For the quarter ended October 2024, Chewy (CHWY) reported revenue of $2.88 billion, up 5.1% over the same period last year. EPS came in at $0.20, compared to $0.15 in the year-ago quarter.The reported revenue represents a surprise of +0.60% over the Zacks Consensus Estimate of $2.86 billion. With the consensus EPS estimate being $0.23, the EPS surprise was -13.04%.While investors closely watch year-over-year changes in headline numbers -- revenue and earnings -- and how they compare to Wall Street expectati ...

Chewy (CHWY) came out with quarterly earnings of $0.20 per share, missing the Zacks Consensus Estimate of $0.23 per share. This compares to earnings of $0.15 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an earnings surprise of -13.04%. A quarter ago, it was expected that this online pet store would post earnings of $0.22 per share when it actually produced earnings of $0.24, delivering a surprise of 9.09%.Over the last four quarters, the company h ...

Financial Highlights - Chewy reported 160K sequential net active customer additions[3] - Net sales per active customer reached $567[3] - Autoship customer sales accounted for 80% of net sales[3] - Q3 2024 Adjusted EBITDA was $138 million, representing a 4.8% margin[3] Revenue Performance - Net sales for the full year 2021 were $8.967 billion, with a YoY growth of 25.5%[4] - Net sales for the full year 2022 were $10.119 billion, with a YoY growth of 12.8%[4] - Net sales for the full year 2023 were $11.148 billion, with a YoY growth of 10.2%[4] - Last Twelve Months (LTM) net sales reached $11.440 billion, showing a 3.7% YoY growth[4] - Q3 2024 net sales were $2.878 billion, a 4.8% YoY growth[4] Autoship Program - Autoship customer sales for the full year 2021 were $6.324 billion, with a YoY growth of 29.3%[5] - Autoship customer sales for the full year 2022 were $7.408 billion, with a YoY growth of 17.1%[5] - Autoship customer sales for the full year 2023 were $8.493 billion, with a YoY growth of 14.7%[5] - LTM Autoship customer sales reached $8.935 billion, a 7.2% YoY growth[5] - Q3 2024 Autoship customer sales were $2.301 billion, an 8.7% YoY growth[5] Profitability and Cash Flow - Gross margin for LTM was 29.2%[7] - LTM Adjusted EBITDA reached $532 million, with a 4.7% margin[8] - Free cash flow for LTM was $343 million[9] - The company's cash balance for FY24 is $508 million[9] Guidance - Fiscal Fourth Quarter 2024 Net Sales are projected to be between $3.18 billion and $3.20 billion, representing approximately 13% YoY growth[10] - Fiscal Year 2024 Net Sales are projected to be between $11.79 billion and $11.81 billion, representing approximately 6% YoY growth[10] - Fiscal Year 2024 Adjusted EBITDA Margin is expected to be between 4.6% and 4.8%[10]

[PART I. FINANCIAL INFORMATION](index=3&type=section&id=PART%20I%2E%20FINANCIAL%20INFORMATION) [Item 1. Financial Statements (Unaudited)](index=5&type=section&id=Item%201%2E%20Financial%20Statements%20%28Unaudited%29) Unaudited Q3 2024 financial statements reflect a shift to net income, with slight asset decrease and liability increase, driven by Chewy Pharmacy KY operations [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets decreased to **$2.96 billion** by October 27, 2024, while liabilities increased, and equity declined due to share repurchases Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | Oct 27, 2024 (Unaudited) | Jan 28, 2024 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $506,634 | $602,232 | | Marketable securities | $885 | $531,785 | | Inventories | $858,551 | $719,273 | | Total current assets | $1,615,725 | $2,104,348 | | **Total assets** | **$2,957,897** | **$3,186,851** | | **Liabilities & Equity** | | | | Trade accounts payable | $1,229,132 | $1,104,940 | | Total current liabilities | $2,179,225 | $2,110,877 | | **Total liabilities** | **$2,734,475** | **$2,676,607** | | **Total stockholders' equity** | **$223,422** | **$510,244** | [Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Income%20%28Loss%29) Q3 2024 net sales grew **4.8%** to **$2.88 billion**, achieving a **$3.9 million** net income, a significant turnaround from prior year's loss Statement of Operations Summary (in thousands, except per share data) | Metric | 13 Weeks Ended Oct 27, 2024 | 13 Weeks Ended Oct 29, 2023 | 39 