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Stitch Fix, Inc. (SFIX)·Q4 2025 Earnings Summary

Executive Summary

  • Q4 2025 revenue was $311.2M, down 2.6% YoY reported but up 4.4% YoY on a 13-week adjusted basis; EPS was $(0.07), gross margin 43.6%, and adjusted EBITDA $8.7M (2.8% margin), all above guidance on top line and EBITDA while gross margin came in below prior quarter’s range due to transportation cost pressure .
  • Versus S&P Global consensus, revenue beat by ~$4.1M* ($311.2M vs $307.1M*) and EPS beat by ~$0.03* (−$0.07 vs −$0.10*); this marked a second consecutive quarter of YoY adjusted revenue growth and share gains in U.S. apparel per management .
  • FY26 outlook guides a return to full-year revenue growth ($1.28B–$1.33B) and adjusted EBITDA $30M–$45M, with gross margin 43%–44% and ad spend 9%–10% of revenue; company expects to be free cash flow positive .
  • Product and engagement drivers: Fix AOV +12% YoY, AUR +7.6% YoY, larger Fix penetration, strong men’s double-digit revenue growth, and non‑apparel/brand additions; management highlighted new GenAI features (Vision, AI style assistant) and Stylist Connect as catalysts into holiday .

What Went Well and What Went Wrong

What Went Well

  • Revenue and adjusted EBITDA beat guidance: Q4 revenue $311.2M vs guidance $298–$303M; adjusted EBITDA $8.7M vs $3–$7M, reflecting strong AOV and assortment execution .
  • Engagement KPIs improving: RPAC rose to $549 (+3% YoY), with eighth consecutive quarter of AOV growth and higher items per Fix; men’s delivered double-digit growth and women’s strength in footwear and athleisure .
  • Strategic innovation: rollout of AI style assistant, Vision GenAI imagery, Stylist Connect, and family accounts to deepen personalization and client-stylist relationships, positioning for holiday .

What Went Wrong

  • Gross margin compression: Q4 GM 43.6% fell 100bps YoY and below prior guidance’s lower bound (44%–45%) due to carrier rate increases and mix shift toward non-apparel .
  • Active client count declined: 2.309M, down 1.9% QoQ and 7.9% YoY; inventory rose 20.9% YoY to support larger Fixes, adding working capital needs .
  • Ongoing legal and cost headwinds: non‑ordinary course legal fees incurred in Q4 and expected ~$4.2M in FY26; management plans to shift compensation mix toward cash, pressuring adjusted EBITDA (benefiting GAAP net income) .

Financial Results

Quarter-over-Quarter and Year-over-Year

MetricQ2 2025Q3 2025Q4 2025
Revenue ($USD Millions)$312.110 $325.016 $311.227
Diluted EPS ($USD)$(0.05) $(0.06) $(0.07)
Gross Margin %44.5% 44.2% 43.6%
Adjusted EBITDA ($USD Millions)$15.919 $11.013 $8.713
Adjusted EBITDA Margin %5.1% 3.4% 2.8%

Notes:

  • Reported YoY: Q4 revenue down 2.6% YoY, but up 4.4% YoY adjusted for the prior year’s extra week .
  • QoQ: Revenue down 4.2% QoQ; gross margin down 60bps QoQ, reflecting carrier rate increases .

Estimate Comparison (S&P Global)

MetricConsensus*ActualSurprise ($)*Surprise (%)*
Revenue ($USD Millions)307.148*311.227 +4.079*+1.3%*
Primary EPS ($USD)−0.099*−0.070 +0.029*n/a*

Values retrieved from S&P Global.*

KPIs

KPIQ2 2025Q3 2025Q4 2025
Active Clients (000s)2,371 2,353 2,309
Net Revenue per Active Client ($)537 542 549

Segment breakdown: Not disclosed in 8‑K; management indicated Fix channel growth outpaced total company growth and highlighted non‑apparel categories and brand additions .

Non‑GAAP considerations: Adjusted EBITDA excludes interest, other income/expense, taxes, D&A, stock-based comp, restructuring/one‑time costs, and non‑ordinary legal fees; reconciliation provided in 8‑K .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent Guidance / ActualChange
Net RevenueQ4 2025$298M–$303M $311.227M Beat vs guidance
Adjusted EBITDAQ4 2025$3M–$7M (1.0%–2.3%) $8.713M (2.8%) Beat vs guidance
Gross Margin %Q4 2025Lower end of 44%–45% 43.6% Below guidance
Net RevenueQ1 2026N/A$333M–$338M; +4.4%–6.0% YoY New
Adjusted EBITDAQ1 2026N/A$8M–$11M; 2.4%–3.3% margin New
Net RevenueFY 2026N/A$1.28B–$1.33B; +1%–5% YoY New
Adjusted EBITDAFY 2026N/A$30M–$45M; 2.3%–3.4% margin New
Gross Margin %FY 2026N/A43%–44% New
Advertising % of RevenueFY 2026N/A9%–10% New
Free Cash FlowFY 2026N/APositive New
Non‑ordinary legal feesFY 2026N/A≈$4.2M expected New
Compensation mixFY 2026N/AShift from equity to cash; reduces adjusted EBITDA, benefits net income New

