Investors found plenty of reasons to celebrate Stitch Fix's (NASDAQ:SFIX) latest earnings report, which was highlighted by strong sales growth as customer engagement improved for its subscription-based shopping service. But some of the apparel upstart's most exciting metrics had to do with new revenue lines like its just-launched direct-purchase program. Stitch Fix's early success on this score suggests the company could materially expand its addressable market by building on its core selling platform.

In a shareholder letter that accompanied the earnings report, CEO Katrina Lake and her team detailed those results and discussed why they're optimistic that growth will speed up for the rest of the fiscal year. Let's look at some highlights from that presentation.

A woman takes delivery of several boxes

Image source: Getty Images.

1. Good growth rates

"Net revenue per active client ... was $485, an increase of 9.5% compared to the prior year. This represented the sixth consecutive quarter of net revenue per active client growth."

All the key growth and engagement metrics are moving in the right direction. Stitch Fix added 486,000 new clients -- a 17% increase year over year and a 6% boost compared to the prior quarter. These customers not only spent more by purchasing a higher proportion of delivered items, but they also reported higher repeat business and shopper satisfaction. These positive trends combined to push sales just ahead of the (admittedly soft) guidance that management issued three months ago.

2. Data-driven success

"We've refined the [inventory] algorithm to improve our assortment and be more effective in reserving inventory for clients in our styling queue."

Anyone can sell apparel online, but what sets Stitch Fix apart as a business today is its push-based selling model, which allows for a unique data-driven approach to apparel marketing. The latest results indicate that the model is working, and tweaks to it can generate better shopping results.

For example, management said improvements to Stitch Fix's inventory algorithm, which limits the selection of products available for any given delivery by taking into account the wider queue of shoppers, pushed up key engagement metrics including client spending and satisfaction. "The updated algorithm also shortened average styling time," the company said, "further improving our unit economics."

3. Finding new ways to change the game

"This radical e-commerce experience is working, and we're encouraged by early signs that 'Shop Your Looks' is both complementary and additive to the [core shopping] experience."

Lake and her team are thrilled with the early results from the direct-buy offering that was just rolled out to roughly one-third of the company's women's clothing shoppers. Executives were careful to note that this new functionality is different from the apparel shopping that customers can find at competitors.

Because Stitch Fix has an established relationship and volumes of data on past purchases and returns, its shopper selection can be curated and personalized to each client. This results in product offerings of around 30 in the "Shop Your Looks" function, for example, out of the tens of thousands of available items. Success with direct-buy should help with inventory management, revenue, and profitability, while also unlocking a potentially large new source of customers.

It's no wonder, then, that Stitch Fix was confident enough to affirm its full-year guidance, which predicts accelerating growth over the next two quarters. It will be a few months before investors know for sure whether that optimistic forecast is right. Yet the latest operating trends show that, if anything, management was too pessimistic in its early October projections.