Stitch Fix, Inc. (NASDAQ:SFIX) Q2 2026 Earnings Call Transcript

Stitch Fix, Inc. (NASDAQ:SFIX) Q2 2026 Earnings Call Transcript March 11, 2026

Stitch Fix, Inc. beats earnings expectations. Reported EPS is $-0.01975, expectations were $-0.05333.

Operator: Hello, everyone. Thank you for joining us, and welcome to the Stitch Fix, Inc. Second Quarter Fiscal Year 2026 Earnings Call. After today’s prepared remarks, we will host a question and answer session. If you would like to ask a question, please press 1. To withdraw your question, please press 1 again. I will now hand the call over to Cherryl Valenzuela, Head of Investor Relations. Please go ahead.

Cherryl Valenzuela: Good afternoon, and thank you for joining us today for the Stitch Fix, Inc. second quarter fiscal 2026 earnings call. With me on the call are Matt Baer, Chief Executive Officer, and David Aufderhaar, Chief Financial Officer. We have posted complete second quarter 2026 financial results and a press release on the Quarterly Results section of our website, investors.stitchfix.com. We would like to remind everyone that we will be making forward-looking statements on this call, which involve risks and uncertainties. Actual results could differ materially from those contemplated by our forward-looking statements. Reported results should not be considered as an indication of future performance. Please review our filings with the SEC for a discussion of the factors that could cause the results to differ, in particular, our press release issued and filed today, as well as our Annual Report on Form 10-K for fiscal 2025 and subsequent periodic reports filed with the SEC.

Also note that the forward-looking statements on this call are based on information available to us as of today’s date. We disclaim any obligation to update any forward-looking statements except as required by law. Please note that fiscal 2024 was a 53-week year due to an extra week in the fourth quarter. As such, references to consecutive quarters or year-over-year revenue growth rates on this call are based on an adjusted 52-week basis, removing the impact of the extra week to provide a comparison that we believe more accurately reflects our performance. During this call, we will discuss certain non-GAAP financial measures. Reconciliations to the most directly comparable GAAP financial measures are provided in the press release on our Investor Relations website.

These non-GAAP measures are not intended to be a substitute for our GAAP results. Finally, this call in its entirety is being webcast on our Investor Relations website and a replay of the call will be available on the website shortly. I will now turn the call over to Matt.

Matt Baer: Thanks, Cherryl. Good afternoon, everyone. Q2 was another strong quarter marked by our fourth consecutive quarter of year-over-year revenue growth. We continue to successfully execute our transformation strategy and are seeing the cumulative impact of those efforts to both strengthen the foundation of our business and reimagine our client experience. The enhancements we have rolled out over the past 18 months, including greater flexibility, meaningful improvements we have made to the quality and breadth of our assortment, and new AI features, are driving increased client engagement and durable revenue growth. As a result, we are solidifying our position in the market and our role as our clients’ retailer of choice for apparel, footwear, and accessories.

Getting into the specific numbers, revenue exceeded our outlook and grew 9.4% year over year to $341.3 million, supported by broad-based demand that remained resilient across all income cohorts. Revenue per active client, our highest revenue per active client as a public company, reached $577 in Q2. We achieved this growth while driving leverage in our business. Q2 was our eighth consecutive quarter with a contribution margin greater than 30%. Adjusted EBITDA also exceeded our outlook and was $15.9 million, or 4.7% of revenue. We also continued to gain market share and significantly outperform the broader U.S. apparel and accessories market during the quarter, highlighting the strength of our value proposition. Our 9.4% year-over-year revenue growth in Q2 contrasts with the 0.5% contraction the total U.S. apparel, footwear, and accessories market sustained in the same period, according to the latest Circana data.

