Stitch Fix, Inc.

Good day, everyone, and welcome to the Stitch Fix third quarter 2021 earnings call. Today's conference is being recorded. At this time, I'd like to turn the conference over to Mr. David Pierce, Vice President of Investor Relations. Please go ahead, sir.

Thank you for joining us on the call today to discuss the results for our third quarter of fiscal 2021. Joining me on today's call are Katrina Lake, founder and CEO of Stitch Fix, Elizabeth Spalding, President, and Dan Jetta, CFO. I would also like to mention that we are joining you remotely today from our home offices. We have posted complete Q3 financial results in a press release posted on the IR section of our website, investors.stitchfix.com. And starting this quarter, we will not be issuing a shareholder letter. A link to the webcast of today's conference call can also be found on our site. 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. 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. 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 IR 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 IR website, and a replay of this call will be available on the website shortly. I'd now like to turn the call over to Katrina.

Thanks, David, and thank you for joining us. After the market closed today, we issued a press release with details on our quarterly performance and outlook. As you'll hear on today's call, we delivered strong third quarter results with active client growth accelerating to 20% year over year and outperformance across net revenue and adjusted EBITDA. This was a function of strong demand and improved client outcomes across both our fixed and direct buy offerings and was reinforced by an improving apparel retail market backdrop. As Elizabeth will discuss later, we continue to roll out new product features in Q3 to enhance both offerings and drive greater client adoption. We believe these new experiences drove momentum in the quarter, which will continue in Q4 as we capitalize on the demand strength and relevance of our fixed offering and introduce direct buy to new clients by the end of the quarter. Now let me discuss our Q3 results in more detail. In the third quarter, we generated net revenue of $536 million, reflecting 44% growth year-over-year. During the quarter, we grew our active client count to over 4.1 million, representing a year-over-year increase of 689,000 clients or 20% growth. And on a quarter-over-quarter basis, we added 234,000 active clients, our second highest client addition ever. In Q3, we delivered a net loss of $18.8 million and adjusted EBITDA of $11.6 million. Dan will review our results in more detail later on this call, as well as share our updated outlook for fiscal 2021. Over the last decade, we've delighted millions of clients and formed lasting relationships and feedback loops that underpin our unrivaled personalization capabilities. Our radically different client experience is built on getting to know every client and gathering feedback around their detailed preferences, resulting in our rich and highly differentiated data moat. Through our powerful combination of data science and creative human judgment, we've shipped over 50 million fixes to date. And while fixes have been incredibly successful, we know that this form factor alone doesn't address all consumer use cases. As such, we're now embarking on our next growth horizon through our introduction of direct buy, which expands our ecosystem of experiences and opens up a total addressable market that we estimate to be multiple times larger than fixes alone. We believe that this more personalized way to shop is universally appealing and one we are uniquely positioned to address. How we shop and live, work, and interact with each other has changed dramatically in the past year. and we believe that consumers' shift to shopping online will be a lasting one. Apparel retail is at a pivotal point, with market share moving online at record pace and consumers seeking more highly personalized and authentic experiences. Stitch Fix was purpose-built to address this evolution with our unique multi-touchpoint model, and as we shared in April, this moment of transformation in our industry and our business make it the right time for the next generation of leadership at Stitch Fix to lead us into the future. With that, I'm very excited for Elizabeth to assume the CEO role starting in August. Working alongside her, we have an experienced and talented leadership team that shares relentless energy, passion, and optimism for the potential possibilities ahead in our business. Since joining us as president, Elizabeth has made significant broad-based contributions across our business and demonstrated outstanding leadership. She's challenged us to think differently, accelerated our pace of innovation, and outlined an ambitious vision for our future. To be clear, I won't be going anywhere and I'm as committed as ever to Stitch Fix. I'll be transitioning to the role of executive chairperson and will remain a Stitch Fix employee while I'll be focusing my impact on our sustainability and social impact efforts that will drive long-term value for all of our stakeholders. I am deeply confident in Elizabeth and our entire team and can't imagine anyone else assuming the CEO role. I look forward to her continuing to innovate on behalf of our clients and taking us from over 4 million clients today that we serve today to the tens of millions more that we plan to serve in the future. And with that, let me turn it over to Elizabeth.