Stitch Fix (SFIX) Q2 2025 earnings summary

Executive summary

• Q2 FY25 net revenue was $312.1M, down 5.5% year-over-year, but above guidance, with adjusted EBITDA of $15.9M and a net loss narrowed to $6.6M.

• Gross margin improved to 44.5%, up 110 basis points year-over-year, driven by higher average order values and product margins.

• Active clients declined 15.5% year-over-year to 2.37M, but revenue per active client increased 4.3% to $537.

• Men's business and Freestyle channel returned to year-over-year revenue growth, while transformation strategy and cost actions drove improved results.

• SG&A expenses decreased 18.5% year-over-year, reflecting restructuring and cost reductions.

Financial highlights

• Adjusted EBITDA was $15.9M (5.1% margin), up from $4.4M a year ago; free cash flow was -$19M for the quarter.

• Ended Q2 with $229.8M in cash, cash equivalents, and investments, and no debt.

• SG&A as a percentage of revenue was 47.4% for the quarter, down from 54.9% a year ago.

• Net inventory at $109.6M, down 13% year-over-year and 8% quarter-over-quarter.

• No share repurchases during the quarter; $120M remains authorized.

Outlook and guidance

• FY25 revenue expected between $1.225B and $1.240B; adjusted EBITDA between $40M-$47M.

• Q3 revenue guidance: $311M-$316M; adjusted EBITDA: $7M-$10M.

• Gross margin for Q3 and full year expected at 44%-45%; advertising at the high end of 8%-9% of revenue.

• Management expects continued challenges in acquiring and retaining active clients, impacting revenue.

• Guidance assumes tariffs will not impact client prices or margins in the second half.