Weeks Ended Oct 27, 2024 | 39 Weeks Ended Oct 29, 2023 | | :--- | :--- | :--- | :--- | :--- | | Net sales | $2,877,635 | $2,745,875 | $8,613,949 | $8,321,816 | | Gross profit | $843,873 | $781,856 | $2,541,701 | $2,363,433 | | Income (loss) from operations | $25,632 | $(9,719) | $122,299 | $(1,644) | | Net income (loss) | $3,932 | $(35,372) | $369,946 | $7,694 | | Diluted EPS | $0.01 | $(0.08) | $0.85 | $0.02 | [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Operating cash flow was **$388.8 million**, investing cash flow reversed to **$445.5 million** provided, while financing activities used **$929.7 million** due to share repurchases Cash Flow Summary (in thousands) | Cash Flow Activity | 39 Weeks Ended Oct 27, 2024 | 39 Weeks Ended Oct 29, 2023 | | :--- | :--- | :--- | | Net cash provided by operating activities | $388,809 | $386,664 | | Net cash provided by (used in) investing activities | $445,482 | $(237,458) | | Net cash used in financing activities | $(929,741) | $(10,938) | | **Net (decrease) increase in cash** | **$(95,598)** | **$138,268** | [Notes to Condensed Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Notes detail **$875.2 million** in share repurchases, a **$275.7 million** deferred tax asset valuation allowance release, and an undrawn **$800 million** ABL credit facility - On May 24, 2024, the Board authorized a **$500 million** share repurchase program, with **$875.2 million** of common stock repurchased during the thirty-nine weeks ended October 27, 2024[44](index=44&type=chunk)[50](index=50&type=chunk) - The company released the valuation allowance on its U.S. federal and other state deferred tax assets, resulting in a benefit of **$275.7 million** during the thirty-nine weeks ended October 27, 2024[104](index=104&type=chunk) - As of October 27, 2024, the company had **$777.6 million** of borrowing capacity under its ABL Credit Facility, with no outstanding borrowings[83](index=83&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=25&type=section&id=Item%202%2E%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Q3 2024 net sales grew **4.8%** with gross margin expansion, leading to **$3.9 million** net income and **$138.2 million** Adjusted EBITDA, despite cash reduction from share repurchases [Key Financial and Operating Data](index=26&type=section&id=Key%20Financial%20and%20Operating%20Data) Q3 2024 net sales grew **4.8%** to **$2.9 billion**, Adjusted EBITDA increased **67.4%**, and net sales per active customer rose **4.2%** Key Financial and Operating Metrics (13 Weeks Ended) | Metric | Oct 27, 2024 | Oct 29, 2023 | % Change | | :--- | :--- | :--- | :--- | | Net sales | $2,877,635 | $2,745,875 | 4.8% | | Net income (loss) | $3,932 | $(35,372) | 111.1% | | Adjusted EBITDA | $138,245 | $82,581 | 67.4% | | Adjusted EBITDA margin | 4.8% | 3.0% | N/A | | Active customers (thousands) | 20,160 | 20,266 | (0.5)% | | Net sales per active customer | $567 | $544 | 4.2% | | Autoship customer sales | $2,300,928 | $2,116,458 | 8.7% | [Results of Consolidated Operations](index=36&type=section&id=Results%20of%20Consolidated%20Operations) Q3 2024 net sales increased **4.8%** driven by customer spending, gross profit margin improved **80 basis points**, and operating income reached **$25.6 million** - Net sales growth in Q3 was driven by increased customer spending, with net sales per active customer rising **4.2%** to **$567**, particularly from healthcare and specialty businesses[153](index=153&type=chunk) - Gross profit as a percentage of net sales increased by **80 basis points** year-over-year, attributed to supply chain efficiency gains and margin expansion[158](index=158&type=chunk) - Selling, general and administrative (SG&A) expenses increased by **2.3%**, primarily due to a **$14.6 million** rise in non-cash share-based compensation[160](index=160&type=chunk) - Advertising and marketing expenses rose **7.0%** to **$191.8 million** due to increased investment and expansion into Canada[163](index=163&type=chunk) [Liquidity and Capital Resources](index=39&type=section&id=Liquidity%20and%20Capital%20Resources) Liquidity is supported by **$506.6 million** cash and an undrawn **$800 million** ABL facility, despite **$875.2 million** in share repurchases - Cash and cash equivalents totaled **$506.6 million** as