Our growth this quarter was anchored by the Fix channel. By leveraging our unique curation capabilities and expert stylists, we have leaned into head-to-toe outfitting and strategic category expansion. This high-touch approach is resonating deeply. Both our women’s and men’s Fix businesses grew double digits, contributing to a nearly 10% year-over-year increase in Fix average order value, our tenth consecutive quarter of growth. A key driver of this performance is the increased flexibility we have integrated into our service. Adoption of our larger Fixes, which offer up to eight items in a Fix versus the original five, continues to grow. We are also seeing high resonance with other newer formats, such as themed Fixes and Fixes built around a Freestyle item of a client’s choosing.

The average order value for these Fixes are, in aggregate, nearly double that of a traditional five-item Fix. We have also fundamentally improved the selection of items within each Fix. The growth in Fix average order value was driven by higher average unit retail, which grew 7.7% year over year, our sixth consecutive quarter of growth. The increase was largely fueled by a more compelling assortment and favorable mix. External pricing factors, including tariffs, were not a significant driver of the change. In Q2, we successfully captured seasonal winter demand for warm layers, with outerwear a top growth category in both our women’s and men’s businesses, up 26% combined. We also saw strong demand for denim, up 17%. In addition, activewear and athleisure were strong contributors to our performance in the quarter, growing 37% year over year combined.

We also saw strong demand for special occasion and social events or night-out styles, which grew 46% this quarter. Of note, we have also been expanding our assortment in strategic categories where we are seeing increased demand, such as footwear and accessories. Footwear grew 33% year over year across our men’s and women’s businesses, with sneakers alone up 46%. Accessories grew 51% year over year across both lines of business. As we mentioned last quarter, we believe expanding our relevance in activewear, athleisure, footwear, and accessories can unlock a significant wallet share opportunity. We estimate our fair share within our existing client base in these categories represents approximately $1 billion in incremental revenue. We also continue to optimize our brand mix.

We are pairing more of the brands clients already know and love with private brands that are purpose-built from our data to offer exceptional quality and value. Within our private brands, we saw strong performance from Market & Spruce, Montgomery Post, 41 Hawthorn, and WeWander, with revenue from each up more than 35% year over year. The work we have done to optimize our assortment and brand mix set the stage for a strong holiday performance. This achievement was fueled by a deeper selection of seasonally relevant merchandise and a strategic promotional cadence, which delivered record Freestyle sales during the Black Friday/Cyber Monday period and sustained broader momentum through the end of the calendar year. Importantly, we achieved this growth while maintaining strict discipline within our Fix business, driven primarily by our enhanced Freestyle-exclusive promotional capabilities.

We continue to be encouraged by our active client trends. This quarter marked our seventh consecutive quarter of improvement in year-over-year active client growth rates, reflecting the disciplined and methodical progress we are making to build a healthier client base. Of note, our men’s business, after returning to sequential growth in active clients last quarter, returned to year-over-year growth in Q2. We are also excited by the early results we are seeing from Family Accounts, which enable a client to manage multiple accounts within a single household. This feature is emerging as a lower-cost way to grow family wallet share while unlocking new ways for clients to shop for others and supporting gifting behavior. Our holiday results reinforce our confidence in its potential as an efficient acquisition lever in future key gifting moments.

Taking a broader view of our performance, we ended Q2 with active clients of 2.3 million, in line with our expectations. Here are a few highlights. New clients grew year over year for the second consecutive quarter. Three-month LTVs for new clients have now grown year over year for 10 consecutive quarters and remain at three-year highs. Reengaged clients also grew for the second consecutive quarter and the number of clients on recurring shipments continued to grow year over year. We also just completed a quarter in which we had the highest retention rate in nearly four years. We are encouraged by the early signals from Stylist Connect, our new platform for near real-time client-stylist collaboration. While still a recent addition, it is already helping us strengthen relationships between our clients and our stylists.

