Chewy Q3 Earnings & Sales Beat Estimates on Autoship-Led Momentum

Core Insights - Chewy, Inc. (CHWY) reported strong third-quarter fiscal 2025 results, with both revenue and earnings exceeding expectations and showing year-over-year growth [1][2]. Financial Performance - The net income for the quarter was $59.2 million, which included $76.5 million in share-based compensation and related taxes, resulting in a net margin of 1.9%, an increase of 180 basis points year over year [2]. - Adjusted earnings per share were 32 cents, surpassing the Zacks Consensus Estimate of 30 cents and increasing by 12 cents from the previous year [2]. - Net sales reached $3,116.6 million, an 8.3% increase year over year, exceeding the Zacks Consensus Estimate of $3,098 million, driven by the Autoship program, which saw customer sales rise nearly 13.6% to a record $2,614 million [3][10]. Customer Metrics - Chewy ended the fiscal third quarter with 21.2 million active customers, reflecting a roughly 5% increase year over year [4]. - Net sales per active customer reached $595, marking a 4.9% year-over-year increase [4]. Margin and Cost Analysis - Gross profit for the quarter was $928.2 million, with a gross margin of 29.8%, up 50 basis points from 29.3% in the same quarter of fiscal 2024 [5]. - SG&A expenses totaled $665.1 million, up from $626.5 million in the prior year, with advertising and marketing expenses at $197.9 million compared to $191.8 million a year ago [5]. - Adjusted EBITDA was $180.9 million, an increase of $42.7 million from the previous year, with an adjusted EBITDA margin of 5.8%, up 100 basis points year over year [6]. Financial Health - The company ended the quarter with $675.4 million in cash and cash equivalents, and total shareholders' equity was $469.4 million [7]. - Free cash flow generated during the fiscal third quarter was $176 million [7]. Future Outlook - For the fourth quarter of fiscal 2025, Chewy expects net sales between $3.24 billion and $3.26 billion, with adjusted earnings per share anticipated in the range of 24 cents to 27 cents [8]. - For the full fiscal year 2025, net sales are now expected to be between $12.58 billion and $12.6 billion, with an adjusted EBITDA margin projected between 5.6% and 5.7% [9].