2025~44%–45% (range reference) Lower end of 44%–45% Lowered within range
Net Revenue ($USD Billions)FY 2025$1.225 – $1.240 $1.254 – $1.259 Raised
Adjusted EBITDA ($USD Millions)FY 2025$40 – $47 $43 – $47 Tightened higher low end
Gross Margin (%)FY 2025~44%–45% Middle of 44%–45% range Clarified midpoint
Advertising (% of Revenue)FY 2025High end of 8%–9% High end of 8%–9% Maintained
Free Cash FlowFY 2025Positive Positive Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 FY25 and Q2 FY25)Current Period (Q3 FY25)Trend
AI/Technology initiativesAI-driven merchandising tools improving inventory and demand prediction; stylist model enhancements and stylist profiles to deepen relationships Continued emphasis on best-in-class AI and recommendation algorithms; differentiated personalization highlighted Sustained focus; scaled across client experience
Supply chain/OperationsInventory management aided by AI; warehouse styling leverage; contribution margin >30% Retail best practices in pricing, warehouse optimization, inventory management; contribution margin >33% Operational discipline maintained
Tariffs/MacroTariffs expected not to impact client prices or margins in 2H FY25; monitoring macro Expect higher merchandising costs in FY26 under current tariffs; minimal impact expected in Q4; proactive supplier diversification Risk rising in FY26
Product performanceWomen: dresses/denim strong; Men: cashmere/performance workwear up; non-apparel growth in sneakers, jewelry, accessories Athleisure +>30% YoY; women’s wide-leg denim and transitional sweaters; men’s fleece/knits; sneakers +35% YoY Continued “newness” boost
Client metrics“Smallest” sequential active client decline in 3 years; new client growth; higher 90-day LTV; recurring shipments up Second straight quarter of new client growth; recurring shipments up; Q3 lowest sequential declines in 3 years Momentum improving
Regulatory/LegalUK business reported as discontinued operations UK discontinued operations reminder Status unchanged

Management Commentary

  • CEO: “Q3 revenue was $325 million, and adjusted EBITDA was $11 million… our women’s business and overall fixed channel returned to revenue growth… AOV grew 10%… we are increasing our annual guidance” .
  • CEO on strategy: “We’ve strengthened the foundation… pricing, warehouse optimization, inventory management… enhanced client engagement features… larger fixes… theme fixes… Freestyle discovery feeding Fix” .
  • CFO: “Gross margin… 44.2%… margins fluctuate with mix between market and private brands; contribution margin above 33% again this quarter” .
  • Tariffs: “Under current tariff conditions, we would expect to see an increase in merchandising costs in FY26… we are well positioned… country-of-origin diversification and negotiations” .

Q&A Highlights

  • Consumer behavior and engagement: Larger Fixes materially lifted AOV; strength observed in keep rate and AUR; fix and Freestyle channels growing; women’s returning to growth; confidence in Q4 revenue growth .
  • Gross margin puts/takes: Mix shifts (newness, non-apparel) can pressure gross margin; contribution margin >33% provides flexibility; Q4 gross margin guided to lower end of 44%–45% .
  • Active clients trajectory: Expect sequential decline in Q4 (~2% QoQ seasonality); path to active client growth targeted in FY2026, dependent on macro .
  • AOV sustainability: Larger Fix penetration more than doubled from Q1 to Q3; two-year AOV stack +17%; tougher comps expected in FY2026 .
  • Advertising: 10.2% of revenue in Q3; LTV improvements support lean-in; seasonality drives spend cadence; no need to materially increase ads to reach active client growth inflection .

Estimates Context

  • Across Q1–Q3 FY2025, SFIX beat S&P Global consensus on both revenue and EPS: Q3 revenue $325.0M vs ~$314.3M consensus*, EPS -$0.06 vs ~-0.11*; Q2 revenue $312.1M vs ~$298.0M*, EPS -$0.05 vs ~-0.11*; Q1 revenue $318.8M vs ~$306.9M*, EPS -$0.05 vs ~-0.14* .

Values retrieved from S&P Global.

Key Takeaways for Investors

  • Consistent execution: Three straight quarterly beats vs consensus on revenue and EPS and raised FY revenue guidance signal durable momentum through FY2025* .
  • Near-term catalysts: Continued AOV strength from larger Fixes and assortment “newness” supports Q4 revenue guide ($298M–$303M) and positions FY2025 gross margin in the middle of the 44%–45% range despite Q4 lower-end guide .
  • Margin/FCF resilience: Contribution margin >33% and Q3 free cash flow of $16.0M, with $242.1M cash/investments and no debt, provide strategic flexibility .
  • Watch active clients: Sequential declines continue near term (Q4 down ~2%), but management targets an FY2026 inflection; engagement metrics (recurring shipments, 90-day LTV) are improving .
  • Tariff/macro overhang into FY2026: Current tariff rates expected to raise merchandising costs; management working supplier diversification/mix and pricing levers while signaling minimal impact in Q4 .
  • Gross margin sensitivity to mix: Lean-in to “client-right” assortment/newness and non-apparel can compress gross margin, but contribution margin discipline offsets near-term headwinds .
  • Estimate revisions likely: Beats on revenue/EPS and raised FY revenue guidance should drive upward revisions near term, while FY2026 commentary (tariffs, tougher AOV comps, active client trajectory) may cap outer-year estimates* .

Appendix: Additional Data and Documents

  • Q3 FY2025 Press Release: revenue $325.016M; gross margin 44.2%; adjusted EBITDA $11.013M; diluted EPS -$0.06; active clients 2,353k; RPAC $542; FCF $15.998M; cash/investments $242.1M; no debt .
  • Q3 FY2025 Guidance: Q4 revenue $298–$303M, adjusted EBITDA $3–$7M; FY2025 revenue $1.254–$1.259B, adjusted EBITDA $43–$47M; Q4 GM lower end of 44%–45%; FY GM mid-range; FY ads high end of 8%–9% .
  • Q2 FY2025 Press Release: revenue $312.110M; gross margin 44.5%; adjusted EBITDA $15.919M; diluted EPS -$0.05; active clients 2,371k; RPAC $537 .
  • Q1 FY2025 Press Release: revenue $318.818M; gross margin 45.4%; adjusted EBITDA $13.494M; diluted EPS -$0.05; active clients 2,434k; RPAC $531 .

All citations correspond to company documents and transcript sections as noted. Values marked with an asterisk were retrieved from S&P Global.