Stitch Fix raises FY outlook after Q3 revenue beats by $6.8M

Stitch Fix reported Q3 revenue of $340.3 million, topping estimates by $6.8 million, as Fix order values and client trends improved. The San Francisco-based company narrowed its net loss to $1.53 million, or 1 cent a share, from a loss of $7.38 million, or 6 cents a share, a year earlier. Analysts had expected a loss of 6 cents a share.

"The results show that improvements we have made to our customer experience and assortment are resonating," Chief Executive Matt Baer said. The company's active client base grew sequentially, he noted.

Revenue rose 4.7% from a year earlier, while net revenue per active client climbed 6.6% to $578. Stitch Fix ended the quarter with 2.31 million active clients, up 0.9% from the prior quarter but down 1.9% year over year. The company attributed the improvement to better Fix order values and continued expense discipline.

Stitch Fix raised its full-year adjusted EBITDA forecast to $49 million to $52 million, up from a prior range of $42 million to $50 million. It also lifted the midpoint of its revenue outlook to roughly $1.35 billion, compared with earlier guidance of $1.33 billion to $1.35 billion. For the current quarter, the company forecast adjusted EBITDA of $7 million to $10 million on sales of $322 million to $327 million, bracketing the consensus estimate of $7.7 million and $323.7 million, respectively.

The guidance raise indicates management expects the operational improvements to sustain through the fiscal year end. Investors will watch the Q4 earnings call for further evidence that the active client base can return to year-over-year growth.

This article is for informational purposes only and does not constitute investment advice.