Clients who engage in the feature are significantly more likely to request the same stylist for their next Fix. We believe these positive trends confirm the improved quality of our new and returning client cohorts and will lead to greater client retention, higher revenue predictability, and improved profitability over the long term. We remain on track to deliver positive sequential net adds in Q3. A key driver of our performance is how we are leveraging technology and innovation, and AI specifically. Technology and innovation have been at the core of Stitch Fix, Inc.’s business since day one. Since our founding, Stitch Fix, Inc. has capitalized on the latest technology advancements as well as data science and proprietary algorithms to provide a superior retail experience.

Our proprietary data and algorithms remain a competitive advantage. We know more about our clients, their fit, their budget, and their style preferences prior to them ever receiving a Fix. We also have a continuous loop of both direct and indirect data from our clients as well as nuanced insight on our merchandise assortment on how specific items fit. We have billions of data points to leverage. Because we know our clients so well, we are able to leverage AI to deliver incomparable client experiences. One way we are putting this data to work is through our AI Style Assistant, which empowers our stylists by helping clients better articulate what they are looking for. This tool captures richer signals that enable our stylists to curate Fixes that better meet each client’s specific needs.

We are also leveraging AI to inspire clients and help them discover the styles they will love. A clear example is Stitch Fix Vision, our AI-powered styling platform that provides clients with personalized imagery of them in a wide array of shoppable head-to-toe outfit recommendations based on their own style profile and the latest fashion trends. Clients who have engaged with Vision use it on a consistent basis, with 75% returning to use it again in subsequent months, and that engagement has translated into increased sales. We saw an over 100% lift in Freestyle spend over a 90-day period for clients who used the feature. As we further execute our strategy, we are confident in our ability to maintain a balance between growth and profitability.

Our unique data-driven model, which combines personalized styling expertise, AI-powered recommendations, and a compelling assortment across Fix and Freestyle, enables us to meet clients where they are while driving both engagement and spend. This integrated approach creates a powerful feedback loop between human insight and technology, strengthening client relationships and improving unit economics over time. The investments we are making in our client experience, AI capabilities, and merchandise mix are designed to drive durable revenue growth while preserving margin integrity. These strategic drivers are performing in line with our expectations, supporting our improved full-year revenue guidance, as we remain focused on finishing the year strong.

As the business continues to scale, we believe we will be able to generate increasing leverage and deliver consistent, sustainable profitability over time. I want to thank our team for their focus and execution, and our clients, partners, and shareholders for their support. With that, I will turn it over to David to discuss our financial results and outlook in more detail.

David Aufderhaar: Thanks, Matt, and good afternoon, everyone. Our second quarter results reflect continued progress against our strategy and the momentum we are building across the business. We delivered strong revenue growth and disciplined expense management while continuing to invest in the client experience and innovation. These results underscore the benefits of our methodical approach to strengthening the business and positioning Stitch Fix, Inc. for consistent and sustainable performance over time. Now, let us turn to the numbers. Revenue was $341.3 million, up 9.4% year over year, exceeding our outlook. Fix average order value rose 9.8%, driven by more items per Fix and higher AUR, reflecting strong demand for larger Fixes and our improved assortment.

We ended Q2 with 2.3 million active clients, in line with our expectations. Revenue per active client was $577, up 7.4% year over year, marking the eighth consecutive quarter of year-over-year growth and the highest RPAC we have reported as a public company. The growth in RPAC confirms that our strategy is effectively leading to increased client engagement and spend, ultimately driving a higher share of wallet from our clients. Gross margin was 43.6%, slightly above the midpoint of our FY 2026 range of 43% to 44%, with contribution margins remaining strong above 30% for the eighth straight quarter. Advertising was 8.5% of revenue in Q2, slightly below our expected range of 9% to 10%. As we have discussed, we are being deliberate in how we invest, prioritizing efficiency and long-term client quality over near-term volume.

