SFIX · Stitch Fix, Inc.

Stitch Fix reported Q3 FY2026 revenue of $340.3 million, up 4.7% year-over-year, surpassing the implied guidance range from the prior quarter. The company achieved its fifth consecutive quarter of adjusted revenue growth, driven by improvements in client experience and assortment. Active clients grew 0.9% sequentially to 2.309 million, marking the first quarter-over-quarter increase after several periods of decline, signaling stabilization in the subscriber base. Net revenue per active client increased 6.6% to $578, reflecting higher average order values and better client engagement. Gross margin of 43.7% declined 50 basis points year-over-year due to product mix shifts and higher transportation costs, though within the expected range. Operating expenses remained disciplined, with SG&A only modestly up, leading to a net loss of $1.5 million versus a $7.4 million loss a year ago. Adjusted EBITDA came in at $13.2 million (3.9% margin), well above the prior quarter's implied outlook. The company generated $11.8 million in operating cash flow and $6.5 million in free cash flow, and continued share repurchases, buying back 4.5 million shares for $15.1 million. Guidance for Q4 FY2026 calls for revenue of $322-$327 million (3.5%-5.1% YoY growth) and adjusted EBITDA of $7-$10 million, implying margin compression from Q3 levels. The full-year FY2026 outlook was raised: revenue now expected at $1.346-$1.351 billion (6.2%-6.6% YoY growth) and adjusted EBITDA of $49-$52 million (3.7%-3.9% margin). Management also guided gross margin between 43% and 44% for the full year, with advertising spend as a percentage of revenue in the 9%-10% range. The company expects to be free cash flow positive for the full year. Overall, results demonstrate consistent execution of the turnaround strategy, with stabilization in client trends and profitability improvements. The sequential active client growth is a key positive sign, supporting the narrative that the company's investments are resonating with consumers. However, Q4 guidance suggests a seasonal slowdown and continued margin pressure, keeping the focus on sustainable revenue growth and cost discipline in a dynamic retail environment.