Chewy delivered Q3 results slightly ahead of Wall Street’s expectations, with management crediting strong Autoship volume growth, improved marketing efficiency, and a higher contribution from its mobile app for the company’s year-over-year gains. CEO Sumit Singh emphasized that “growth in Autoship customer sales outpaced total company growth,” and highlighted the effectiveness of new customer acquisition strategies and increased retention. Enhanced engagement through the Chewy app also helped lift net sales per active customer, while margin expansion was supported by improvements in category mix and advertising productivity.
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Chewy (CHWY) Q3 CY2025 Highlights:
- Revenue: $3.12 billion vs analyst estimates of $3.1 billion (8.3% year-on-year growth, 0.5% beat)
- Adjusted EPS: $0.32 vs analyst estimates of $0.30 (5.4% beat)
- Adjusted EBITDA: $180.9 million vs analyst estimates of $170 million (5.8% margin, 6.4% beat)
- Operating Margin: 2.1%, up from 0.9% in the same quarter last year
- Market Capitalization: $13.84 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From Chewy’s Q3 Earnings Call
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Eric Sheridan (Goldman Sachs) asked how learnings from Autoship and Chewy+ are shaping customer lifetime value strategies. CEO Sumit Singh described a “flywheel” effect across these programs, with strong intersectionality driving increased retention and efficiency.
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Douglas Anmuth (JPMorgan) questioned drivers behind the acceleration in active customer growth and its sustainability. Singh explained that higher direct traffic, improved app conversion, and enhanced SEO all contributed, and he expects these gains to be durable into next year.
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Steven Zaccone (Citigroup) asked about demand outlook and pricing dynamics for 2026. Singh noted that the industry remains in a low single-digit growth phase, with unit volume driving most gains and only modest pricing benefit expected in the near term.
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Nathaniel Feather (Morgan Stanley) probed the sustainability of marketing efficiency and sequential margin trends. Singh attributed improvements to the compounding effects of digital and CRM investments, and clarified that Q4 margins are seasonally lower due to promotions and fulfillment costs.
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Anna Andreeva (Piper Sandler) inquired about Chewy+ retention following the price increase and the program’s economic impact. Singh said conversion rates remained strong, gross margins from paid members are accretive, and penetration into discretionary categories continues to grow.
Catalysts in Upcoming Quarters
Looking ahead, the StockStory team will be monitoring (1) the pace of adoption for Autoship and Chewy+ membership programs, (2) further expansion and customer uptake of Chewy’s health services and CVC clinics, and (3) the integration and performance impact of the Smart Equine acquisition on margin and product mix. Execution in these areas will be key indicators of Chewy’s ability to sustain growth and margin improvements.
Chewy currently trades at $33.27, down from $34.84 just before the earnings. Is there an opportunity in the stock?Find out in our full research report (it’s free for active Edge members).
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