Q2 adjusted EBITDA came in at $900,000 or a 4.7% margin, outperforming expectations on strong revenue and disciplined expense management. We ended Q2 with $240.5 million in cash and investments and no debt. Inventory was $122.1 million, up 11.4% year over year, reflecting investments in our client experience and increased demand. Turning to our outlook for Q3 and FY 2026. For full-year FY 2026, we expect total revenue to be between $1.33 billion and $1.35 billion. We expect total adjusted EBITDA for the year to be between $42 million and $50 million, and we continue to expect to be free cash flow positive for the full year. For Q3, we expect total revenue to be between $330 million and $335 million. We expect Q3 adjusted EBITDA to be between $7 million and $10 million.

For the second half of the year, we are tightening our revenue guidance range, reflecting greater confidence in the underlying momentum we are seeing while continuing to be thoughtful and realistic about the environment ahead. We expect growth rates to moderate as we lap a strong two-year AOV stack. We believe there remains opportunity to continue driving steady AOV improvement. Ongoing enhancements to our client experience, including a stronger, more relevant assortment, continued category expansion, increased Fix flexibility, and the use of AI to support more dynamic client engagement, provide a durable foundation for that progress. At the same time, we believe our methodical approach to rebuilding our active client base is working. We are encouraged by continued improvement in active client trends and remain confident that sequential net active client adds will be positive in Q3.

Over time, as both AOV and active clients improve, we believe this positions the business for compounding growth. We continue to expect full-year gross margin to be approximately 43% to 44%, and full-year advertising costs to be between 9% and 10% of revenue. In closing, we are encouraged by the progress we are making across the business. Our focus on delivering a strong client experience, rebuilding our active client base with discipline, and maintaining financial rigor is driving improved performance and positioning us well for the remainder of the year. With that, Operator, we can open up the line for Q&A.

Q&A Session

Operator: We will now begin the question and answer session. Please limit yourself to one question and one follow-up. If you would like to ask a question, please press 1 on your telephone keypad. To withdraw your question, please press 1 again. Please pick up your handset when asking a question. If you are muted locally, please remember to unmute your device. Please hold while we compile the Q&A roster. Your first question comes from the line of Dana Telsey from Telsey Advisory Group. Please go ahead.

Dana Telsey: Hi, everyone. Nice to see the progress. I wanted to get some more color on what you are seeing from the current consumer. It sounds like the AURs are being well accepted. Is that existing brands, new brands? You have brought on new brands over the past couple of months. How has that gone? And then we would love to know more about active client growth and, sequentially, how you are thinking about it going forward. Thank you.

Matt Baer: Hey, Dana. It is Matt. I appreciate the comment on the progress that we have made. The team has done a phenomenal job driving this continued outperformance from a revenue growth standpoint, so I appreciate that. I heard about three questions there: a check-in on how we are seeing the consumer and how that has impacted our AUR performance, the impact between private brands and national brands, and then an update on our active client count. I will answer the first two, and David can jump in with additional color as well as answer the third on the client count piece. In terms of the consumer, one of the things that gives us additional confidence in our ability to continue to perform and sustain this momentum is that we are seeing equally positive performance across all different income cohorts within our client base.

We are seeing that strength across the board, and the increase in AUR that we have been able to deliver is reflective of continuing to improve the quality of our assortment overall. Within our private brand portfolio, we have been investing to deliver an even higher quality product while maintaining exceptional value for the end consumer, and our clients have really resonated with that. That is why we were excited to share the outsized growth that we are seeing within many of our private brands within our portfolio. We also continue to strategically add market and national brands in order to meet the needs of our clients and fill white space. In addition to the brand piece, something else that we have talked about on prior calls that is part of our merchandise-focused transformation is investing in newness and making sure that we stand for style and trend.

In the second quarter, sales from new styles were up roughly 50% year over year. So that investment that we are making into new product is also resonating extremely well with our clients. As you know, having the best assortment is critical for delivering RPAC and revenue growth, so we feel good about the work that we have done there and the way that it is helping to drive that performance across the board.

