Stitch Fix Q2 FY2026 Earnings Call - AI and assortment upgrades fuel 9.4% revenue growth and margin leverage

Operator: Hello, everyone. Thank you for joining us, and welcome to the Stitch Fix second quarter fiscal year 2026 earnings call. After today’s prepared remarks, we will host a question and answer session. If you would like to ask a question, please press star one on your telephone keypad. To withdraw your question, please press star one again. I will now hand the call over to Cherryl Valenzuela, Head of Investor Relations. Please go ahead.

Cherryl Valenzuela, Head of Investor Relations, Stitch Fix: Good afternoon, and thank you for joining us today for the Stitch Fix second quarter fiscal 2026 earnings call. With me on the call are Matt Baer, Chief Executive Officer, and David Aufderhaar, Chief Financial Officer. We have posted complete second quarter 2026 financial results in a press release on the quarterly results section of our website, investors.stitchfix.com. We would like to remind everyone that we will be making forward-looking statements on this call which involve risks and uncertainties. Actual results could differ materially from those contemplated by our forward-looking statements. Reported results should not be considered as an indication of future performance.

Please review our filings with the SEC for a discussion of the factors that could cause the results to differ, in particular, our press release issued and filed today, as well as our annual report on Form 10-K for fiscal 2025 and subsequent periodic reports filed with the SEC. Also note that the forward-looking statements on this call are based on information available to us as of today’s date. We disclaim any obligation to update any forward-looking statements except as required by law. Please note that fiscal 2024 was a 53-week year due to an extra week in the fourth quarter. As such, references to consecutive quarters of year-over-year revenue growth rates on this call are based on an adjusted 52-week basis, removing the impact of the extra week to provide a comparison that we believe more accurately reflects our performance.

During this call, we will discuss certain non-GAAP financial measures. Reconciliations to the most directly comparable GAAP financial measures are provided in the press release on our investor relations website. These non-GAAP measures are not intended to be a substitute for our GAAP results. Finally, this call in its entirety is being webcast on our investor relations website, and a replay of the call will be available on the website shortly. Now let me turn the call over to Matt.

Matt Baer, Chief Executive Officer, Stitch Fix: Thanks, Cherryl, and good afternoon, everyone. Q2 was another strong quarter, marked by our fourth consecutive quarter of year-over-year revenue growth. We continue to successfully execute our transformation strategy and are seeing the cumulative impact of those efforts to both strengthen the foundation of our business and reimagine our client experience. The enhancements we’ve rolled out over the past 18 months, including greater flexibility, meaningful improvements we’ve made to the quality and breadth of our assortment, and new AI features are driving increased client engagement and durable revenue growth. As a result, we are solidifying our position in the market and our role as our clients’ retailer of choice for apparel, footwear, and accessories.

Getting into the specific numbers, revenue exceeded our outlook and grew 9.4% year-over-year to $341.3 million, supported by broad-based demand that remained resilient across all income cohorts. Revenue per active client reached $577 in Q2, our highest revenue per active client as a public company. We achieved this growth while driving leverage in our business. Q2 was our eighth consecutive quarter with a contribution margin greater than 30%. Adjusted EBITDA also exceeded our outlook and was $15.9 million or 4.7% of revenue. We also continued to gain market share and significantly outperform the broader U.S. apparel and accessories market during the quarter, highlighting the strength of our value proposition.

Our 9.4% year-over-year revenue growth in Q2 contrasts with the 0.5% contraction the total U.S. apparel, footwear, and accessories market sustained in the same period, according to the latest Circana data. Our growth this quarter was anchored by the Fix channel. By leveraging our unique curation capabilities and expert stylists, we’ve leaned into head-to-toe outfitting and strategic category expansion. This high touch approach is resonating deeply. Both our women’s and men’s Fix businesses grew double digits, contributing to a nearly 10% year-over-year increase in Fix average order value, our tenth consecutive quarter of growth. A key driver of this performance is the increased flexibility we’ve integrated into our service. Adoption of our larger Fixes, which offer up to eight items in a Fix versus the original five, continues to grow.

