管理層發言
Hello, everyone. Thank you for joining us, and welcome to Stitch Fix third quarter fiscal 26 earnings results conference call. After today's prepared remarks, we will host a question and answer session. If you would like to ask a question, please press *1 to raise your hand. To withdraw your question, press *1 again. I will now hand the conference over to Cherryl Valenzuela, Head of Investor Relations. Please go ahead.
Good afternoon, and thank you for joining us today for the Stitch Fix third quarter fiscal 26 earnings call. With me on the call are Matthew Baer, Chief Executive Officer, and David Aufderhaar, Chief Financial Officer. We have posted complete third quarter fiscal 26 financial results and 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 that 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 quarterly report on Form 10-Q for the second quarter of fiscal 26 and subsequent periodic reports filed with the SEC. Also, note that fiscal 24 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 this call will be available on the website shortly. And now let me turn the call over to Matthew.
Thanks, Cherryl, and good afternoon, everyone. Revenue in the quarter grew 4.7% to $340.3 million, marking our fifth consecutive quarter of year-over-year revenue growth. Active clients were 2.3 million and increased 21 thousand sequentially. A significant milestone in our transformation journey — revenue per active client, or RPAC, reached $578 in Q3, now the highest level we have reported, slightly exceeding the record we set just last quarter. These results demonstrate how we are strengthening our position as our clients' retailer of choice for apparel, footwear, and accessories. As we scale, we maintain our focus on operating with financial discipline, resulting in healthy profit margins. Gross margin in Q3 was 43.7% and contribution margin remained above 30% for the ninth consecutive quarter. Our adjusted EBITDA was $13.2 million and our adjusted EBITDA margin was 3.9%, both also better than expected. Our revenue outperformance in Q3 was driven by strength in our fixed channel. Fixed average order value, or AOV, increased year-over-year for the eleventh straight quarter, primarily due to higher items per fix as a result of expanded adoption of our larger fix offering. Growth in average unit retail, or AUR, also contributed meaningfully to the overall AOV upside, reflecting the benefits of our ongoing assortment improvements. Over the last several years, we have significantly enhanced the breadth and depth of our assortment to more fully meet client needs and capture more wallet share. Our strategy has been anchored on optimizing our portfolio of market brands, investing in our own private brands, and expanding into new categories to better offer head-to-toe outfitting. We are seeing the results of this work. Both our women's and men's businesses saw top-line gains in Q3. Within our women's business, we saw robust demand for activewear and athleisure, which grew a combined 50% year-over-year. We also had a successful seasonal transition with strength in sandals, skirts, and sneakers. Some of the brands that posted the strongest growth were our private brands, namely Montgomery Post, 41 Hawthorne, and Market & Spruce. Men's grew double digits year-over-year for the fourth straight quarter, with standout performance in warm weather categories such as shorts, short sleeve woven tops, and casual shoes, which each grew more than 30%. Some of the brands that posted the strongest growth were our private brand Aylesbury, as well as TravisMathew, Vuori, and Bonobos. With regards to expanding into new categories, we have previously shared our belief that growing our relevance in activewear and athleisure, footwear, and accessories can unlock approximately $1 billion in incremental revenue if we achieve our fair share with our existing client base. We are actively pursuing this opportunity by expanding our offerings in these key categories. As an example, we recently launched women's sunglasses, introducing brands like Le Specs, Eyre, and Quay, and we are strengthening our footwear assortment with new brands like Frye while seeing growth in established brands such as Adidas and New Balance. We are also building on our momentum in activewear and athleisure. We recently added Outdoor Voices, Malbon Golf, Spiritual Gangster, and Cotopaxi, as well as deepened our penetration with client favorites like Varley, ROAN, and our private label brand WeWander. We are also seeing strength in men's and kids' swimwear with the addition of brands like Fair Harbor. The improvements to our assortment are boosting both our position in the market and translating into further market share gains. According to the latest Circana data, Stitch Fix again meaningfully outperformed the total U.S. apparel, footwear, and accessories market in the most recent quarter, with our year-over-year revenue growth rate more than four times the growth of the total market. We also remain focused on the quality and durability of our base. A central focus of our transformation has been acquiring and retaining high lifetime value, or LTV, clients who value our service and whom we are uniquely positioned to serve well. As I noted earlier, we reached an important milestone in this work as we successfully grew our client base. We also hit our eighth consecutive quarter of year-over-year growth rate improvement in active clients and remain encouraged by this steady progress. Starting with new clients, they grew for the