Chewy Posts 8.6% Revenue Gain in Q2

Key Points

• Revenue rose 8.6% to $3.10 billion in Q2 FY2025, exceeding the high end of management’s outlook.

• Adjusted diluted EPS increased 37.5% year over year to $0.33.

• Autoship sales grew 14.9% and reached a record 83.0% of total sales.

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Chewy (NYSE:CHWY), the online pet-products retailer, released its results on September 10, 2025. The most important news: revenue surpassed the high end of management’s guidance, Adjusted EBITDA margin (non-GAAP) improved to 5.9%, and Adjusted earnings and free cash flow also rose meaningfully, while growth in active customer numbers moderated a bit and headline net income fell year-over-year due to a one-time tax benefit in the prior period. Overall, it was a solid quarter for Chewy, reflecting consistent expansion and operational progress in key focus areas.

Chewy’s business and key drivers

Chewy runs one of the largest e-commerce platforms in the U.S. focused on pet food, health, supplies, and wellness. Its business centers on home delivery, subscription ordering with its Autoship service, and personalized online experiences. The company offers more than 130,000 products and partners with over 3,200 brands, giving pet owners wide access to consumables, hard goods such as crates and carriers, and pet healthcare options.

The company’s growth model relies on three things: driving customer loyalty through fast delivery and competitive pricing; expanding subscription-based offerings like Autoship, which generates recurring revenue; and growing new categories, especially in pet healthcare and exclusive brands. Its customer-first approach, investment in technology, and scale logistics give it an edge as more pet spending shifts online. Recent areas of focus also include expanding digital health services and introducing more private label products.

Second quarter results: Sales, profit, and customer engagement

Revenue reached $3.10 billion, an increase of 8.6% from the same period last year. This result exceeded the upper end of management’s previously stated range of $3.06–$3.09 billion. The company’s key recurring revenue stream, the Autoship service that enables customers to set up repeat deliveries, grew 14.9% from the prior year to $2.58 billion and now accounts for 83% of all sales, up from 78.4% the past year. Autoship accounted for 82.2% of net sales in the previous quarter.

Adjusted EBITDA, a measure of operating profitability that excludes one-time charges, climbed 26.5% year over year to $183.3 million, with margins improving by 0.8 percentage points. Adjusted diluted earnings per share rose 37.5% to $0.33. Net income dropped sharply to $62.0 million, compared to $299.1 million for Q2 FY2024. This decline resulted from a one-off deferred tax asset benefit that boosted profits in Q2 FY2024, rather than from an erosion of the core business. Free cash flow, which is the cash left after capital expenditures, improved 15.7% to $105.9 million, supporting continued investments and share repurchases.

Customer growth continued, with active customer accounts rising to 20.91 million—a 4.5% year-over-year increase. The average net sales per active customer increased to $591, up 4.6% from last year’s $565. This indicates that existing customers are spending more, even as the pace of new customer additions steadied compared to earlier quarters.

The company continued to see higher engagement as it invested in expanding proprietary brands and membership programs. Chewy Plus, the company’s paid membership offering, remained a focus, but the release did not disclose new detailed metrics for its impact. Similarly, the company did not provide updated figures for its Chewy Vet Care clinics or adoption of Connect with a Vet telehealth services, although it reaffirmed that pet wellness and prescription offerings are core parts of its product mix.

Trends, growth initiatives, and financial context

Autoship sales growth was a significant driver, reflecting a continued shift in consumer habits toward e-commerce and recurring transactions. At 83% of company revenue, Autoship has become central to Chewy’s business, given its predictability and high customer lifetime value. This shift supports the company’s stated mission of improving revenue visibility and retention through subscriptions and automation, which is especially valuable in a competitive industry.

On the margin front, both gross margin and adjusted EBITDA margin (non-GAAP) rose from the prior-year period, pointing to disciplined operational execution. Gross margin reached 30.4%. These figures support management’s long-term efforts to expand profitability as the company scales.

The quarter also brought modest but consistent capital investment, with $28.0 million spent on capital expenditures. The balance sheet remained healthy, with cash and equivalents at $591.8 million at quarter end. The company used some of its cash to repurchase $152.6 million in stock during the first half of FY2025. Share-based compensation, a noncash expense tied to employee incentives, decreased slightly year over year.

The company continued expanding its private label lineup and promoted health and wellness as a differentiator, though the earnings release did not break out figures for these segments. Management cited customer-centricity and market share gains as competitive strengths. However, management also referenced ongoing investment in technology and healthcare as important for future periods. No material one-time events beyond the lapped deferred tax asset from prior year results were called out.

Looking ahead: Guidance and investor focus areas

Management did not issue updated financial guidance for the third quarter or for the full year in this release. In the prior quarter, company leadership had guided FY2025 net sales to $12.3–$12.45 billion, representing 6%–7% growth over the previous year, along with an adjusted EBITDA margin of 5.4%–5.7%. Those previous figures remain the last publicly stated outlook. Investors will watch for formal updates on these expectations and look for progress as new quarters unfold.

In the quarters ahead, important factors for Chewy include maintaining strong recurring revenue through subscriptions, further progress on pet healthcare and digital services, and offsetting competitive pressures as the industry matures. Watchpoints will be the pace of active customer growth, Autoship penetration, margin trends as technology and wellness investments scale, and overall cash generation. Management’s language in this release continues to emphasize execution in customer engagement, product choice, and digital innovation.

Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.

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Motley Fool Markets Team is a Foolish AI, based on a variety of Large Language Models (LLMs) and proprietary Motley Fool systems. The Motley Fool takes ultimate responsibility for the content of these articles. Motley Fool Markets Team cannot own stocks and so it has no positions in any stocks mentioned. The Motley Fool has positions in and recommends Chewy. The Motley Fool has a disclosure policy.