of October 27, 2024, a decrease of **$95.6 million** from January 28, 2024[171](index=171&type=chunk) - Net cash used in financing activities for the 39 weeks ended October 27, 2024 was **$929.7 million**, primarily consisting of **$875.2 million** for repurchases of common stock[179](index=179&type=chunk) - The company has an **$800 million** ABL Credit Facility maturing in 2026, with **$777.6 million** of borrowing capacity and no outstanding borrowings[181](index=181&type=chunk) [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=42&type=section&id=Item%203%2E%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) No material changes to market risk disclosures were reported since the last annual report - There have been no material changes to the company's market risk disclosures since the last annual report[188](index=188&type=chunk) [Item 4. Controls and Procedures](index=42&type=section&id=Item%204%2E%20Controls%20and%20Procedures) Disclosure controls and procedures were effective as of October 27, 2024, with no material changes in internal control over financial reporting - Disclosure controls and procedures were effective as of October 27, 2024, as concluded by principal executive and financial officers[190](index=190&type=chunk) - No material changes in internal control over financial reporting occurred during the quarter[191](index=191&type=chunk) [PART II. OTHER INFORMATION](index=44&type=section&id=PART%20II%2E%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=44&type=section&id=Item%201%2E%20Legal%20Proceedings) The company does not expect current legal proceedings to materially affect its financial condition or results - The company does not expect current legal proceedings to have a material adverse effect on its financial results[81](index=81&type=chunk)[195](index=195&type=chunk) [Item 1A. Risk Factors](index=44&type=section&id=Item%201A%2E%20Risk%20Factors) No material changes to risk factors were reported for the quarter - No material changes to risk factors were reported for the quarter[196](index=196&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=44&type=section&id=Item%202%2E%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) During Q3 2024, Chewy repurchased **11.8 million** shares, with **$424.8 million** remaining for future repurchases under the program Share Repurchase Activity (13 Weeks Ended Oct 27, 2024) | Period | Total Shares Purchased | Average Price Paid Per Share | Shares Purchased as Part of Program | Remaining Program Value (in millions) | | :--- | :--- | :--- | :--- | :--- | | Jul 29 - Aug 25, 2024 | 774,185 | $24.37 | 774,185 | $448.4 | | Aug 26 - Sep 29, 2024 | 11,038,651 | $29.31 | 834,570 | $424.8 | | Sep 30 - Oct 27, 2024 | — | — | — | $424.8 | | **Total** | **11,812,836** | **N/A** | **1,608,755** | **$424.8** | [Item 5. Other Information](index=44&type=section&id=Item%205%2E%20Other%20Information) Several executives adopted Rule 10b5-1 trading plans for Class A common stock sales, including for tax obligations and financial planning - CEO Sumit Singh adopted a Rule 10b5-1 trading plan to sell up to **1,387,271** shares of Class A common stock, expiring December 31, 2025[202](index=202&type=chunk) - CFO David Reeder and Chief Accounting Officer William Billings adopted 'sell-to-cover' Rule 10b5-1 trading arrangements for tax withholding obligations from RSU vesting[198](index=198&type=chunk)[199](index=199&type=chunk) [Item 6. Exhibits](index=47&type=section&id=Item%206%2E%20Exhibits) This section lists exhibits filed with Form 10-Q, including stock compensation, repurchase agreements, and officer certifications

Financial Performance - Net sales for Q3 2024 reached $2.88 billion, a year-over-year increase of 4.8%[3] - Gross margin improved to 29.3%, up 80 basis points from the previous year[3] - Net income was $3.9 million, with a net margin of 0.1%, an increase of 140 basis points year-over-year[3] - Adjusted EBITDA rose to $138.2 million, reflecting a year-over-year increase of $55.7 million[3] - Adjusted net income increased to $84.9 million, up $21.5 million year-over-year[3] - Net income for the 39 weeks ended October 27, 2024, was $369,946, compared to a net income of $7,694 for the same period last year, marking a significant recovery[16] - Adjusted EBITDA