We are also seeing high resonance with other newer formats, such as themed Fixes and Fixes built around a specific Freestyle item of a client’s choosing. The average order value for these Fixes are, in aggregate, nearly double that of a traditional five-item Fix. We have also fundamentally improved the selection of items within each Fix. The growth in Fix average order value was driven by higher average unit retail, which grew 7.7% year-over-year, our sixth consecutive quarter of growth. The increase was largely fueled by a more compelling assortment and favorable mix. External pricing factors, including tariffs, were not a significant driver of the change. In Q2, we successfully captured seasonal winter demand for warm layers with outerwear, a top growth category in both our women’s and men’s businesses, up 26% combined. We also saw strong demand for denim, up 17%.

In addition, activewear and athleisure were strong contributors to our performance in the quarter, growing 37% year-over-year combined. We also saw strong demand for special occasion and social events or night out styles, which grew 46% this quarter. Of note, we have also been expanding our assortment in strategic categories where we are seeing increased demand, such as footwear and accessories. Footwear grew 33% year-over-year across our men’s and women’s businesses, with sneakers alone up 46%. Accessories grew 51% year-over-year across both lines of businesses. As we mentioned last quarter, we believe expanding our relevance in activewear, athleisure, footwear, and accessories can unlock a significant wallet share opportunity. We estimate our fair share within our existing client base in these categories represents approximately $1 billion in incremental revenue. We also continue to optimize our brand mix.

We’re pairing more of the brands clients already know and love with private brands that are purpose-built from our data to offer exceptional quality and value. Within our private brands, we saw strong performance from Market & Spruce, Montgomery Post, 41 Hawthorn, and WeWander, with revenue from each up more than 35% year-over-year. The work we’ve done to optimize our assortment and brand mix set the stage for a strong holiday performance. This achievement was fueled by a deeper selection of seasonally relevant merchandise and a strategic promotional cadence, which delivered record Freestyle sales during the Black Friday/Cyber Monday period and sustained broader momentum through the end of the calendar year. Importantly, we achieved this growth while maintaining strict discipline within our Fix Business, driven primarily by our enhanced Freestyle exclusive promotional capabilities. We continue to be encouraged by our active client trends.

This quarter marked our seventh consecutive quarter of improvement in year-over-year active client growth rates, reflecting the disciplined and methodical progress we’re making to build a healthier client base. Of note, our men’s business, after returning to sequential growth in active clients last quarter, returned to year-over-year growth in Q2. We’re also excited by the early results we’re seeing from family accounts, which enable a client to manage multiple accounts within a single household. This feature is emerging as a lower cost way to grow family wallet share while unlocking new ways for clients to shop for others and supporting gifting behavior. Our holiday results reinforce our confidence in its potential as an efficient acquisition lever in future key gifting moments. Taking a broader view of our performance, we ended Q2 with active clients of 2.3 million, in line with our expectations.

Here are a few highlights. New clients grew year over year for the second consecutive quarter. Three-month LTVs for new clients have now grown year over year for 10 consecutive quarters and remain at 3-year highs. Re-engaged clients also grew for the second consecutive quarter, and the number of clients on recurring shipments continued to grow year over year. We also just completed a quarter in which we had the highest retention rate in nearly 4 years. We are encouraged by the early signals from Stylist Connect, our new platform for near real-time client stylist collaboration. While still a recent addition, it is already helping us strengthen relationships between our clients and our stylists. Clients who engage in the feature are significantly more likely to request the same stylist for their next Fix.

We believe these positive trends confirm the improved quality of our new and returning client cohorts and will lead to greater client retention, higher revenue predictability, and improved profitability over the long term. We remain on track to deliver positive sequential net adds in Q3. A key driver of our performance is how we are leveraging technology and innovation, and AI specifically. Technology and innovation has been at the core of Stitch Fix’s business since day one. Since our founding, Stitch Fix has capitalized on the latest technology advancements as well as data science and proprietary algorithms to provide a superior retail experience. Our proprietary data and algorithms remain a competitive advantage. We know more about our clients, their fit, their budget, and their style preferences prior to them ever receiving a fix.

