Stitch Fix, Inc.

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Good afternoon, and thank you for joining us today for the Stitch Fix fourth quarter and full fiscal year 2025 earnings call. With me on the call are Matt Baer, Chief Executive Officer, and David Asterhar, Chief Financial Officer. We have posted complete fourth quarter and full fiscal year 2025 financial results in a press release on the quarterly results section of our website, investors.stitchfix.com. 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. In particular, our press release issued and filed today, as well as our annual report on Form 10-K, for fiscal 2025, which we expect to file later this week. 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, The adjusted revenue growth rates we reference on this call remove the impact of that 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 this call will be available on the website shortly. And now let me turn the call over to Matt.

Thank you, Cheryl, and good afternoon, everyone. Over the last two years, we've been relentlessly executing our transformation strategy to deliver the most client-centric and personalized shopping experience. I'm incredibly proud of the significant progress we've made We've fundamentally reshaped how we operate by strengthening the foundation of our business and embedding retail best practices. We've also made significant strides in re-imagining our client experience. Our transformation is driving tangible results. We closed out fiscal 25 with a strong Q4, delivering 4.4% adjusted revenue growth. Revenue of $311.2 million exceeded our guidance and marked our second consecutive quarter of revenue growth. We once again gained market share in the U.S. apparel market this quarter, according to Circona data. Adjusted EBITDA was $8.7 million, or 2.8% of revenue, which also came in ahead of guidance. Our strong top-line performance was the direct result of the improvements we've made to our client experience and assortment. Stake's average order value grew 12% year-over-year, our eighth consecutive quarter of AOV growth. AOV growth was driven by higher items per fix due to greater penetration of our larger fix offering. AOV growth was also driven by fixed AUR that was up 7.6% year-over-year, as we continue to benefit from the newness and trend-right styles we brought to our merchandise assortment. Both our women's and men's lines of business accelerated revenue growth in Q4. Expansion into non-apparel categories and a greater infusion of established brands were the primary drivers. I'm especially proud of the continued strength of our men's business that delivered double digit revenue growth in Q4 and a positive full year performance. Our core fixed channel continues to perform. with Q4 revenue growth that outpaced our total growth. This is due in part to the encouraging initial results we're seeing from our new feature that allows clients to build a fix around a freestyle item. This is a strategic move that blends the best of both channels to create a more seamless experience for our clients. As a result of the changes to our client experience and our thoughtful client acquisition strategy, We are encouraged by the trends we're seeing with new client acquisition, engagement of former clients, and retention of our current clients. These shifts have led to improvements in year-over-year active client growth rates for five consecutive quarters. Bringing in the right clients to our service remains a key priority, and this is an area where we continue to see strength with 90-day new client LTVs at three-year highs. Our recurring fixed shipments enrollment also remains up year over year, reflecting the resonance of our client experience improvements. FY25 was a milestone year for Stitch Fix, where our consistent execution set us on a path to sustainable, profitable growth. In the last fiscal year, we achieved our highest contribution margin in the last decade. we expanded our adjusted EBITDA margin by 170 basis points. And we completed another year with positive free cash flow and no debt. Now firmly in the growth phase of our transformation, we'll continue in fiscal year 26 to enhance our client experience, including through investments in generative AI and remain focused on four areas. creating more dynamic ways for our clients to engage with us, deepening our client-stylist relationships, introducing increased fixed flexibility, and strengthening our assortment. In line with these priorities, we recently began to roll out a new suite of innovations. These enhancements will further our efforts to deliver industry-leading personalization and convenience. we are leveraging generative AI to offer even greater personalization as well as new engagement opportunities. As a result of our services' continuous feedback loop, we have billions of insights on our clients' fit and style preferences. And we are using these insights, coupled with the latest in GenAI technology, to serve them in ways only we can. Our clients have shared with us that one of their biggest challenges is expressing what they want to their stylists. To address this, we recently began to roll out an AI style assistant, which chats with clients while they develop their fixed request notes, using GenII imagery, as well as leading questions to help them articulate what they are looking for. Through the feedback we secure from the AI style assistant, as well as our sophisticated algorithms and the expertise of our human stylists, we are now able to be that much more precise with meeting each client's individual needs. In addition to launching our AI Style Assistant, we are also beginning to roll out a style visualization feature called Vision that provides clients with personalized GenAI imagery of their likeness in a variety of shoppable outfit recommendations incorporating the latest styles and trends. Second, we're further deepening client-stylist relationships I often think back to the golden age of retail when sales associates knew their customers by name, remembered their preferences, and could anticipate their needs. Those personal relationships have all but disappeared from shopping today. However, at Stitch Fix, they are alive and well. Our stylists serve as trusted partners to our clients, and now we're creating opportunities for clients and stylists to collaborate like never before through a new platform called Stylus Connect. Through the beta rollout of Stylus Connect, select clients can communicate with their stylists whenever they need assistance, whether to ask a question about fit, get tips on the latest trends, or work together on their next fix. Client feedback on this feature has been incredibly positive, and we are also seeing higher order values from clients who have been part of the early rollout. Third, We're giving clients even more flexibility. One of the main reasons clients come to us is for the convenience and time savings we offer. We recently launched family accounts, which enable clients to shop for their partner or anyone else in their household, all from one account. This helps families save hundreds of hours a year. Family accounts join other ways we've embedded flexibility into the experience including larger fixes, themed fixes, and the ability for clients to build a fix around a freestyle item. Lastly, we're further strengthening our assortment by leveraging GenAI in our private brand design process and adding new styles and brands. By integrating GenAI in private brand development, we are responding to trend signals more quickly and accelerating how we bring relevant styles to the market. We are uniquely positioned to do this because of the depth and quality of our data from the continuous direct and indirect feedback our clients provide. While we are enhancing our private brand development process, we're also expanding our portfolio of emerging and established brands. Since the start of FY25, we've added more than 50 new brands. including Barley, Favorite Daughter, Alex Mill, Roan Women, Pendleton, Madewell Men, Birkenstock, Gola, Abercrombie Kids, and my kids' favorite, Goat USA, with additional brands launching in the coming months. Building off the momentum of FY25, we are operating from a position of strength, and our FY26 guidance anticipates a return to full-year revenue growth. We also expect active client year over year growth rates to continue to improve through the year, including a quarter over quarter increase in net ads. We will accomplish this while staying disciplined with our growth investments as we navigate an increasingly dynamic and complex environment. Two years ago, when I stepped into the CEO role, I recognized that Stitch Fix offered a powerful and differentiated alternative to traditional retail whose potential had yet to be fully realized. I am incredibly proud of the work the Stitch Fix team has done since then to further unlock that potential. At Stitch Fix, we know that the best retail experience is one that serves clients at a truly individual level. One where you know your clients so well that you don't just meet, but anticipate and ultimately exceed their needs and expectations. That's the level of service we aspire to provide every day. Harnessing the power of AI, almost 15 years of proprietary data, our algorithms that get smarter with every interaction, our assortment of leading brands, and the human connection of our stylists who know each of their clients personally. With this competitive edge, we're well positioned to be the retailer of choice for apparel and accessories and to continue to grow faster than the overall U.S. apparel market. In closing, I want to thank our team for their incredible work and our clients, partners, and long-term shareholders for their support. And with that, I'll turn it over to David for our financial results and outlook.