Dive Brief:

• Stitch Fix this week released its first quarterly report as a public company, reporting that its Q1 net revenue rose 25.2% year-over-year to $295.6 million. Net income in the quarter was $13.5 million, or 4 cents per share, besting analyst expectations for GAAP earnings of 3 cents per share on revenue of $295 million, according to FactSet numbers cited by MarketWatch.

• The company's active client count as of Oct. 28 was 2.4 million, an increase of 549,000 and a 29.7% year-over-year growth, according to the company's letter to shareholders.

• But expenses soared in the quarter as the company spent money on advertising to raise brand awareness and push its new men's and plus-size categories. Selling, general and administrative expenses in the quarter were $119.5 million or 40.5% of net revenue, compared to $83.6 million, or 35.4% of net revenue, in the year-ago quarter — an increase of 5.1 percentage points, the company said.

Dive Insight:

Beating analyst forecast for certain line items wasn't enough to protect Stitch Fix's share price after its first post-IPO earnings report — shares plummeted some 10% as investors demonstrated their disappointment in the company's less-than-smooth sailing.

"They beat on the top and bottom, but it was not the blowout quarter the bulls were hoping for," Daniel Ives, head of technology research at GBH Insights, told MarketWatch. "It's a first quarter coming out public and there were high expectations, especially in light of a stock that has significantly outperformed since the IPO."

Stitch Fix is finding that lower-priced apparel is selling better than its premium offer, and Stitch Fix founder/CEO Katrina Lake told analysts that subscribers looking for that merchandise will be more of a focus for the subscription service from here on out. "From a volume perspective, there is a greater opportunity in the $20 to $50 price range," she said, according to a conference call transcript from Seeking Alpha. "And that's the price range that we are seeing more and more demand for, it's a price point that we could serve very profitably and effectively. And so there is probably going to be greater investment in that lower price point than in the Premium one."

Lake also urged analysts to view the company's customer acquisition in its first quarter as a sign of its potential. "In terms of overall momentum, I guess what I would say is I think you should take this as indicative of what we're capable of doing," she said.

In the company's letter to shareholders, Stitch Fix said it expects net revenue in the second quarter to land between $287–$294 million (21%–24% year-over-year growth) and for the full fiscal year to land between $1.17–$1.22 billion (20%–25% growth).