We also have a continuous loop of both direct and indirect data from our clients, as well as nuanced insight on our merchandise assortment on how specific items fit. We have billions of data points to leverage. Because we know our clients so well, we are able to leverage AI to deliver incomparable client experiences. One way we are putting this data to work is through our AI Style Assistant, which empowers our stylists by helping clients better articulate what they’re looking for. This tool captures richer signals that enable our stylists to curate fixes that better meet each client’s specific needs. We are also leveraging AI to inspire clients and help them discover the styles they will love.

A clear example is Stitch Fix Vision, our AI-powered styling platform that provides clients with personalized imagery of them in a wide array of shoppable head-to-toe outfit recommendations based on their own style profile and the latest fashion trends. Clients who have engaged with Vision use it on a consistent basis, with 75% returning to use it again in subsequent months. That engagement has translated into increased sales. We saw an over 100% lift in Freestyle spend over a 90-day period for clients who used the feature. As we further execute our strategy, we’re confident in our ability to maintain a balance between growth and profitability. Our unique data-driven model, which combines personalized styling expertise, AI-powered recommendations, and a compelling assortment across Fix and Freestyle, enable us to meet clients where they are while driving both engagement and spend.

This integrated approach creates a powerful feedback loop between human insight and technology, strengthening client relationships and improving unit economics over time. The investments we’re making in our client experience, AI capabilities, and merchandise mix are designed to drive durable revenue growth while preserving margin integrity. These strategic drivers are performing in line with our expectations, supporting our improved full-year revenue guidance as we remain focused on finishing the year strong. As the business continues to scale, we believe we will be able to generate increasing leverage and deliver consistent, sustainable profitability over time. I want to thank our team for their focus and execution, and our clients, partners, and shareholders for their support. With that, I’ll turn it over to David to discuss our financial results and outlook in more detail.

David Aufderhaar, Chief Financial Officer, Stitch Fix: Thanks, Matt, and good afternoon, everyone. Our second quarter results reflect continued progress against our strategy and the momentum we’re building across the business. We delivered strong revenue growth and disciplined expense management while continuing to invest in the client experience and innovation. These results underscore the benefits of our methodical approach to strengthening the business and positioning Stitch Fix for consistent and sustainable performance over time. Now let’s turn to the numbers. Revenue was $341.3 million, up 9.4% year-over-year, exceeding our outlook. Fix Average Order Value rose 9.8%, driven by more items per fix and higher AUR, reflecting strong demand for larger fixes and our improved assortment. We ended Q2 with 2.3 million active clients, in line with our expectations.

Revenue per active client was $577, up 7.4% year-over-year, marking the eighth consecutive quarter of year-over-year growth and the highest RPAC we’ve reported as a public company. The growth in RPAC confirms that our strategy is effectively leading to increased client engagement and spend, ultimately driving a higher share of wallet from our clients. Gross margin was 43.6%, slightly above the midpoint of our FY26 range of 43%-44%, with contribution margins remaining strong above 30% for the eighth straight quarter. Advertising was 8.5% of revenue in Q2, slightly below our expected range of 9%-10%. As we’ve discussed, we are being deliberate in how we invest, prioritizing efficiency and long-term client quality over near-term volume.

Q2 Adjusted EBITDA came in at $15.9 million or 4.7% margin, outperforming expectations on strong revenue and disciplined expense management. We ended Q2 with $240.5 million in cash and investments and no debt. Inventory was $122.1 million, up 11.4% year-over-year, reflecting investments in our client experience and increased demand. Turning to our outlook for Q3 and FY26. For full year FY26, we expect total revenue to be between $1.33 billion and $1.35 billion. We expect total Adjusted EBITDA for the year to be between $42 million and $50 million, and we continue to expect to be free cash flow positive for the full year.

For Q3, we expect total revenue to be between $330 million and $335 million. We expect Q3 Adjusted EBITDA to be between $7 million and $10 million. For the second half of the year, we’re tightening our revenue guidance range, reflecting greater confidence in the underlying momentum we’re seeing while continuing to be thoughtful and realistic about the environment ahead. While we expect growth rates to moderate as we lap a strong two-year AOV stack, we believe there remains opportunity to continue driving steady AOV improvement. Ongoing enhancements to our client experience, including a stronger, more relevant assortment, continued category expansion, increased fixed flexibility, and the use of AI to support more dynamic client engagement, provide a durable foundation for that progress. At the same time, we believe our methodical approach to rebuilding our active client base is working.