third consecutive quarter, up more than 10% year-over-year in Q3. As our marketing becomes more targeted and precise, we are seeing that rigor show up in the quality of new client cohorts. New client LTVs increased year-over-year for the eleventh consecutive quarter and were nearly double what they were three years ago, reinforcing our belief we are building a healthier and more durable client base. That momentum is being reinforced by the sustained adoption of family accounts, which is creating an additional organic pathway for client acquisition. As more clients adopt the feature, family accounts have become an efficient way for us to add high-intent clients while also expanding family wallet share. We are also focused on reengaging former clients. Our targeted campaigns are bringing clients back to Stitch Fix and as they return, we are focused on deepening engagement through a more personalized and flexible experience. At the same time, retention rates continue to strengthen with steady improvement over seven straight quarters. Q3 surpassed the mark we set last quarter for our highest retention rate in four years. Engagement also remains healthy. Total active clients on recurring shipments continued to grow year-over-year. New clients on recurring shipments grew even faster. This is an important signal of the value clients are seeing in their fixes and the strength of the ongoing relationship we are building with them. Taken together, these trends reinforce that we are methodically building a stronger client base. Our goal remains to return to year-over-year active client growth in fiscal 27. We attribute both our progress in active clients as well as our revenue growth in large part to the advancements we have made to our client experience over the past two years. These improvements have been grounded in delivering on our core promise: to offer the most client-centric and personalized shopping experience. We are best positioned to do this because of the uniqueness of our model, which starts with the power of our data. We know more about our clients before their first transaction with us than most retailers know over a lifetime relationship. We have billions of data points on their fit, style, and budget preferences, as well as nuanced insights on our merchandise assortment. It is the interplay of that data, our innovative and AI-driven technology platform, and the human connections that our stylists build with clients every day that enable us to deliver what we believe is a superior way to shop for apparel, footwear, and accessories. Our AI-powered style visualization platform, Stitch Fix Vision, plays an important role in offering this better way to shop. As a reminder, Vision provides clients with personalized imagery of their likeness in an array of shoppable outfits tailored to their style profiles and current trends. Since launching it in October, we have been pleased with our clients' response. Notably, we continue to see over a 100% lift in freestyle spend over a 90-day period for clients who used Vision. We are integrating Vision further within the client experience and are beginning to give clients more control over how they discover and visualize styles by enabling them to generate their own Vision images around a look of their choosing. This is exactly the type of innovation we believe can deepen client engagement over time, and reflects the broader strides we are taking to strengthen the Stitch Fix experience and the business overall. Beyond embedding AI into the client experience through features like Vision, we are applying AI across the enterprise. We are increasingly using these capabilities to optimize efficiency and sharpen our retail advantage in areas including inventory management, intelligent pricing, and creative marketing execution. In private brand product development, we are using AI to fundamentally transform the process, and we can now design a full assortment for an individual private brand in about one week, compared to the traditional multi-month design cycle. To close, Q3 was another clear step forward for Stitch Fix. We delivered revenue and adjusted EBITDA above our outlook, achieved sequential active client growth, and continue to execute with the discipline that has been central to our transformation. This is increasingly showing up in our bottom line as we drive towards net income profitability. Importantly, this performance reflects the deliberate choices we have made over the last several years to strengthen the foundation of the business, enhance how we serve clients, sharpen our focus on higher-quality growth, and fully deliver the client-centric, highly personalized shopping experience that sets Stitch Fix apart. Technology and innovation has been at the core of Stitch Fix's business since day one, and as we look ahead, we will continue to capitalize on this leadership. This will enable us to build on our progress even in a more challenging retail environment. Our model is resilient, differentiated, and uniquely equipped to navigate macroeconomic uncertainty and a more dynamic consumer backdrop. We are confident in our ability to capture further market share and wallet share and to keep building steadily toward long-term sustainable profitable growth. I want to thank the entire Stitch Fix team. The results we are seeing are a direct reflection of your focus, dedication, and commitment to our clients. Thank you for the work you do every day. With that, I will turn it over to David to discuss our financial results and outlook.
