Chewy’s results for Q2 reflected top-line growth ahead of Wall Street’s expectations but were met with a sharply negative market reaction. Management credited the quarter’s performance to increased penetration of its Autoship subscription program and strong growth in both the hard goods and health categories. CEO Sumit Singh highlighted the strength of Chewy’s Autoship offerings, which now account for a record share of sales, and ongoing improvements in customer quality and engagement. Management also pointed to gross margin expansion, driven by sponsored ads and a higher mix of premium products, as a key profitability lever.
Is now the time to buy CHWY? Find out in our full research report (it’s free).
Chewy (CHWY) Q2 CY2025 Highlights:
- Revenue: $3.10 billion vs analyst estimates of $3.08 billion (8.6% year-on-year growth, 0.8% beat)
- Adjusted EPS: $0.33 vs analyst estimates of $0.33 (in line)
- Adjusted EBITDA: $183.3 million vs analyst estimates of $182.1 million (5.9% margin, 0.7% beat)
- Operating Margin: 2.2%, up from 1.1% in the same quarter last year
- Market Capitalization: $15.84 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 Q2 Earnings Call
- Doug Anmuth (JPMorgan) questioned investment levels needed for Chewy+ and Get Real, to which CEO Sumit Singh replied that the company is leveraging its existing customer base and fulfillment network, minimizing incremental marketing spend.
- Nathan Feather (Morgan Stanley) asked about the temporary nature of SG&A deleverage. Singh explained that ramping new fulfillment centers and inventory investments are expected to moderate, with SG&A leverage anticipated in the second half.
- David Bellinger (Mizuho) pressed for details on gross margin trends and the impact of new growth investments. Singh noted gross margin expansion is driven by product mix and scale, while incremental profits are being reinvested in membership and subscription programs.
- Rupesh Parikh (Oppenheimer) inquired about the potential scale and customer profile of Get Real. Singh responded that the segment could reach a multi-billion dollar market, with early adoption split between new and existing customers and strong upsell potential.
- Shweta Khajuria (Wolfe Research) asked about the advertising environment and customer growth composition. Singh highlighted stable pet household formation, continued industry normalization, and increased customer engagement through mobile and sponsored ads.
Catalysts in Upcoming Quarters
In coming quarters, our analysts will watch (1) the pace of Chewy+ membership adoption and its impact on overall revenue, (2) margin realization from ongoing fulfillment automation and inventory strategies, and (3) competitive positioning as the company absorbs or passes through cost pressures. The evolution of private brands and veterinary care offerings will also be critical signposts for Chewy’s long-term growth trajectory.
Chewy currently trades at $38.23, down from $42.09 just before the earnings. In the wake of this quarter, is it a buy or sell? The answer lies in our full research report (it’s free).
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