Stitch Fix spikes 26% after turning in revenue and revenue

Stitch Fix shares increased 25% in aftermarket trading on Wednesday after online personal styling company reported it beating earnings and sales expectations in the third the quarter of 2019, aided by the healthy growth of women's business and the upscaling of their men's business.

Here's what the company reported compared to what Wall Street expected, based on a survey by analysts after Refinitive:

• Earnings per share: 7 cents vs. a loss of 3 cents expected
• Revenue: $ 408.9 million vs. $ 394.9 million expected

For the third quarter ended April 27, Stitch Fix net revenue to $ 7 million, or 7 cents per share, from $ 9.5 million, or 9 cents per share, a year ago. Analysts predicted the result with a loss of 3 cents per share, based on a Refinitiv poll.

Its active customers ̵[ads1]1; people who received a box of clothing in the previous twelve-month period – came in at 3.1 million, an increase of 17% year-on-year.

Stitch Fix has posted seven consecutive quarters with more than 20% revenue growth since it became a public company in 2017. Sales in Q3 2019 grew 29% to $ 408.9 million, $ 394.9 million analysts expected.

"These results demonstrate our ability to attract new customers and serve our existing customers well," said Stitch Fix founder and CEO Katrina Lake in a statement. "The continued strength of our women's category and the growth of our men's category gives us even greater confidence in our ability to scale new categories and geographies. As I look forward, I am thrilled with the opportunities to please even more customers around the world."

In a letter to the shareholders, the company said it used predictive algorithms to better reach female customers "who have long-term relationships." Stitch Fix said it strengthened its men's business by increasing the product range and adding more exclusive brands .

The company also credited its year-old service Style Pass to improve customer retention, increasing average customer earnings and increasing customer satisfaction compared to non-styled clients. The service offers unlimited styling for an annual $ 49 fee, which is credited to goods a customer purchase. Stitch Fix's renewed rate for the Style Pass was 70% across men's and women's business.

The company increased its forecast for 2019 to a range of $ 1.57 billion and $ 1.58 billion, up from previous estimates of $ 1.53 billion to $ 1.56 billion. For the fourth quarter, revenue will be between $ 425 million and $ 435 million.

Adjusted EBITDA will be between $ 5 million and $ 10 million in the fourth quarter and between $ 38 million and $ 43 million for the year.

In the second quarter of 2019, the company launched a new algorithm application that makes it possible to predict product needs by using the data they receive from styling reviews and quizzes on the app. Lake partially assigned the company's strong performance algorithm that quarter.

At the beginning of the third quarter, Stitch Fix also presented a brand marketing campaign to raise consumer awareness by describing how their service works. In May, the company launched in the UK, which is expected to affect earnings forecasts.

The company, which has a market value of $ 2.4 billion, has seen the share price 38 percent since the beginning of the year.