Thanks, Matthew, and good afternoon, everyone. As Matt highlighted, our strategic initiatives are driving clear momentum across our top line and client metrics. From a financial perspective, I am equally pleased with how those gains translated to our bottom line. Our third quarter results demonstrate our ongoing commitment to operational efficiency, which allowed us to exceed our adjusted EBITDA outlook and generate positive cash flow. We are maintaining strong financial discipline to ensure our transformation scales profitably. Now let's turn to the numbers. Revenue was $340.3 million, up 4.7% year-over-year, exceeding our outlook. Fix AOV grew 6.4%, better than expected, and was the primary reason for the outperformance. This was driven by more items per fix and higher AUR, reflecting strong demand for larger fixes and our improved assortment. We ended Q3 with 2.3 million active clients, up 21 thousand or nearly 1% sequentially. Both women's and men's active clients were up sequentially and men's active clients were up year-over-year for the second consecutive quarter. Net revenue per active client, or RPAC, was $578, up 6.6% year-over-year, marking the ninth consecutive quarter of year-over-year growth. We view the continued growth in RPAC as an important indicator of improving engagement and spend among our clients. It reflects the impact of the work we are doing across assortment, personalization, fixed flexibility, and the overall client experience, and reinforces the opportunity we see to grow share of wallet over time as we build the active client base. We continue to deliver strong margins. Gross margin was 43.7%, again above the midpoint of our FY26 range of 43% to 44%, while contribution margins remain robust and north of 30% for the ninth straight quarter. Advertising was 10.2% of revenue in Q3, in line with our expectations. Q3 adjusted EBITDA came in at $13.2 million or 3.9% margin. We exceeded our guidance due to stronger-than-expected revenue and disciplined expense management. We ended Q3 with $229.4 million in cash and investments and no debt, and we generated $6.5 million of free cash flow in the quarter. Our strong balance sheet and stable cash flows give us the flexibility to sustain our investments in the growth of the business while also returning capital to shareholders when we believe it represents an attractive use of cash. During the quarter, we bought back 4.5 million shares for $15.1 million under our previously authorized share repurchase program, which leaves $104.9 million in that program. Our decision to repurchase shares reflects our confidence in the progress we are making, the durability of our financial position, and our commitment to strategic capital allocation. Inventory at the end of Q3 was $132.2 million, up 15.6% year-over-year, reflecting investments in our client experience and increased demand for larger fixes. Turning to our outlook for Q4 and FY26, for Q4 we expect total revenue to be between $322 million and $327 million. We expect Q4 adjusted EBITDA to be between $7 million and $10 million. As a result, for full year FY26, we are tightening our ranges and raising the midpoints for both revenue and adjusted EBITDA to reflect the resilience we are seeing in existing client engagement despite an increasingly challenged consumer environment. We now expect total revenue to be between $1.346 billion and $1.351 billion. We now expect total adjusted EBITDA for the year to be between $49 million and $52 million, and we continue to expect to be free cash flow positive for the full year. We still expect full year gross margin to be between 43% to 44% and full year advertising costs to be between 9% to 10% of revenue. As we close out FY2026, we are encouraged by the meaningful progress we are making across the business. Active client trends are improving, AOV growth remains healthy, and we expect continued market share gains. Our financial model continues to demonstrate strong margins, disciplined expense management, positive free cash flow, and progress towards net income profitability. That performance gives us the flexibility to keep investing in the areas we believe can drive durable growth, such as strengthening the client experience, thoughtfully rebuilding our active client base, and advancing the innovation that differentiates Stitch Fix. We are confident in the path ahead, encouraged by the traction we are building, and committed to delivering further progress in the quarters to come. With that, operator, we can open the line for Q&A.
分析師問答
Thank you. We will now begin the question and answer session. If you would like to ask a question, please press *1 to raise your hand. To withdraw your question, press *1 again. We ask that you pick up your handset when asking a question to allow for optimum sound quality. 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 Jay Sole from UBS. Your line is open. Please go ahead.
Great. Hope you can hear me. Very interesting on the AOV trends. Can you double click on those a little bit? You mentioned what is driving it, but it seems like it really outperformed in the quarter. Tell us maybe some of the strategies that are really the key to getting the more units per fix and some of the other drivers of AOV that you mentioned. Thank you.