David Aufderhaar: And then, Dana, on active clients, first, the results we saw this quarter were definitely in line with our expectations. As a reminder, we have seasonality in our active clients where Q2 and Q4 tend to be a little bit seasonally softer quarters for us around active client growth, and we are certainly encouraged by being able to continue to commit to seeing sequential client growth in Q3, and we are confident we remain on track to do that. In terms of size and shape, we are just returning to quarter-over-quarter growth, so we probably anticipate that Q3 client growth to be a little less than 1% quarter over quarter. But, again, we are encouraged with those results. Taking a step back, we continue to be encouraged with the overall trends that Matt called out earlier in his remarks around new client acquisition, reengaged clients, and client retention.

That really goes back to that methodical approach that we have been talking about the last few quarters where we are focused on rebuilding a healthy client base, and that continues to be our focus. One of the metrics we have been calling out a lot lately is that 90-day LTV, and that was up 5% year over year. It was the tenth quarter in a row that we have seen year-over-year growth, confirming that we are bringing healthy clients into the mix. From a go-forward perspective, we will provide more detail on specific numbers around Q4 next quarter, but our focus continues to be around sustainable, profitable client growth, and using that methodical approach, we absolutely expect year-over-year comps to continue to improve. Our goal is to return to year-over-year active client growth in FY 2027, so we are definitely encouraged with the results we are seeing.

Matt Baer: Thank you.

Operator: Thank you very much for your question. Your next question comes from the line of Dylan Carden from William Blair. Dylan, your line is now open.

Dylan Carden: Thanks. The comments around revenue per decelerating as you lap harder comparisons. I mean, you already kind of started to lap some of those comparisons. So can you give a sense of what is behind that, or is that just general caution? I have some follow-ups.

David Aufderhaar: Yeah. Dylan, are you talking about the back half revenue comps?

Dylan Carden: Correct.

David Aufderhaar: I got it. Over the last couple of quarters, we have consistently guided to a deceleration in the back half of the year, and actually this back-half guide is an improvement from last quarter’s guide. There are a couple of factors that I would call out. First is what we have been discussing the last couple of quarters: there are more challenging AOV comps in the back half of this year. We have had 10 consecutive quarters of AOV growth, and Q3 and Q4 last year had AOV growth of 10% and then 12%. Our guidance in the back half of this fiscal year still assumes healthy AOV growth, but it is probably in the 4% to 6% range. That is the first factor. The second, when you think about Q2 to Q3, we had a really strong holiday season compared to last year in Q2, and that does not necessarily play forward into future quarters.

One data point there: December was our highest revenue comp in the quarter at around 12% year-over-year growth, and the holiday period also created a little bit of pull-forward activity from Q3 into Q2. Lastly, considering the macro environment and current trends in consumer sentiment and some of the volatility we are seeing, we think it is prudent to assume some headwinds in spending in the coming quarters. All of that is factored into our guide for the year, but again, we are encouraged with what we are seeing, and we are encouraged with the guide that we have been able to provide where we raised the low end of the full-year revenue guide. After significantly increasing our full-year guide last quarter, as a reminder, if you take the last two quarters and add them together, we raised the midpoint of our revenue guide by about $35 million over those two quarters and our EBITDA by almost $9 million.

So we are encouraged with what we are seeing with those trends.

Dylan Carden: Very good. Thank you. And then I am curious on the assortment, Matt, maybe. Do you have it where you want it now, particularly as you start thinking about maybe the women’s business with that influx?

Matt Baer: Yeah. Hey, Dylan. I appreciate the question. Ensuring that we have best-in-class assortment is a perpetual area of focus for us. We are always going to challenge ourselves to make sure that we have the right brands, the right mix, and the right breadth and depth within that, and we are always going to continue to drive an improvement there. We have talked about previously that the initial focus as part of our transformation was more heavily weighted towards our men’s business. We feel really good about where we are there, and we also feel great about the progress that we have made across the board within our women’s business. As I noted, our women’s Fix business was up double digits from a revenue perspective last quarter, which is a strong signal in terms of the strength there, but also a recognition that we still have opportunity to improve the assortment even further, which gives us greater confidence in our ability to sustain the gains that we are seeing across the board.