for the 13 weeks ended October 27, 2024, was $138,245, a 67.4% increase from $82,581 in the prior year[21] - The company reported a net margin of 0.1% for the 13 weeks ended October 27, 2024, compared to a net margin of (1.3)% in the same period last year[21] - Adjusted net income for the 13 weeks ended October 27, 2024, was $84,922 thousand, compared to $63,449 thousand for the same period last year, representing a year-over-year increase of 33.5%[26] - Adjusted diluted earnings per share for the 39 weeks ended October 27, 2024, was $0.75, up from $0.50 for the same period last year, reflecting a 50% increase[26] - Adjusted basic earnings per share for the 39 weeks ended October 27, 2024, was $0.77, compared to $0.50 for the same period last year, reflecting a 54% increase[26] Cash Flow and Expenditures - The company reported robust free cash flow generation, underscoring the durability of its business model[3] - Net cash provided by operating activities was $388,809 for the 39 weeks ended October 27, 2024, compared to $386,664 in the same period last year, indicating stable cash flow[16] - Free cash flow increased by 218.2% to $151,767 for the 13 weeks ended October 27, 2024, compared to $47,692 in the prior year[16] - Free cash flow for the 13 weeks ended October 27, 2024, was $151,767 thousand, significantly higher than $47,692 thousand for the same period last year, indicating a growth of 217.5%[30] - Capital expenditures for the 39 weeks ended October 27, 2024, totaled $92,920 thousand, down from $110,902 thousand for the same period last year, a decrease of 16.2%[30] - The company emphasized the importance of free cash flow as a key indicator of liquidity, which is crucial for evaluating operational results[28] Customer Metrics - Active customers saw a sequential increase, contributing to the positive momentum observed in Q2[3] - Active customers remained stable at 20,160, a slight decrease of 0.5% from 20,266 in the previous year[16] - Autoship customer sales reached $2,300,928 for the 13 weeks ended October 27, 2024, an 8.7% increase from $2,116,458 in the same period last year[16] Shareholder Value - The company repurchased $875,197 of common stock during the current period, reflecting a strategic move to enhance shareholder value[16] Operational Focus - Chewy continues to focus on high-quality execution and operational discipline to drive growth[3] - The company partners with approximately 3,500 trusted brands and offers around 115,000 products and services[5] Earnings Per Share - Basic and diluted earnings per share were $0.01, an increase of $0.09 year-over-year[3] - The weighted-average common shares used in computing diluted earnings per share for the 13 weeks ended October 27, 2024, was 426,572 thousand, slightly down from 432,172 thousand for the same period last year[26] - Share-based compensation expense for the 13 weeks ended October 27, 2024, was $80,426 thousand, up from $65,799 thousand for the same period last year, an increase of 22.5%[26] Turnaround Performance - The company reported a net income of $3,932 thousand for the 13 weeks ended October 27, 2024, compared to a net loss of $35,372 thousand for the same period last year, marking a significant turnaround[26]

Core Viewpoint - Chewy Inc. is preparing to announce its Q3 fiscal 2024 earnings, with a focus on its growth trajectory and strategic initiatives, raising questions about its investment viability at this stage [1] Financial Performance - The Zacks Consensus Estimate projects revenues of $2.86 billion for the upcoming quarter, indicating a 4.5% increase year-over-year [2] - The consensus estimate for earnings is 23 cents per share, reflecting a significant 53.3% year-over-year increase, with Chewy having an average earnings surprise of 50.9% over the past four quarters [3] Market Position and Strategy - Chewy is adapting to market dynamics, enhancing its position in the growing pet care sector through an expanding customer base and diversified service offerings, including veterinary clinics and pharmacy services [6] - The company is broadening its inventory to meet customer preferences, supported by strategic promotions and targeted marketing initiatives [7] - The success of the Autoship program is expected to drive revenues and improve customer