Stitch Fix (SFIX) is trading higher after the company reported third quarter results above guidance yesterday afternoon.
The company that sends personalized clothing options in the mail after a quick online consultation reported EBITDA and revenue above its guidance range for the second quarter in a row -- the company had preannounced first quarter results in its IPO prospectus.
Third quarter net revenue grew 29% to $317 million while adjusted EBITDA more than doubled to $12.4 million. Active clients grew 30% to 2.7 million.
Stitch Fix also offered solid revenue guidance for the fiscal fourth quarter while guiding EBITDA just below consensus for the second straight quarter.
Stitch Fix has executed quite well after coming public in November of last year.
The company remains focused on balancing growth and profitability while expanding its addressable market.
Stitch Fix announced the upcoming launch of Stitch Fix Kids in time for the back-to-school season. Meanwhile, the company's plus-sized offering is doing well after launching last year. The company also expanded its use of a Style Shuffle interactive game that bolsters their understanding of client tastes and style preferences at both the individual and aggregate level.
What's more, marketing veteran Deirdre Findlay is joining the company as Chief Marketing Officer.
The stock is a battleground of sorts. Bulls see a disruptive retail technology leader (at ~1.5x sales) while Bears see marginally profitable hype (at ~35x EBITDA) in a very competitive market. The $2 billion valuation is either attractive or frothy, depending on your perspective.
Guidance for fiscal 2019 in September will be key. Analysts currently expect revenue growth to slow to 20% next year with EBITDA down ~23%.
Roughly 20% of the 17 million share float is sold short.