Matt Baer: Thanks, Hayden, and good afternoon. As we have said for the past few quarters, we are committed to managing our business with financial discipline to drive profitability in the near term and growth over time. We delivered second quarter results in line with our outlook on both revenue and adjusted EBITDA. While these fell within our outlook, there is additional work to be done to improve the trajectory of our business. The original Stitch Fix vision to create an easier and more enjoyable way for people to shop for clothing and accessories is as compelling and relevant today as when the company was founded 13 years ago. Our leadership in personalization technology, combined with our passionate and skilled stylists continues to create an innovative and exciting way to shop.

Our transformation efforts are grounded in fully realizing our vision and evolving the Stitch Fix experience. As we stated on last quarter's call, we are focused on three priority areas. First, we are working to strengthen the foundation of our business across all disciplines. This includes embedding retail best practices across the enterprise and ensuring we have the right organizational structure in place to enable our future success. Second, we are reimagining the client experience in order to attract and retain high lifetime value customers. Third, and simultaneously, we are developing a long-term strategy to build upon these areas and ensure we best serve our clients as their needs evolve in the future. We believe the execution of these priorities will enable the company to return to sustainable, profitable growth.

In the second quarter, we made progress on several initiatives to strengthen the foundation of our business across merchandising and marketing. These actions contributed to our expanding gross margins year-over-year and will provide the opportunity for us to realize additional efficiencies in our operations. In merchandising, a robust offering of national and private brands is one of the ways we best serve our clients. So we continue to enhance our assortment of both. Extensive ongoing client feedback enables us to offer private brands that perform better and more profitably than our national brands. And we plan to further strengthen our private brand portfolio by making enhancements to our existing brands and introducing new ones. At the same time, we continue to deepen relationships with the national brands that resonate most with our clients.

In marketing, we continue to evolve both program and channel strategies to optimize media mix and efficiency and to strengthen brand affinity. We know that when we reach clients for whom our offering resonates, they have a higher order value and purchase frequency as we saw with our newer client cohorts in the second quarter. While we have invested in new upper and mid-funnel tactics that help increase traffic, we continue to have an opportunity to improve our current levels of client conversion, which have not met our expectations. We are focused on improving the performance of our full funnel media. And as we move through the back half of the year, we will adjust our media mix and spend levels in an effort to improve conversion and retention of clients.

Now let me shift gears to describe how we are reimagining the client experience, which we believe will help us attract and engage the right clients and drive higher lifetime value. We are taking a holistic approach to rethink how our clients engage with Stitch Fix and going forward, we are prioritizing a reimagination of the client experience to focus on long-term growth. A few initial areas guide our thinking about how to reimagine the client experience. First, we want to create a more fun and visual experience that better engages clients beginning at their sign-up and creates ongoing confidence that we will deliver for them on both fit and style. In the coming months, we plan to introduce a new onboarding experience that will be a more dynamic and interactive way for clients to begin their relationship with Stitch Fix.

Second, we plan to deepen engagement by developing new ways to inspire and empower clients as they discover their personal style through our service. This includes creating new social connections that help clients visualize their style and give them reasons to return to our platform. Third, we plan to offer new touch points for clients to interact and develop more personalized connections with stylists. Our stylists play a critical part in our value proposition and our clients have told us they want to get to know the stylists behind their fixes. By enabling more direct ways to connect with stylists, we believe these relationships will become deeper and more meaningful. While some of these initiatives will begin to roll out in the coming months, it will take time to accomplish our ambitious plans to significantly evolve the Stitch Fix client experience.

I look forward to sharing updates as our work progresses. Finally, we have a powerful value proposition that combines a strong network of stylists, carefully curated merchandise assortment and advance the data science and technology to create an experience that only Stitch Fix can deliver. We believe that these strategic priorities tied to strengthening our foundation and reimagining the client experience will lead to sustainable, profitable growth over time. With that, I'll turn the call over to David to talk about our Q2 financial results and outlook.