We’re encouraged by continued improvement in active client trends and remain confident that sequential net active client adds will be positive in Q3. Over time, as both AOV and active clients improve, we believe this positions the business for compounding growth. We continue to expect full-year gross margin to be approximately 43%-44% and full-year advertising costs to be between 9% and 10% of revenue. In closing, we’re encouraged by the progress we’re making across the business. Our focus on delivering a strong client experience, rebuilding our active client base with discipline, and maintaining financial rigor is driving improved performance and positioning us well for the remainder of the year. With that, operator, we can open up the line for Q&A.

Operator: We will now begin the question-and-answer session. Please limit yourself to one question and one follow-up. If you would like to ask a question, please press star one on your telephone keypad. To withdraw your question, please press star one again. Please pick up your handset when asking a question. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from the line of Dana Telsey from Telsey Advisory Group. Please go ahead.

Dana Telsey, Analyst, Telsey Advisory Group: Hi, everyone. Nice to see the progress. Wanted to get some more color on what you’re seeing from the current consumer. It sounds like the AURs are being well accepted. Is that existing brands, new brands? You’ve brought on new brands over the past couple months. How has that gone? Would love to know more about active client growth and sequentially how you’re thinking about it going forward. Thank you.

Matt Baer, Chief Executive Officer, Stitch Fix: Hey, Dana, it’s Matt. Appreciate the recognition on the progress that we’ve made. The team has done a phenomenal job driving this really continued outperformance from a revenue growth standpoint, so appreciate that. I heard about three questions there, just a kind of a check in terms of how we’re seeing the consumer and how that has impacted our AUR performance, the impact between private brands and national brands, and then kind of an update on our active client count. I’ll answer the first two, and David can jump in with additional color as well as answer the third on the active client count piece.

In terms of the consumer, one of the things that gives us additional confidence in our ability to continue to perform and sustain this momentum is that we’re seeing really equally positive performance across all different income cohorts within our client base. We’re seeing that strength really across the board. The increase in AUR that we’ve been able to deliver is really reflective of continuing to improve the quality of our assortment overall. Within our private brand portfolio, we’ve really been investing to deliver an even higher quality product but maintaining exceptional value for the end consumer, and our clients have really resonated with that. That’s why we were excited to share the outsized growth that we’re seeing within many of our private brands within our portfolio.

We also continue to strategically add market and national brands in order to meet the needs of our clients and fill white space. In addition to the brand piece, something else that we’ve talked about on prior calls that’s part of our merchandise-focused transformation is investing in newness and making sure that we stand for style and trend. In the second quarter, sales from new styles was up roughly 50% year-over-year. That investment that we’re making into new product is also resonating extremely well with our clients. As you know, having the best assortment is critical for delivering outperformance and revenue growth. We really do feel good about the work that we’ve done there and the way that it’s helping to drive that performance across the board.

David Aufderhaar, Chief Financial Officer, Stitch Fix: Dana, on active clients, first, the results we saw this quarter were definitely in line with our expectations. Sort of as a reminder, we have seasonality really in our active clients, where Q2 and Q4 tend to be, you know, a little bit seasonally softer quarters for us around active client growth. And certainly encouraged by being able to continue to commit to seeing, you know, sequential client growth in Q3, and we’re confident we remain on track to do that. You know, size and shape, we’re just returning to quarter-over-quarter growth, so we probably anticipate that Q3 client growth to be a little less than 1% quarter over quarter, but again, encouraged with those results.

Taking a step back, you know, we continue to be encouraged with the overall trends that Matt called out earlier in his remarks around new client acquisition, re-engaged clients, and client retention. That really goes back to that methodical approach that we’ve been talking about the last few quarters, where we’re really focused on rebuilding a healthy client base, and that continues to be our focus. You know, one of the metrics I know we’ve been calling out a lot lately is that 90-day LTV, and that was up 5% year-over-year. It was the 10th quarter in a row that we’ve seen year-over-year growth. Just really confirming that we’re bringing healthy clients into the mix. From a go-forward perspective

You know, we’ll provide more detail on specific numbers around Q4 next quarter, but our focus continues to be around sustainable, profitable client growth, and using that methodical approach. We absolutely expect, you know, year-over-year comps to continue to improve. Our goal is to return to year-over-year active client growth in FY27. Definitely encouraged with the results we’re seeing.