retention, simplifying the purchasing process and maintaining a steady revenue stream [8] Expansion and Innovation - Chewy has opened two additional Vet Care clinics, increasing the total to six, which enhances customer loyalty and serves as entry points for new customers [9] - The Sponsored Ads program is contributing to revenue growth, with increasing advertiser demand and improved click-through rates, while enhancements to the mobile app are driving customer acquisition and order frequency [10] Stock Performance - Chewy's stock has surged 50.1% over the past six months, outperforming the industry growth of 19.4% and its close competitors [11] Valuation - Chewy shares are trading at a forward 12-month price-to-sales ratio of 1.14, below the five-year median of 1.63 and the industry's average of 1.80, presenting an attractive opportunity for investors [13] Investment Thesis - Chewy's stock price appreciation, strong financial metrics, and strategic initiatives underscore its growth potential, with a focus on innovation through the Autoship program and pharmacy services likely driving revenue growth [16] - The company's diversified services and strategic marketing initiatives align with evolving consumer preferences, enhancing customer engagement and revenue potential [17]

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Core Viewpoint - Wall Street anticipates a year-over-year increase in earnings for Chewy, driven by higher revenues, with a focus on how actual results compare to estimates impacting stock price [1][2] Earnings Expectations - Chewy is expected to report quarterly earnings of $0.23 per share, reflecting a year-over-year increase of +53.3% [3] - Revenues are projected to be $2.86 billion, representing a 4.4% increase from the same quarter last year [4] Estimate Revisions - The consensus EPS estimate has been revised 10.53% higher in the last 30 days, indicating a positive reassessment by analysts [5] - The Most Accurate Estimate for Chewy is higher than the Zacks Consensus Estimate, resulting in an Earnings ESP of +2.67% [11][12] Earnings Surprise Prediction - A positive Earnings ESP is a strong indicator of an earnings beat, especially when combined with a Zacks Rank of 1 (Strong Buy), 2 (Buy), or 3 (Hold) [9] - Chewy currently holds a Zacks Rank of 2, suggesting a high likelihood of beating the consensus EPS estimate [12][13] Historical Performance - Chewy has consistently beaten consensus EPS estimates, achieving this in the last four quarters [15] - In the last reported quarter, Chewy exceeded expectations by delivering earnings of $0.24 per share against an expected $0.22, resulting in a surprise of +9.09% [14] Conclusion - Chewy is positioned as a compelling candidate for an earnings beat, but investors should consider additional factors beyond earnings results when making investment decisions [18]

Company Performance - Chewy (CHWY) has returned 46.5% year-to-date, outperforming the Retail-Wholesale sector average of 27.8% [4] - The Zacks Consensus Estimate for Chewy's full-year earnings has increased by 39.1% over the past 90 days, indicating improved analyst sentiment [3] - Chewy currently holds a Zacks Rank of 2 (Buy) [3] Industry Comparison - Chewy belongs to the Internet - Commerce industry, which has 39 stocks and is ranked 74 in the Zacks Industry Rank [5] - The Internet - Commerce industry has gained an average of 32.1% year-to-date, with Chewy outperforming this average [5] - Petco Health & Wellness (WOOF), another Retail-Wholesale stock, has returned 33.9% year-to-date, also outperforming the sector average [4] Peer Analysis - Petco Health & Wellness falls under the Retail - Miscellaneous industry, which has 17 stocks and is ranked 163 in the Zacks Industry Rank [6] - The Retail - Miscellaneous industry has declined by 2.3% year-to-date, while Petco Health & Wellness has shown positive performance [6] - Petco Health & Wellness' consensus EPS estimate for the current year has increased by 4.1% over the past three months and holds a Zacks Rank of 2 (Buy) [5] Sector Overview - The Retail-Wholesale group consists of 210 companies and is ranked 7 within the Zacks Sector Rank [2] - The Zacks Sector Rank includes 16 groups, ranked based on the average Zacks Rank of individual companies within each sector [2]