Hey, Jay. It's Matthew. I appreciate the recognition. We are really proud of the work that we have done to reimagine the client experience. Through those efforts, we have been able to drive 11 consecutive quarters of average order value gains. There are a few key contributing factors to that. One is the success we have seen with larger fixes. As we have enabled our clients to have fixes of six, seven, or eight items, we have seen many clients self-select into those larger fixes, helping us capture additional wallet share, better provide head-to-toe outfitting, and ensure that we are able to meet or exceed the needs for additional use cases. We also see the success and average order value of those larger fixes nearly double that of a traditional fix. One of the other factors of the reimagination of the client experience is the investments we have made to improve our portfolio and assortment. That is true in both the market brands that we carry as well as the private brands that we develop. Within the market brands, we brought on several new brands, which we have highlighted on prior calls as well as noted in today's prepared remarks, and that has helped us improve our AURs across the board, which were up, I believe, for a seventh consecutive quarter. We have also been investing heavily in our private brands, delivering exceptional value and quality across the board. Our clients have continued to take notice there, which has helped us capture higher average unit retails within our private brand portfolio while not directly impacting AOV. Worth noting that our private brands are also delivering about 500 basis points of higher gross margin than the market brands.
Got it. And maybe, Matthew, if I can ask you about just the active client momentum you've gotten sequentially. I think active client trend improved for the eighth quarter in a row. Looking ahead to the fourth quarter, how are client acquisition and retention trends shaping up? And what is your level of confidence in being able to maintain the positive sequential momentum?
Yeah, Jay. This is David. I can take that. Thanks for the question. First, to your point, we are really encouraged with the results we saw this quarter. It's just one more proof point that the methodical approach that we have been taking to grow active clients is working. As for Q4, just a reminder that Q1 and Q3 tend to be seasonally stronger quarters for active clients, so Q4 tends to be seasonally less strong around client acquisition, and that is what we are seeing as we go into Q4. Because of that, we actually expect Q4 to be down slightly sequentially, somewhere between about 0.5% to 1% down sequentially. With that said, we still expect year-over-year comps to continue to improve in Q4 as they have the last eight quarters. Because of the work Matthew highlighted earlier around new, reengaged, and client retention, that methodical approach is the one we will continue to use to make sure that we are rebuilding a healthy and profitable client base. That continues to be our focus in Q4, and our goal remains to return to year-over-year client growth in FY2027. These results and our guide show clear progress towards that.
Got it. If I can squeeze in one more and then I will pass it on. Can you put your finger on exactly what allowed you to raise the adjusted EBITDA guide, especially the lower end of the guide as much as you did? Of all the different things you mentioned, what was driving that?
Certainly, Jay. On the adjusted EBITDA side, we've talked about this quite a bit over the last few quarters. We continue to be very focused on expense discipline and leverage in the business. That focus continued this quarter and will continue in coming quarters. A couple of data points: SG&A spend in Q3 was down over 220 basis points from last year, and it was down over 800 basis points from two years ago. Part of that is also SBC expense, which is below EBITDA, but is another area that we continue to focus on. We continue to drive financial discipline while still investing in growth, and that is really where we felt comfortable putting EBITDA where it is from a guide perspective.
Maybe one additional point on that, Jay. We continue to lean in and capitalize on infusing AI and additional initiatives to improve operational efficiencies. We continue to drive leverage throughout our fulfillment network and supply chain, and we continue to drive efficiencies and leverage throughout our styling network as well. All of those improvements are helping us continue to improve our bottom-line performance.
Got it. Okay. Thank you so much.
Your next question comes from the line of Owen Ricker from Northland Capital Markets. Please go ahead.
Thanks for taking my questions here. First for me, household accounts were called out as a growth initiative. How much penetration have you seen there and what is the RPAC associated with clients who do adopt that feature?
Hey, Owen. It's Matthew. We have been extremely pleased with the adoption of household accounts since we rolled that out. That household account feature came through client insights we gathered a couple of years ago whereby our clients spoke loud and clear that we were offering a superior service that they loved, but they wanted to bring that service to the entire household. When we launched that feature, we saw some pretty quick organic adoption. That adoption accelerated and has sustained since we launched, and it has made a material impact to the overall improvement in our active client count. It is something we will continue to lean into, creating awareness and consideration for the feature across the board, and it is now part of our core messaging throughout both our on-site experiences as well as through our CRM. In terms of how we are thinking about it, our goal is to use household accounts to capture additional wallet share from the entire family. That continues to be a focus for us to ensure that we are the retailer for any and all apparel and accessories needs for the entire household, such that they never have a reason to waste a day walking to a store or scrolling endlessly online. They can just use our superior service offering unparalleled convenience to have all of their needs met.