Dana Telsey, Analyst, Telsey Advisory Group: Thank you.

Operator: Thank you very much for your question. Your next question comes from the line of Dylan Carden from William Blair. Dylan, your line is now open.

Dylan Carden, Analyst, William Blair: Thanks. The comments around revenue per decelerating as you lap harder comparisons. I mean, you already kind of started to lap some of those comparisons, so can you give a sense sort of what’s behind that, or is that just sort of general caution? I have a couple follow-ups.

David Aufderhaar, Chief Financial Officer, Stitch Fix: Yeah. Dylan, are you talking about sort of the back half revenue comps?

Dylan Carden, Analyst, William Blair: Right.

David Aufderhaar, Chief Financial Officer, Stitch Fix: Yeah, got it. Yeah. So, you know, over the last couple quarters, I think we’ve consistently guided to a deceleration in the back half of the year, and actually this back half guide is an improvement from last quarter’s guide. There are a couple factors that I’d call out. You know, first is what we have been discussing the last couple of quarters. There are just more challenging AOV comps in the back half of this year. You know, we’ve had 10 consecutive quarters of AOV growth, and Q3 and Q4 last year had AOV growth of 10% and then 12%. Our guidance in the back half of this fiscal year still assumes healthy AOV growth, but it’s probably in the 4%-6% range. That’s the first factor.

The second, when you think about sort of Q2 to Q3, we had a really strong holiday season compared to last year in Q2, and that doesn’t necessarily play forward into future quarters. Like one data point there, December was our highest revenue comp in the quarter at around 12% year-over-year growth. And that’s also, you know, the holiday period also created probably a little bit of a pull forward activity from Q3 into Q2. Then lastly, you know, considering the macro environment and current trends in consumer sentiment and some of the volatility that we’re thinking, we still think it’s prudent to assume some headwinds in spending in the coming quarters. All of that’s factored into our guide for the year.

Again, we’re really encouraged with what we’re seeing, and we’re really encouraged with the guide that we’ve been able to provide, where we raised the low end of the full year of the revenue guide. After significantly increasing our full year guide last quarter, you know, if, as a reminder, sort of if you take the last two quarters and add them together, we’ve raised the midpoint of our revenue guide by about $35 million over those two quarters, and our EBITDA by almost $9 million. Still really encouraged with what we’re seeing with those trends.

Dylan Carden, Analyst, William Blair: Very good. Thank you. I’m curious on the assortment, Matt, maybe. Do you kind of have it where you want it now, particularly as you start thinking about maybe the women’s business that inflects?

Matt Baer, Chief Executive Officer, Stitch Fix: Yeah. Hey, hey, Dylan. I appreciate the question. Ensuring that we have best in class assortment, that’s a perpetual area of focus for us. We’re always gonna challenge ourselves to make sure that we have the right brands, the right mix, the right breadth and depth within that, and we’re always gonna continue to drive an improvement there. As we’ve talked about previously, the initial focus as part of our transformation was more heavily weighted towards our men’s business. We feel really good about where we are there, and we also feel great about the progress that we’ve made across the board within our women’s business.

David Aufderhaar, Chief Financial Officer, Stitch Fix: As I noted, our women’s Fix business was up double digits from a revenue perspective last quarter, which is, you know, really a strong signal in terms of the strength there. But also recognition that we still have opportunity to improve that assortment even further, which gives us even greater confidence in our ability to sustain the gains that we’re seeing across the board. In addition to that, I would just point us back to something that was in the prepared remarks and that we’ve talked about previously around this billion-dollar wallet share opportunity that we have with our existing client base across footwear, accessories, activewear, and athleisure. We’re delivering outsized growth in those categories, but because of the relatively smaller base that they started at, we still have an exceptional opportunity to continue to lean in there.

That’s part of, again, what enables us to increase engagement with clients, deliver success with larger fixes, increase our wallet share, and ultimately continue to deliver these outsized market share gains that we’ve delivered.

