Chewy — Second Quarter 2026 Earnings Summary

Financial Performance

• Net sales for the 13 weeks ended August 2, 2026, reached $3.33 billion, a 7.3% increase year over year (5.7% excluding SmartPak and Modern Animal contributions).
• Net sales for the 26 weeks ended August 2, 2026, totaled $6.69 billion, a 7.5% increase year over year.
• Gross margin remained consistent at 30.4% year over year for the quarter.
• Net income was $80.5 million for the quarter, including $85.9 million in share-based compensation expense and related taxes; net margin increased to 2.4% from 2.0% year over year.
• Net income for the 26-week period was $175.3 million, a 40.9% increase year over year.
• Basic earnings per share (EPS) were $0.20, an increase of $0.05 year over year; diluted EPS were $0.20, an increase of $0.06 year over year.
• Adjusted EBITDA was $226.7 million, a 23.7% increase year over year; Adjusted EBITDA margin was 6.8%, up 90 basis points year over year.
• Adjusted net income was $148.8 million, a 5.5% increase year over year; Adjusted diluted EPS was $0.36, up $0.03 year over year.
• Net cash provided by operating activities was $137.4 million for the quarter and $245.9 million for the 26-week period (an 11.6% increase year over year).
• Free cash flow was $89.5 million for the quarter (down 15.5% year over year) and $160.3 million for the 26-week period (up 3.7% year over year).
• Cash and cash equivalents decreased to $611.0 million as of August 2, 2026, from $860.1 million as of February 1, 2026.
• Long-term debt, net, increased to $588.7 million as of August 2, 2026, from $0 as of February 1, 2026.
• Inventories increased to $924.7 million as of August 2, 2026, from $864.8 million as of February 1, 2026.

Guidance and Future Outlook

• Management raised full-year revenue and profitability outlooks following the strong second quarter performance.
• CEO Sumit Singh expressed confidence in the durability of the recurring revenue base, continued customer growth, and disciplined execution.
• The company intends to continue investing in opportunities to deepen customer engagement and create long-term shareholder value.

Business Segments and Product Lines

• Autoship customer sales were $2.82 billion for the quarter, representing 84.6% of net sales, up from 83.0% year over year.
• Autoship customer sales were $5.65 billion for the 26-week period, representing 84.5% of net sales, up from 82.6% year over year.
• Active customers reached 21.705 million as of August 2, 2026, a 3.8% increase year over year.
• Net sales per active customer were $602, a 1.9% increase year over year.
• The company partners with approximately 4,000 brands and offers approximately 190,000 products and services.
• The SmartPak acquisition contributed to growth, with approximately 43,000 active customers attributed to SmartPak in the quarter.
• Customer additions related to the Modern Animal acquisition are excluded from the active customer count.

Market and Competitive Landscape

• The company positions itself as the preeminent online source for pet products, supplies, and prescriptions.
• The business model relies on a high-bar, customer-centric experience to drive brand loyalty and repeat purchasing.
• The company operates in a competitive and rapidly changing environment within the pet products and services health and retail industry.

Risks and Challenges

• Risks include the ability to sustain growth rates, successfully manage challenges to future growth, and introduce new products or services.
• Potential disruptions to business operations, supply chain, workforce, and facilities due to macroeconomic conditions or severe weather.
• Challenges in acquiring and retaining new customers cost-effectively and managing growth effectively.
• Risks related to maintaining positive brand perception, limiting operating losses during expansion, and forecasting net sales.
• Cybersecurity risks, technology reliability, and the need to maintain adequate internal controls over financial reporting.
• Dependence on supplier relationships, third-party service providers, and shipping arrangements.
• Risks associated with complying with existing or future laws and regulations and protecting intellectual property rights.

Management Commentary and Tone

• CEO Sumit Singh stated the company delivered a strong second quarter with growth at the high end of guidance and an adjusted EBITDA margin exceeding expectations.
• Management highlighted the durability of the recurring revenue base and disciplined execution as key drivers for raising the full-year outlook.
• The tone is confident regarding the company's ability to create long-term shareholder value while investing in customer engagement.

Other Key Points

• The company acquired businesses for $552.8 million during the 26-week period ended August 2, 2026.
• The company repurchased $400.0 million of common stock during the 26-week period, compared to $152.6 million in the prior year period.
• Proceeds from debt issuance were $811.7 million, with principal repayments of $220.0 million during the 26-week period.
• Capital expenditures were $85.6 million for the 26-week period, an increase from $65.7 million in the prior year period.
• A net legal settlement proceeds of $24.0 million was recorded in the quarter.
• The company hosts a conference call and webcast on September 9, 2026, at 8:00 am ET to discuss results.