Got it. That makes sense. Super helpful. And then lastly for me, how are you thinking about the balance between fixed and freestyle as the primary growth drivers going forward? Does the mix shift between the two have any meaningful margin implications?
In terms of fix and freestyle, one of the important things for us is to show up for the client in the best way possible, however we can best meet their needs, whether that is through a fix experience or a freestyle experience. We have continued to lean into and invest in both of those channels. Over the last several quarters we have also started to break down the barriers between those channels, such that a client could initiate their shopping journey within freestyle and then use the item they are shopping for to become the anchor for their next fix and work with their stylist to build an outfit around that item or to provide a few variations. When we are thinking about where growth is coming from, we are a bit indifferent to the channel. What we are focused on is how we can ensure that we continue to drive engagement and capture that wallet share overall for us.
Owen, if there's anything to add in terms of the relative profitability of both, at the end of the day they are pretty similar, and we are very comfortable just meeting the client where they are.
Great. Super helpful, guys. Thanks for taking my questions.
Your next question comes from the line of Dana Telsey from Telsey Advisory Group. Please go ahead.
On the revenue per active client, where do you see that going? Difference between brands and private label in terms of what you are seeing and what are the category trends? How do you feel about the state of the consumer? And lastly, on advertising, which was flat at 10.2%, how do you think of the trajectory of advertising spend moving forward? Thank you.
Dana, a few questions there. On revenue per active client, we are very encouraged by the trend and expect to continue to set new highs from a reporting perspective. It is a strong signal that we are delivering exceptional service, and our goal is to continue to drive that metric by meeting clients where they are. We feel confident that our service can meet clients' needs for nearly all apparel, accessories, and footwear use cases. Category expansion is a big part of that: continuing to grow in athleisure, accessories, and footwear. All three categories grew relative to our total business and were each north of 18% growth in the last quarter. That gives us line of sight to future RPAC growth and wallet share gains. Regarding market brands versus private brands, we are seeing success in both and we remain client-led in this pursuit. It's important to carry market brands our clients covet to fill white space where our private brands do not have assortment today, and to have leading brands for certain categories and use cases. From a private brand perspective, the team has done a phenomenal job increasing quality and value, and awareness and demand for these brands continue to grow. Some private brands are now growing over 100% year-over-year. On the state of the consumer, we are encouraged by the resilience of the Stitch Fix client. Clients continue to show up across every income cohort we track, with nearly the same levels of revenue growth regardless of household income. We believe that is because we personalize the experience and serve a breadth of price points so we can meet clients where they are even when budgets are constrained. The recurring nature of our model and the relationship clients have with their stylists is durable and helps us capture wallet share even as consumer behavior changes.
Dana, on advertising, we've spoken about seasonality before and this quarter we were comfortable spending at the high end of our range. We expected to spend toward the higher end of the range, and we are seeing strength across areas that drive active clients: new client acquisition was up again quarter-over-quarter and year-over-year, reengaged clients remain a healthy avenue to bring clients back, and client retention continues to look better. Because of that, we are comfortable with current investment levels and our expectation is to spend within that 9% to 10% range going forward.
Your next question comes from the line of David Bellinger from Mizuho Securities USA. Please go ahead.
Hey, everyone. Thanks for the question. I want to go back to your comments on the consumer. You mentioned an increasingly dynamic spending backdrop. Can you walk us through the cadence of this quarter? Anything on quarter-to-date that has changed? How has that shown up in the business? Does this have anything to do with the sequential contraction we are looking for in fiscal Q4?
