Stitch Fix, Inc.

FY26 net revenue was $1.35 billion, up 6.4% year over year. Q4 revenue was $324.4 million, up 4.2% year over year. FY26 gross margin was 43.7%, and Q4 gross margin was 43.6%, flat year over year. FY26 adjusted EBITDA margin was 4%; Q4 adjusted EBITDA was $10.8 million, or 3.3%, up 50 basis points year over year. Net loss narrowed to $12.6 million, or $(0.09) per share. Free cash flow was $19.8 million, and year-end cash, cash equivalents and investments were $220.9 million with no debt. For Q1 FY27, revenue is expected to be $323 million to $328 million and adjusted EBITDA $3 million to $6 million. For FY27, revenue is expected to be $1.31 billion to $1.36 billion, adjusted EBITDA $27 million to $42 million, and gross margin to remain between 43% and 44%; management also expects stronger positive free cash flow than FY26.

Matt Baer framed FY26 as a pivotal year that left Stitch Fix with a stronger operating foundation, a reimagined client experience, and better client economics. He emphasized larger fixes, improved assortment, and category expansion as key growth drivers, along with ongoing investment in AI-powered tools like Vision and operational automation. His tone was confident but realistic: he repeatedly said the strategy is unchanged even though FY27 reflects a more challenging consumer environment.

David Aufderhaar highlighted that FY26 showed improvement across the model: contribution margins stayed above 30% each quarter, gross margin held at 43.7%, SG&A fell to 45.3% of revenue, and stock-based compensation was 3.4% of revenue versus 4.5% last year. He noted $19.8 million of free cash flow, $220.9 million in cash and investments, and no debt, while buybacks continued with 2.7 million shares repurchased in Q4 for $11.3 million and 7.2 million shares for $26.4 million in the year. On FY27, he said EBITDA will step down mainly because the company plans to raise advertising spend to about 10% to 11% of revenue from 9% to 10% in FY26 and make additional AI investments.

Analysts focused on higher client acquisition costs, whether advertising spend is a separate issue or a margin drag, and how much of FY27 weakness is temporary versus structural. Management said CAC pressure started in Q4 and continued into Q1, but the company is still comfortable leaning into ads because of strong client LTVs; it also said Q1 is affected by a shipment-timing shift and an unintended post-checkout offer issue that has since been corrected. On active clients, management said confidence in returning to year-over-year growth remains intact, but macro pressure is making acquisition tougher. Questions on RPAC and Vision drew a bullish response: management said larger fixes, footwear, accessories, and other underpenetrated categories still have a large runway, and Vision adoption has exceeded expectations with more than 22 million images shared.