Billion Dollar Unicorn club member Stitch Fix (Nasdaq: SFIX) went public in November last year. It had a choppy start to the listing as its unique business model puzzled the analysts. Stitch Fix operates a hybrid model of subscription and transaction revenue services. Customers subscribe to receive a supply of apparel that Stitch Fix’s stylists and algorithms work out as best suited to the customer’s needs. But the customer does not have to pay a monthly subscription to receive the package. Instead, they pay a fee when the Fix is sent, and, if they want to buy the products in the package, they can apply this subscription fee as credit toward those purchases. In the last few months, the company appears to have instilled some confidence into the market as it has delivered an upbeat quarterly performance.

Stitch Fix’s Financials

Stitch Fix’s second quarter revenues grew 24% to $295.9 million, ahead of the analyst estimates of $291.54 million. Adjusted net income of $0.07 a share was also better than the estimate of $0.06 for the quarter.

Among operating metrics, it now has 2.5 million clients, recording a 31% growth over the year. Over the quarter, it added 112,000 customers compared with 50,000 estimated by the markets. It recorded an addition of 588,000 customers over the previous year.

For the current quarter, the company forecast revenues of $300-$310 million, ahead of the market’s forecast of $301 million. It expects to end the year with revenues of $1.19-$1.22 billion, topping the Street’s estimate of $1.2 billion.

Stitch Fix’s Expansion

During the quarter, Stitch Fix continued to expand its line of offerings. Within the existing categories, it added to its activewear selection by entering into partnerships with Beyond Yoga and Sweaty Betty. It is also working on a pilot program with Nike for spring. Within regular apparel, Stitch Fix expanded its relationships with other brands including Calvin Klein, Levi’s, and Tommy Hilfiger.

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