David Aufderhaar: Thanks, Matt. In Q2, we continued to focus on driving leverage in our P&L while also funding initiatives that position us for long-term growth. The actions we took in Q2, including negotiating cost savings throughout our business, optimizing our carrier mix, implementing efficiency measures and ensuring we have the right organizational structure in place to enable our future success. Taking a step back, since Q3 of fiscal 2022, we've undertaken detailed reviews of our business and cost structure to identify savings opportunities and the resulting actions have allowed us to expand gross margins and reduced total annualized SG&A spend by over $370 million. The work our teams have done to improve gross margin and variable cost leverage continues to produce enviable unit and order economics and our contribution profit is nearing the high end of its historical 25% to 30% range.

And our work here is not done. We believe there are additional opportunities for us to operate more efficiently and drive more leverage in both our fixed and variable cost structures. Now let me get into the Q2 results. Q2 net revenue was $330 million, down 18% year-over-year and down 9% compared to last quarter Net Active clients ended the quarter down 6% compared to last quarter at approximately 2.8 million clients. Revenue per active client ended the quarter at $515, down 3% year-over-year, but up 2% quarter-over-quarter. As Matt said, we continue to see strength in our newer client cohorts with both order value and fixed frequency up year-over-year for those clients. Additionally, our 90-day revenue per active client had its third consecutive quarter of sequential growth.

Gross margin for the quarter was 43.4%, down 20 basis points quarter-over-quarter and up 250 basis points year-over-year, driven by strong product margins, improvement in inventory health, and transportation leverage. Net inventory decreased 22% quarter-over-quarter as expected due to the front-loading of our inventory at the beginning of this fiscal year. We continue to expect inventory balances to these lower levels for the remainder of fiscal 2024 as we align our inventory position with demand, rationalize our assortment, and focus on our successful private brands. Advertising was 7% of revenue in the quarter down 19% quarter-over-quarter due to our typical lower seasonal spending around the holidays. Q2 adjusted EBITDA came in at $4.4 million and reflected our ongoing cost management discipline.

As expected, free cash flow was negative, $26.1 million in the quarter due to the timing of receipts related to our inventory purchases in Q1. We still expect to be free cash flow positive for the full year and ended the quarter with $230 million in cash, cash equivalents, and investments and no bank debt. Turning to our outlook. We are updating our full fiscal year outlook to reflect the current trends we are seeing in our business. For Q3, we expect total net revenue to be between $300 million and $310 million. We expect Q3 adjusted EBITDA will be between negative $5 million and breakeven. In the back half of the year, we expect gross margin to increase to between 44% and 45% as a result of the ongoing efforts to drive improvement in our inventory position and efficiencies in our transportation costs.

We expect Q3 advertising to be between 8% and 9% of revenue. As we've said in the past, we will continue to be methodical about our approach when we are investing in marketing and may adjust up or down based on the ROI we are seeing. For the full year, we are lowering our expectations for net revenue to reflect the current trends we are seeing in active clients. We now expect revenue to be between $1.29 billion and $1.32 billion. We expect adjusted EBITDA to be between $10 million and $20 million. For the full fiscal year, we expect gross margin to be approximately 44% and advertising to be approximately 8% of revenue. Overall, I am confident in our ability to maintain profitability today and I'm excited about the work we are doing to strengthen the foundation of our business and reimagine the client experience.

We will do so by remaining focused on leverage and profitability, along with acquisition and engagement of high lifetime value customers. Now, let me turn the call back to Matt.

Matt Baer: Thanks David. As you heard me say earlier, I believe that we have the right strategic priorities in place to generate sustainable, profitable growth over time. We are strengthening the foundation of our business. We are reimagining the client experience to attract and retain high lifetime value customers, and we are developing a long-term strategy to build upon these areas and ensure we best serve our clients as their needs evolve in the future. While some of these initiatives will begin to come to life later this year, we know it will take time to accomplish our ambitious plans to re-imagine the Stitch Fix client experience. I look forward to sharing updates as our work progresses. Thank you all for joining today's call. And now, I'll turn it over to the operator so we can take your questions.

See also 25 Companies with the Best Benefits and Perks and 20 Countries With Worst Vision Problems.

To continue reading the Q&A session, please click here.