But, with the company already providing preliminary results for Q1, much of the mystery was taken out of the report, as it relates to the quarterly numbers. Therefore, most investors and traders were honing in on its guidance, which is being viewed disappointingly, hence, why shares are trading lower by about 12% in pre-market action.
Before diving into the guidance, here is a more in-depth look at its Q1 results. The 25% revenue growth was solid, and, is consistent with its recent performance. In fact, in both 4Q17 and 3Q17, sales were up 26%. The growth has mainly been driven by new active client acquisition, which increased 30% year/year to 2.4 million. That metric, too, is healthy and inline with last quarter's 30% bump in clients.
Gross margin dipped sharply to 43.7% from 46.6% in the year ago quarter. Management stated that the decline here was largely due to investments in new product categories, especially in the men's and plus categories. Furthermore, SFIX commented in its press release that it expects gross margin to decline in the near term as it continues to invest in new categories. Longer term, it expects margins to improve as these business grow and scale.
Similarly, SG&A, as a percentage of revenue increased to 40.5% from 35.4% as SFIX continues to invest in technology talent and advertising. The absolute growth in SG&A expense was 43% to $119.5 million, roughly inline with last quarter's 46% increase.
Turning to guidance, the revenue numbers looked strong, as SFIX guided for Q2 revenue of $287-$294 million versus the $286.4 million consensus, and, for FY18 revenue of $1.147-$1.22 billion versus the $1.18 billion expectation. However, its EBITDA guidance for both periods came up a bit light, which, along with the slide in gross margin, is what is driving the stock lower today. Specifically, it guided for Q2 EBITDA of $11.5-$15.5 million versus the $16.0 million estimate, and FY18 EBITDA of $40-$60 million versus the $57.5 million estimate.
Wrapping up, we feel a good way to describe the quarter is "mixed." There are certainly some positives to be taken, including the solid and consistent new client and revenue growth. The company is profitable too, which many up-and-coming companies that go public cannot say. That said, the fact that SFIX is having to spend more in marketing, as a percentage of sales, in order to keep its topline growth rates steady, is a bit of a red flag. At this point, the its not an egregious issue, but, it is worth noting and keeping an eye on in future quarters.