Dylan Carden, Analyst, William Blair: Excellent. Just last one on the repeat customers that are some of the higher that you’ve seen. Is that proven out to be greater wallet share across use cases? Is that just sort of spending more on existing categories? How should we think about kind of how people are coming to you more and more?

Matt Baer, Chief Executive Officer, Stitch Fix: If I understand the question correctly, Dylan, the work that we do is to ensure that we are able to serve clients across a variety of use cases, and whatever use case that a client comes to us for example, if they’re starting a new job and we need to update their wardrobe with the appropriate workwear, through that client stylist relationship, we’re also able to navigate them to other use cases. It’s why we’re excited to share in the prepared remarks the success that we’ve seen, for example, in social occasion dressing and in nights out. And you know, that’s also why we’re seeing that outsized growth in activewear and athleisure as well.

David Aufderhaar, Chief Financial Officer, Stitch Fix: Because we have such great assortment across the board for all of these different use cases, that expansion of use cases with our clients continues to be one of the drivers that’s helping propel the revenue growth. We’re gonna continue to lean into that, as well as continue to lean into head-to-toe outfitting across footwear and accessories.

Operator: Thank you very much for your question. Your next question comes from the line of Jessica Tian from Bernstein. Jessica, your line is now open.

Jessica Tian, Analyst, Bernstein: Hi. Thank you for taking my question, and congrats on the quarter. I had a two-part question on the guide. First on the H2 guide, it looks like the Q2 beat on Adjusted EBITDA didn’t fully flow through to the full year outlook. Should we read that primarily as conservatism on your part, or is there anything in the underlying margin trends that caused you to hold back some of that upside? Second, on the Q3 active client inflection, sequential inflection, with new clients growing year-over-year for the second consecutive quarter and five-year low dormancies last quarter, can you talk about what’s driving the expected sequential increase in the adds? Should we think about that improvement as coming more from reduced dormancy, or is it coming more from new clients? Thank you.

David Aufderhaar, Chief Financial Officer, Stitch Fix: Yeah. Thanks, Jessica. On the EBITDA guide, I think we’re really encouraged with increasing, you know, even the full year guide. If you look at the full year guide, I think we increased the low end of the guide by around $4 million and the high end of the guide by $2 million. You know, definitely still feel like we’ve got a very healthy flow through of EBITDA for the year. On the active clients on sort of the sequential, you know, I think Matt might have called out in some of his prepared remarks as well, but we’re really seeing strength across all three of those, you know, cohorts that we tend to call out. You know, new acquisition was up year-over-year for the second quarter in a row.

Re-engaging clients was up for the second quarter as well, from a year-over-year perspective. Client retention is definitely looking healthier than it’s been in quite a long time. I think that is a big part of our focus is that client retention side, and it almost comes back to that full loop of making sure that we are bringing in those high LTV clients, you know, that engage with the service. Also for our existing client base, all of the new client features, the, you know, improvement assortment that Matt called out as well, all of those things, you know, just create stickier relationships from a client perspective as well.

All three of those things are sort of trending in the right direction, and that’s why we’ve felt comfortable really calling out that sequential improvement and the sequential quarter-over-quarter increase in Q3.

Operator: Thank you very much for your question. We will now move on to the next question from David Bellinger from Mizuho. David, your line is now open.

David Bellinger, Analyst, Mizuho: Hey, everyone. Thank you. I want to ask on the Q3 guidance, revenue growth up something above 2% at the midpoint. I think if I’m hearing you correctly, a lot of that deceleration from this quarter has to do with the lapping positive revenue growth last year, some of the AOV uptick. Is there anything else that explains the deceleration? Any other context around the external pressures that you’ve started to factor into the guidance? You got gas prices moving up. Is any of that starting to show up in the business? Can you just remind us how gas prices moving higher has historically affected Stitch Fix?

David Aufderhaar, Chief Financial Officer, Stitch Fix: Yeah, David. I think outside of, you know, we called out the AOV comps earlier, you know, and that is certainly probably the bigger factor around sort of the change quarter to quarter. I think the second call-out was really the holiday period. You know, we had a really strong holiday period this Q2, and so I think that’s a big part of sort of when you just think about the sequentials, where that’s not necessarily something that plays forward. On the macro side, you know, definitely when you know when you see the consumer sentiment, where it is, the February jobs report, gas prices certainly going up, you know, and gas prices for us, that’s, you know, that’s not discretionary spend.

