Stitch Fix reported Q1 FY2025 net revenue of $318.8 million, down 13% year over year but flat quarter over quarter, underscoring ongoing demand normalization as the company de-risks its transition. AOV rose 6% YoY (and 11% QoQ) to help lift revenue per active client to $531, while gross margin expanded 180 basis points YoY to 45.4%, contributing to a roughly 34% contribution margin—above the historical 25%–30% range for three consecutive quarters. Adjusted EBITDA was $13.5 million (about 4.2% margin), marking continued operating leverage as the company benefits from cost discipline in warehousing and styling and from mix shifts toward higher-margin inventory. Net income remained negative at $6.3 million (EPS -$0.0497) as Stitch Fix continues to invest in growth initiatives, brand overhaul, and inventory optimization. Cash generation remained positive with $14.3 million of operating cash flow and roughly $10.0 million of free cash flow in the quarter, ending with roughly $253 million in cash, cash equivalents and investments and no net debt on the balance sheet per management’s commentary, albeit reported debt lines show some near-term obligations. Importantly, the company raised its full-year guidance for FY25: revenue of $1.14–$1.18 billion and adjusted EBITDA of $25–$36 million, with Q2 expected to be modestly negative on EBITDA due to inventory investments and timing. Management cited the ongoing transformation, AI-enabled inventory and pricing optimization, expanded Fix options (up to eight items), stronger engagement, and reactivation of dormant customers as key pillars supporting the path back to revenue growth by the end of FY26. The quarter also showcased early momentum from private-label brands (The Commons and Montgomery Post), new national brand partnerships, and a refresh of brand and marketing (Retail Therapy, Style File, Stylist Profiles) that lowered CAC and improved conversion in TV/related channels. While the near-term top-line remains pressured by a smaller active client base (2.4 million, down 19% YoY, down 3% QoQ), the combination of higher AOV, better newness, and a more flexible Fix is designed to rebuild wallet share and LTV over the coming year. Investors should monitor active client trends, newness penetration, private-label contribution, gross margin progression, inventory management, and marketing efficiency as the key levers of the turnaround.