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 & Q3)Current Period (Q4 2025)Trend
AI/Technology initiativesFocus on personalization, data-driven initiatives; transformation strategy execution AI style assistant, Vision GenAI imagery, Stylist Connect, family accounts launching/rolling out Accelerating innovation
Supply chain & transportationGM guided ~44%–45% FY25; product margin improvements GM down 100bps YoY; carrier rate increases (USPS, etc.) cited; mix to non‑apparel Cost pressure mitigated but persistent
Tariffs/MacroTariffs not expected to impact margins in H2 FY25 Small GM impact; supplier negotiations/diversification mitigated Managed/contained
Product performanceReturn to YoY growth; RPAC +4.3% in Q2; men’s channel durable growth engine Fix AOV +12% YoY; AUR +7.6% YoY; women’s footwear +35%, wide‑leg denim, skirts; men’s double-digit growth (Adidas, Tommy Bahama, Marine Layer) Broadening category strength
Client acquisition/retentionRPAC increases; methodical rebuild of client base Active client YoY comp improved 5 consecutive quarters; Q1 active clients ~flat to −0.5% QoQ; inflection expected in Q3 FY26 Improving engagement trajectory
Legal/regulatoryn/aNon‑ordinary legal fees incurred in Q4; ~$4.2M expected FY26 New headwind

Management Commentary

  • “We closed out fiscal year 2025 with a strong Q4, delivering 4.4% adjusted revenue growth… Revenue of $311.2 million exceeded our guidance… Adjusted EBITDA was $8.7 million” — Matt Baer, CEO .
  • “Fix average order value grew 12% year over year… AUR was up 7.6% year over year… Both our women’s and men’s lines accelerated revenue growth in Q4” .
  • “Over the last three years, we have removed almost $500 million in SG&A spend, going from 53.1% of sales to 47.5%” — David Aufderhaar, CFO .
  • “For full year FY26, we expect total revenue $1.28 billion to $1.33 billion… adjusted EBITDA $30 million to $45 million… gross margin 43% to 44%… and advertising 9% to 10%” — CFO .
  • “Our differentiated business model of expert stylists, proprietary data and algorithms, and generative AI innovations position Stitch Fix to uniquely serve clients” — CEO .

Q&A Highlights

  • Tariffs vs pricing/AOV: Management stated none of the AUR (+7.6% YoY) or AOV (+12% YoY) improvement was attributable to tariffs due to mitigation efforts by the tariff task force .
  • Market share and holiday: Company continues to gain share, planning to lean into holiday with themed Fixes, family accounts enabling gifting, Vision and Stylist Connect engagement, and improved CRM/promotional capabilities .
  • Active client trajectory: CFO guided Q1 active clients ~flat to −0.5% QoQ, with quarter-over-quarter net adds expected in Q3 FY26 as cohorts mature and re‑engagement improves .
  • Gross margin drivers: Higher transportation costs and non‑apparel mix shift were cited; tariffs impact small due to supplier negotiations/diversified sourcing .

Estimates Context

  • Q4 2025 S&P Global consensus: Revenue $307.1M*, Primary EPS −$0.10*; Actuals: Revenue $311.2M, EPS −$0.07 — both beats; EBITDA consensus $6.7M* vs actual adjusted EBITDA $8.7M, noting differences in definition (SPGI EBITDA vs company’s adjusted EBITDA) .
  • Ongoing estimate recalibration likely: Better-than-guided revenue/AEBITDA and FY26 return-to-growth outlook may drive upward revisions to near-term revenue and EBITDA; gross margin expectations may temper due to carrier costs (43%–44% FY26 guide) .

Values retrieved from S&P Global.*

Key Takeaways for Investors

  • Near-term: Revenue and EPS beats, plus FY26 growth outlook and holiday product/feature pipeline are positive catalysts; watch carrier rate trends and gross margin sensitivity .
  • Engagement quality rising: RPAC up for six consecutive quarters; AOV and AUR strength suggest healthier cohorts and effective assortment strategy .
  • Innovation moat: Vision, AI assistant, Stylist Connect, and family accounts deepen personalization — potential to lift conversion and frequency into holiday and FY26 .
  • Cost discipline intact: SG&A structurally lower; adjusted EBITDA expansion YoY despite gross margin pressures; cash/investments $242.7M and no debt provide flexibility .
  • Risks: Gross margin exposed to transportation rates and mix shift; active clients still declining YoY; legal fees (~$4.2M in FY26) and comp mix shift may weigh on adjusted EBITDA optics .
  • Trading lens: Expect estimate revisions reflecting beats and growth guide; stock likely sensitive to holiday execution (men’s/women’s non‑apparel momentum) and visibility to client growth inflection in Q3 FY26 .
  • Medium-term thesis: If AI-driven personalization and stylist connectivity sustain AOV/RPAC gains while transportation/tariff headwinds are contained, SFIX can compound gross profit dollars and leverage SG&A, supporting profitable growth and FCF .

Appendix: Additional Data Points

  • Operating metrics: Active clients 2,309k; RPAC $549; inventory $118.4M (+20.9% YoY) to support larger Fixes .
  • Cash/Investments: Quarter-end cash, cash equivalents, and investments $242.7M; no debt .
  • Free cash flow: Q4 FCF $2.8M; FY25 FCF $9.3M .
  • Non-GAAP reconciliations: Provided for adjusted EBITDA and FCF .