Stitch Fix Inc (NASDAQ: SFIX) stock surged over 30% on 12 th March, 2019 after the company raised its full-year revenue forecast after reporting better-than-expected results for the second quarter of FY 19. SFIX delivered free cash flow of $46 million compared to $26 million in the first half of 2018 and ended Q2 with zero debt and $356 million in cash, cash equivalents and highly rated securities. While the free cash flow in Q2 was lower due to some timing benefits in Q1 reversing in Q2, to continue to manage the working capital well, as evidenced by a gross margin and inventory terms.

SFIX in the second quarter of FY 19 has reported the adjusted earnings per share of 12 cents, beating the analysts’ estimates for the adjusted earnings per share of 5 cents, according to IBES data from Refinitiv. The company had reported the adjusted revenue growth of 25 percent to $370.3 million in the second quarter of FY 19, beating the analysts’ estimates for revenue of $364.9 million. SFIX grew the active client count to $3 million as of January 26, 2019 an 18% increase year-over-year. Net revenue per active client grew 6% year-over-year, representing a third consecutive quarter of growth even with the continued penetration of men’s and kids. These games reflect the continued strong health of the women’s category, as well as the ongoing focus on attracting long-term quality client. Q2 gross margin was 44.1%, 110 basis points higher than last year’s Q2. Advertising was 6.5% of net revenue, below the 6.7% in Q2 2018, reflecting a planned pullback and ad spend during the holiday. SG&A excluding advertising was 33.4% of net revenue in the quarter, compared to 31.1% in last year’s Q2. These results reflect the build-out of UK capabilities, as well as payroll and SBC investments to track and retain top talent.

For the fiscal third quarter, analysts expect earnings of 1 cent a share and sales of $384 million. For Q3 2019, SFIX expect net revenue between $388 million and $398 million dollars, representing growth of 22% to 26% year-over-year. The company expects adjusted EBITDA between negative $4 million and positive $1 million or an adjusted EBITDA margin of negative 1.0, to positive 0.3%.

SFIX now expects full-year revenue to be between $1.53 billion and $1.56 billion, up from $1.49 billion to $1.53 billion it previously forecast.