ChewyCHWY

Key highlights

• Customer growth returning: The company added 741,000 net new customers compared to a year ago, bringing the total to 21.497 million. This 3.6% increase shows a return to growth after a period where the user count had stalled at around 20 million.
• Spending per pet rising: The average amount each customer spent reached $597 for the year, a 2.4% increase over the $583 reported in the same period last year. This steady climb toward the company target of $650 shows that existing shoppers are buying more categories, like prescriptions or health services, over time.
• Autoship loyalty deepening: Automatic recurring orders grew 10.5% to $2.83 billion and now make up 84.4% of all sales. This is a record high for the company and provides highly predictable revenue, as customers who use these scheduled deliveries tend to stay with the brand longer.
• Profitability reaching new highs: The adjusted EBITDA margin, which measures profit from business operations before certain costs like taxes, rose to 7.5% from 6.2% a year ago. This record level of profitability was driven by better efficiency in the company warehouses and more customers choosing higher margin health products.
• Inventory and cash management: Chewy used $200 million to buy back its own stock this quarter, leaving $485.2 million in cash on the balance sheet. Management is prioritizing these buybacks and business investments like the $174.8 million spent on a recent acquisition, while inventory levels grew to $1.01 billion to ensure products stay in stock.

Our take: This was a standout quarter that showed Chewy can grow its user base while also becoming much more profitable. The jump in active customers to 21.497 million and the record 7.5% profit margin prove the business is finally scaling efficiently. It significantly strengthens the case that Chewy is the dominant, high-loyalty winner in online pet care.