Thanks, David. In Q3 we were really happy with the performance. If you look at the progression through the quarter, we had a slightly slower start driven by average order value, but it rebounded mid-quarter and we saw strength as we exited the quarter. We expect that strength to continue into Q4. We had already assumed an increase in AOV of roughly 4% to 6% in the back half of the year, and we expected Q3 to be at the lower end and Q4 at the higher end of that range. Because we already had a higher AOV baked into our Q4 assumption, our guide stayed consistent. Going into Q4, we continue to see resilience with existing clients. If there is any macro headwind, we are maybe seeing a little bit of an increase in client acquisition costs from a marketing standpoint, which is an industry-wide development, but our existing clients remain incredibly resilient across income cohorts. We are encouraged by that and have included all of this in our guide.
Understood. Thanks for that. Then going forward, if you think about SG&A dollars, the last few quarters have been in the approximately $150 million range. As the business gets back to growth mode, should we expect any incremental uplift in SG&A dollars as the business returns to growth?
David, thanks for the question. On SG&A, we have been very focused on driving leverage across the P&L. That includes gross margin and below gross margin items like SG&A. A large part of SG&A is our variable labor teams — warehouse and stylist teams — and we have driven a lot of leverage there. Over the last year SG&A spend has come down 220 basis points. SBC is also a significant component of total SG&A, and SBC was 3.3% of revenue this quarter, down 100 basis points. Across each area of SG&A, we want to make sure we are investing appropriately for growth while continuing to drive leverage. We do not see any significant investment needs that would reverse that direction; our priority is to continue to drive leverage in the P&L.
Your next question comes from the line of Aneesha Sherman from Bernstein. Please go ahead.
Thank you, and congrats on a great quarter. David, I want to follow up on your comments. It sounds like you are saying you ended Q3 at a high point in terms of revenue growth relative to the first half of Q3. Does that imply you are running ahead of the Q4 guide at the moment, or at the top of the Q4 guidance range? Do you expect it to decelerate a little bit through the quarter to get to the 3.5% to 5% guidance range? Related to that, AOV compares get a bit tougher in Q4 — are you seeing or expecting any moderation in AOV growth in Q4 as those compares get tougher?
Thanks, Aneesha. The trend in Q3 was a bit slow at the beginning and then it rebounded. For Q4 we see something similar: a slightly slower start from an AOV perspective and then a rebound. For Q4 we had already assumed AOV would be about 6% year-over-year, and we remain comfortable with that assumption. In Q3 we got to the AOV level faster than we expected, which is one reason we didn't push the beat forward — we already had the strength included in our guide for Q4 from last quarter.
Okay, that makes a lot of sense. One follow-up on new client LTVs: beyond family accounts, is there any mix shift in demographics among those new clients that is driving higher LTVs? Are you seeing different cohorts come in that explain the improvement?
Hey, Aneesha. This is Matthew. A point of clarification first: within household accounts, we treat each household member separately for LTV purposes, so the growth in new client LTVs is independent of household account accounting. Doubling new client LTVs over three years is the aggregate impact of improvements to the experience and our assortment. That includes larger fixes, assortment improvements, and investments in engagement mechanisms from Stitch Fix Vision to our AI style assist and Stylist Connect platform. As we create more opportunities to engage clients and more services that elevate the experience, we see increased spend from new clients. Regarding who we are acquiring, our marketing team has gotten more focused and methodical in targeting clients that resonate with our service. We are finding very specific segments that we can serve exceptionally well. A great example is targeting clients likely on GLP-1s who are undergoing a body transformation; we can follow them through the funnel with tailored messaging and stylist support at each stage of the transformation. We have other segments like that and continue to ensure the clients we bring in are those we can serve at a high level.
At this time, there are no further questions. I would now like to turn the call back to Matthew Baer for closing remarks.
Okay. Thank you. To close, I want to reiterate how proud I am of the team. The progress we delivered this quarter and the success we have driven throughout the transformation are meaningful. We are building a healthier and more durable client base. We continue to strengthen our assortment, deepen engagement with our clients, and prove that Stitch Fix can deliver a more personal, more convenient, and more inspiring way to shop. I am excited the progress continues to show up in multiple dimensions of the business. We are growing revenue, improving active client trends, gaining market share, and doing all of this while maintaining the financial discipline that has been central to the transformation. That includes robust margins, positive free cash flow, strategic capital allocation, and progress towards net income profitability. At Stitch Fix, we are operating from a position of strength, and I am confident in our ability to continue to do so. I appreciate your interest in our business, and I look forward to sharing our continued progress in the future. Thank you.
This concludes today's call. Thank you all for attending. You may now disconnect.