In addition to that, I would point back to something that was in the prepared remarks and that we have talked about previously around this $1 billion wallet share opportunity that we have with our existing client base across footwear, accessories, activewear, and athleisure. We are delivering outsized growth in those categories, but because of the relatively smaller base that they started at, we still have an exceptional opportunity to continue to lean in there. That is part of what enables us to increase engagement with clients, deliver success with larger Fixes, increase our wallet share, and ultimately continue to deliver these outsized market share gains that we have delivered.

Dylan Carden: Excellent. And then just last one on the repeat customers that are some of the higher that you have seen. Is that proven out to be greater wallet share across use cases? Is that just spending more on existing categories? How should we think about how people are coming to you more and more?

Matt Baer: If I understand the question correctly, Dylan, the work that we do is to ensure that we are able to serve clients across a variety of use cases. Whatever use case that a client comes to us for—for example, if they are starting a new job and we need to update their wardrobe with the appropriate workwear—through that client-stylist relationship, we are also able to navigate them to other use cases. It is why we were excited to share in the prepared remarks the success that we have seen in social occasion dressing and in night-outs. That is also why we are seeing outsized growth in activewear and athleisure as well. Because we have such great assortment across the board for all of these different use cases, that expansion of use cases with our clients continues to be one of the drivers that is helping propel the revenue growth.

We are going to continue to lean into that, as well as continue to lean into head-to-toe outfitting across footwear and accessories.

Operator: Thank you very much for your question. Your next question comes from the line of Jessica Tian from Bernstein. Jessica, your line is now open.

Jessica Tian: Hi, thank you for taking my question and congrats on the quarter. I had a two-part question on the guide. First, on the H2 guide, it looks like the Q2 beat on adjusted EBITDA did not fully flow through to the full-year outlook. Should we read that primarily as conservatism on your part, or is there anything in the underlying margin trend that caused you to hold back some of that upside? And then second, on the Q3 active client sequential inflection, with new clients growing year over year for the second consecutive quarter and five-year low dormancies last quarter, can you talk about what is driving the expected sequential increase in the adds? Should we think about that improvement as coming more from reduced dormancy or is it coming more from new clients? Thank you.

David Aufderhaar: Yes. Thanks, Jessica. On the EBITDA guide, I think we are encouraged with increasing the full-year guide. If you look at the full-year guide, I think we increased the low end of the guide by around $4 million and the high end of the guide by $2 million. So we definitely still feel like we have a healthy flow-through of EBITDA for the year. On the active clients and the sequential inflection, I think Matt might have called this out in his prepared remarks as well, but we are really seeing strength across all three of those cohorts that we tend to call out. New acquisition was up year over year for the second quarter in a row. Reengaging clients was up for the second quarter as well from a year-over-year perspective.

Client retention is looking healthier than it has been in quite a long time. I think that is a big part of our focus, the client retention side, and it comes back to that full loop of making sure that we are bringing in those high-LTV clients that engage with the service. For our existing client base, all of the new client features and the improved assortment that Matt called out as well create stickier relationships from a client perspective. All three of those things are trending in the right direction, and that is why we have felt comfortable calling out that sequential improvement and the sequential quarter-over-quarter increase in Q3.

Operator: Thank you very much for your question. We will now move on to the next question from David Bellinger from Mizuho. David, your line is now open.

David Bellinger: Hey, everyone. Thank you. I want to ask on the Q3 guidance. Revenue growth up something above 2% at the midpoint. I think, if I am hearing you correctly, a lot of that deceleration from this quarter has to do with lapping positive revenue growth last year, some of this AOV uptick. Is there anything else that explains the deceleration? Any other context around the external pressures that you have started to factor into the guidance? You have got gas prices moving up. Is any of that starting to show up in the business? Can you just remind us how gas prices moving higher has historically affected Stitch Fix, Inc.?

