Stitch Fix Inc (NASDAQ:SFIX), a leading online personal styling service, stock rallies 24.91% (As on June 5, 11:28:49 AM UTC-4, Source: Google Finance) after the company announced the third-quarter results that surpassed Wall Street’s expectations. The company reported a narrower loss and higher revenue than analysts had anticipated, alongside guidance for the fourth quarter and full year that also exceeded consensus estimates. Active clients of 2,633,000, a decrease of 172,000, or 6%, quarter-over-quarter; and a decrease of 655,000, or 20%, year-over-year. Analyst consensus called for about 2.682 million active clients at quarter-end. Net revenue per active client (“RPAC”) of $525, an increase of 2% year-over-year. Gross margin of 45.5%, an increase of 280 basis points year-over-year, which reflects improved product margins and transportation leverage. Net loss from continuing operations of $22.0 million. Adjusted EBITDA of $6.7 million, which reflects continued cost management discipline. Free cash flow was $18.9 million in the third fiscal quarter. The company has ended the quarter with $244.5 million of cash, cash equivalents, and investments; and no debt on the balance sheet. During the first quarter of fiscal 2024, the company ceased operations of the UK business and met the accounting requirements for reporting the UK business as a discontinued operation.

SFIX in the third quarter of FY 24 has reported the adjusted loss per share of 18 cents, beating the analysts’ estimates for the adjusted loss per share of 24 cents. The company had reported the adjusted revenue decline of 16 percent to $322.7 million in the third quarter of FY 24, beating the analysts’ estimates for revenue of $306.9 million. Gross margin increased 280 basis points year-over-year to 45.5%, which the company said reflects improved product margins and transportation leverage.

Looking forward, Stitch Fix provided an optimistic outlook, projecting fourth-quarter revenue in the range of $312 million to $322 million, above the consensus of $307 million. For the full fiscal year 2024, the company anticipates revenue between $1.33 billion and $1.34 billion, which also surpasses the consensus estimate of $1.31 billion.

For the fourth quarter of fiscal 2024 ending August 3, 2024, Adjusted EBITDA is expected to be in the range of $5 million – $10 million, representing 1.6% – 3.1% margin. For the full fiscal year 2024, the company anticipates Adjusted EBITDA to be in the range of $25 million – $30 million, representing 1.9% – 2.2% margin.