Chewy Inc. (CHWY) delivered a remarkably strong third quarter, proving once again that pet parents are willing to pay for convenience—and that subscription models work beautifully in the pet supply business.
The online pet retailer reported adjusted earnings of 32 cents per share for the third quarter of fiscal 2025, sailing past the analyst consensus of 13 cents and landing comfortably within management's previously issued guidance of 28-33 cents. Revenue came in at $3.117 billion, up 8.3% year-over-year, topping both the $3.099 billion consensus estimate and the company's own guidance range of $3.07 billion to $3.1 billion.
The real story here is Autoship, Chewy's recurring delivery program that lets customers schedule regular shipments of pet food and supplies. Autoship customer sales surged 13.6% to $2.61 billion and now account for 83.9% of total net sales. It's a simple concept—customers get a discount on their first order and ongoing savings on recurring deliveries—but it's proving incredibly sticky.
Margins are expanding too. Gross margin climbed 50 basis points year-over-year to 29.8%, while adjusted EBITDA jumped 30.9% to $180.9 million. The adjusted EBITDA margin increased by a full percentage point to 5.8%. This is exactly what investors want to see: profits growing faster than sales.
The company also reported 21.16 million active customers, up 4.9% from the prior year, with net sales per active customer rising 4.9% to $595. Translation: Chewy is adding customers while getting existing customers to spend more.
"Chewy continues to outperform the pet category and expand market share, with profits once again growing faster than sales," said Sumit Singh, CEO of Chewy. "We exceeded the high end of our net sales guidance, grew margins, and delivered strong free cash flow generation."