If someone’s having to spend more on gas, that just means less in their wallet for discretionary spend like apparel. Certainly those things, you know, we’ve taken into account in that back half guide. You know, the other thing that you can see though is that, you know, because the point in time where we are this year, you can sort of back into a Q4 guide as well. You know, we’re really encouraged that, you know, between Q3 and Q4, you still see an acceleration in that revenue growth as well at the midpoint, where the midpoint in Q4 calculates to something closer to four percent. So definitely really encouraged with that as we close out the year.

Matt Baer, Chief Executive Officer, Stitch Fix: David, what I’ll add as well is while not to minimize the impact of gas or challenges on the consumer and the broader macro environment, something that we’ve talked about previously is just how we’re uniquely situated to perform really well, you know, if and when the overall wallet for our clients shrink. Our clients and stylists have a very deep and enduring relationship. That allows them to have a real conversation around how budgets might be shifting month to month, week to week, quarter to quarter. We have the breadth and depth of assortment across all different price points, so we can meet our clients where they are at any given time, and we continue to see us, you know, perform relatively well in those periods where the consumer is potentially challenged.

That’s what gives us so much confidence that, you know, wherever the overall market goes, we’ll continue to be a market share gainer.

David Bellinger, Analyst, Mizuho: Very helpful. My second question, I wanna ask about GLP-1 usage. That seems to be a relatively new and positive customer driver. Can you help frame up any exposure to the business? Are these customers more sticky, more engaged, and can you simply get more of them as GLP-1 usage becomes increasingly popular? Thank you.

Matt Baer, Chief Executive Officer, Stitch Fix: Yeah, David, I appreciate that question as well. Again, the uniqueness of our service and that superior level of service that we provide each of our clients positions us extremely well to serve clients going through a body transformation. We’ve made it a real point of emphasis to market that capability of our service. We’re out in market and have been for a while, explaining to consumers that are potentially on a GLP-1 medication that as their body transforms, they have the ability to work with a personal stylist to help ensure that they have everything that they need so that they can dress in clothing that fits at each stage of that weight loss journey that they’re on.

We’ve seen really positive results in terms of how that’s helping them improve their confidence, how that’s helping them improve their ability, you know, to get dressed and outfit themselves on a daily basis. We’ve seen that also show up in our data as well. A client mentions of weight loss in their Fix request notes, as an example, has tripled over the last two years, and it’s actually surged 75% year-over-year just this past quarter. You know, what that tells me is that the work that we’ve been doing to improve the segmentation and targeting within our marketing capabilities is working extremely well, and that the quality and superiority of our service is really resonating with those clients.

We’ll continue to lean in, and we’ll continue to serve that demographic at a really high level.

Operator: Thank you. There are no further questions at this time. I will now turn the call back to Matt Baer, CEO, for closing remarks.

Matt Baer, Chief Executive Officer, Stitch Fix: Thanks. To wrap up, as I said, we’re incredibly pleased with the strong results we delivered this quarter and the improved guidance that we shared for the back half of the year. We believe we’re uniquely positioned to lead in this moment of AI innovation, and that’s because of just how seamlessly data science and AI are integrated into our business, how deeply and personally we know our clients, and how holistically we’ve integrated our expert stylists. Due to the significant improvements we’ve made to our experience and assortment through our transformation, we’re capturing increased market share and outperforming the broader apparel retail market. We’re also building a stronger client base. That’s with seven consecutive quarters of improving year-over-year active client trends and also, as we noted, the expected sequential growth in active client count in the third quarter.

We’re confident the growth in our business will continue and that this growth will be sustainable. Important to note that since the start of our transformation, we’ve improved our contribution margins more than 500 basis points, and we’ve maintained contribution margins above 30% for the last 2 years. I appreciate everyone’s interest in our business and look forward to sharing future updates with each of you in the future.

Operator: This concludes today’s call. Thank you for attending, and you may now disconnect.