David Aufderhaar: Yeah, David. I think outside of what we called out on the AOV comps earlier—and that is certainly the bigger factor around the change quarter to quarter—the second callout was really the holiday period. That is a big part of the sequentials. We had a really strong holiday period this Q2. That is not necessarily something that plays forward. On the macro side, when you see the consumer sentiment where it is, the February jobs report, gas prices certainly going up—and gas prices for us, that is not discretionary spend. If someone is having to spend more on gas, that just means less in their wallet for discretionary spend like apparel. Certainly those things we have taken into account in that back-half guide.

The other thing that you can see, because of the point in time where we are this year, you can back into a Q4 guide as well. We are encouraged that between Q3 and Q4, you still see an acceleration in revenue growth at the midpoint, where the midpoint in Q4 calculates to something closer to 4%. So we are encouraged with that as we close out the year.

Matt Baer: David, what I will add as well is that, while not to minimize the impact of gas or challenges on the consumer in the broader macro environment, something that we have talked about previously is how we are uniquely situated to perform really well if and when the overall wallet for our clients shrinks. Our clients and stylists have a very deep and enduring relationship that allows them to have a real conversation around how budget might be shifting month to month, week to week, quarter to quarter. We have the breadth and depth of assortment across all different price points, so we can meet our clients where they are at any given time. We continue to see us perform relatively well in those periods where the consumer is potentially challenged. That is what gives us so much confidence that, wherever the overall market goes, we will continue to be a market share gainer.

David Bellinger: Very helpful. My second question, I want to ask about GLP-1 usage. That seems to be a relatively new and positive customer driver. Can you help frame up any exposure to the business? Are these customers more sticky, more engaged? Can you simply get more of them as GLP-1 usage becomes increasingly popular? Thank you.

Matt Baer: Yeah, David. I appreciate that question as well. Again, the uniqueness of our service and that superior level of service that we provide to each of our clients positions us extremely well to serve clients going through a body transformation. We have made it a real point of emphasis to market that capability of our service. We are out in market and have been for a while explaining to consumers that, for those on a GLP-1 medication, as their body transforms, they have the ability to work with a personal stylist to help ensure that they have everything that they need so that they can dress in clothing that fits at each stage of that weight loss journey that they are on. We have seen positive results in terms of how that is helping them improve their confidence and their ability to get dressed and outfit themselves on a daily basis.

We have seen that also show up in our data as well. Client mentions of weight loss in their Fix request notes, as an example, have tripled over the last two years. It has actually surged 75% year over year just this past quarter. What that tells me is that the work that we have been doing to improve the segmentation and targeting within our marketing capabilities is working extremely well, and that the quality and superiority of our service is resonating with those clients. We will continue to lean in, and we will continue to serve that demographic at a high level.

Operator: Thank you. There are no further questions at this time. I will now turn the call back to Matt Baer, CEO, for closing remarks.

Matt Baer: Thanks. To wrap up, as I said, we are incredibly pleased with the strong results we delivered this quarter and the improved guidance that we shared for the back half of the year. We believe we are uniquely positioned to lead in this moment of AI innovation, and that is because of how seamlessly data science and AI are integrated into our business, how deeply and personally we know our clients, and how holistically we have integrated our expert stylists. Due to the significant improvements we have made to our experience and assortment through our transformation, we are capturing increased market share and outperforming the broader apparel retail market. We are also building a stronger client base, with seven consecutive quarters of improving year-over-year active client trends and, as we noted, the expected growth in active client count in the third quarter.

We are confident the growth in our business will continue and that this growth will be sustainable. It is important to note that since the start of our transformation, we have improved our contribution margins more than 500 basis points, and we have maintained contribution margins above 30% for the last two years. I appreciate everyone’s interest in our business and look forward to sharing future updates with each of you in the future.

Operator: This concludes today’s call. Thank you for attending, and you may now disconnect.