Chewy (CHWY) 31 May 232023 Q1 Earnings call transcript

Good afternoon. Thank you for attending today's Chewy Q1 Fiscal 2023 Earnings Call. My name is Hannah, and I will be your moderator for today's call. All lines will be muted during the presentation portion of the call with an opportunity for questions and answers at the end. [Operator Instructions]

to VP, conference Head like host, to now Hsu, Jen of would pass over the our I Investor Relations.

ahead. go may You

Thank results. on our us you today for discuss to the first call XXXX quarter joining

Marte. Joining me Sumit CEO, are CFO, Singh; and Chewy's Mario

release of which filed Our our SEC website, and with the to to been have investor.chewy.com. today, posted letter Investor the shareholders, earnings were earlier Relations section

and in prospects, statements investments, business forward-looking call trends other results statements, to be uncertainties including Act which financial today, results, other certain the Chewy's by concerning XXXX risks. forward-looking and of actual in our to subsequent ability could strategies are statements. On on cause from our materially Reform under making factors and our subject Form future XX-K Annual industry to and Securities forward-looking quarterly to are our Report we statements respond Litigation Private Risk reports, and statements the contemplated those risks, Factors differ will successfully considered described Such section titled

any of any not date. results required information of note Also available performance. based statements an us law. call the considered forward-looking forward-looking to statements, as Reported except future that on disclaim on update indication We this be obligation by should to are today's as

intended on the for to not measures call, and were filed Relations will Investor release items comparable These shareholders, this SEC as most which the GAAP measures. our a are results. our today. non-GAAP non-GAAP discuss in we these directly provided during financial Reconciliations to Also, certain non-GAAP with substitute website are of financial letter earnings GAAP and measures

all of accordingly refer results quarter first comparisons quarter the unless today first discussed XXXX noted, to XXXX. of Additionally, are the against otherwise and

our this available in being website will this of entirety our call call on on Relations also webcast be its A Investor website. IR replay is Finally, shortly.

Sumit. like call over turn the I'd to to now

call the us you for thank Thanks, Jen, today. all joining on and

Before after the to Head thank Bob after his to like who Relations we for three chapter begin, past has to LaFleur, our decided as next Investor on Chewy. serving years I would of move

grateful the our Bob today, and Chewy's to time, Investor our service of to I'd out At Hsu, expanded following IPO. Development IR now that like We for responsibilities of his to our same her function for Head M&A, Jen and are all years Corporate Relations team. include has building announce

and well expanded joining serve Before Jen in that spent to her Chewy, technology-focused banking will in XX Jen. Welcome, her continue years investment background role.

first remained engaged our and QX, and with superior team's did shopping remained execution focus along value with platform quarter Throughout Now, results. customers our let's high-quality rest. our trends review strong. the Chewy's proposition

net As adjusted in in margin. a QX, approximately a an we billion sales, reported EBITDA and X% increase, year-over-year result, XX% $X.XX

grew sales net purchases. to and customer Consistent and steadied programs base exceed or cross-category customer, customer in engagement active by NSPAC, strong growth NSPAC $XXX. Our like XX% ongoing active and per expansion Autoship, is in driven

the Autoship of sales customer sales first in quarter. net nearly represented total XX%

loyalty. recurring tool a Our predictable Autoship for and subscription customer long-term us, is revenue driving powerful service and

resulted in from strength such healthcare. and as sales Net category premium consumables,

our season and to translated A product healthcare of all size, start or strength non-discretionary tick in to order down trade supported continue AOV. loyalty the further customers discernible performance Our behavior, business. these to durability no with which and flea show average categories in healthy in

lower-than-anticipated exceeded strength buoyed and at to leverage and activity, expectations of better-than-expected by AOV, level. promotional in were the packaging XX.X% margin Moving gross profitability, freight overall and

expanded record adjusted EBITDA line, margin quarter. X% for margin gross the to Below the a

our to me growth you Mario will through detail our take innovation. he walk provide and does some momentarily. let more time investments performance before on And financial so,

to year. am excited of in to bring the Canadian first Chewy's this personalized international we last value expect parents including experience, market. superior previewed launch to announce work QX we our I team's pet proposition, customer On earnings Today, and our that our call, outstanding to

few Let this grow how and a allow concepts: now? model me market? we us can elaborate in our in win sustainably on Why will profitably believe key to Why Canada? And we

International part time expansion strategic us there has now make on reasons embark a to of long journey. several our the been roadmap and that right are for this

years, steady the we First, fundamentals financially, over trajectory on profitability. a U.S. of strengthened and have and our growth have business few past both our put and operationally

cloud, our deployed of the reliably can to Additionally, having meaningful our incremental stack Canada tech undergone investment. leverage now we a multiyear be transition into in platform without

increasing for we expansion our see and to on U.S. trust to honed offer geography associate Chewy growing of level a the e-commerce players a differentiated has most path come a with large proposition U.S. existing and parents would Canada to and Canadian which penetration brand. be value our with build we assessed relative in to and can plans, market, the the profitability akin that Canada's those in in have business. we the we same where healthy achieving share suitable where pet As market market

Toronto which take will represents and responsible gradual a metropolitan plan the area the to approach we largest market, launch our in to Greater initial on Our expanding focus which footprint. Canada, from

attractive economics, delivery Our a customer ensuring create experience. leverage service efficiency our will while assets model operational to high-bar and

our third-party Canada to fulfillment Specifically, a strategy local support with and logistics scaled, partner. we intend

U.S. an strategically us and will additional in network advantaged chain do it economically we affords or our so. leverage supply where U.S. situations to Our is asset,

an and business approach this launch least a commitment cost through CapEx us material Canada do look focus to of success market investments anticipate we customer in do investment on area. Canada and not this to this requiring experience to with projected spend, in together, until the our broadly, expect XXXX. over optimal us allows to the We investment without to long-term the company-wide quarters at not level, any supports Taken come. scale on our forward in our CapEx or More We a targets. material from CapEx deviate progress sharing profitability,

announce back to international on I pleased center, Moving automated we our launched this fourth to fulfillment Tennessee. in am Nashville, from and one stateside, that business

margin in Our scaling earnings calls, automated target. SG&A previous our FCs, supply are of we chain of the long-term have network I will transformation, by efficiency to improving discussed believe growing and contribute our accompanied which

Health, to of are Lemonade CarePlus are announce official broader two and best-in-class allowing part Trupanion, available across us of insurance Chewy offerings. wide now to parents. wellness pet Lemonade plans range of of of excited needs points in the this Elsewhere, CarePlus providers, the price we of and as meet a the spectrum and suite launch With from a coverage options launch,

quarter. nationwide of majority to plans available the our vast these to expect be We by customers next

around insurance product and continue we education TAM and we to offering, in expand category. a underpenetrated compelling to profitable see awareness As our highly drive opportunity broader this

entered as quarter In closing, proud of I execution the in year. fiscal new our am the we

and business long-term prospects the by profitability With growth robustly and meaningful and to base positive nascent I shareholder with new several Chewy's innovation performing return. deliver in and incredibly encouraged remain fuel stages,

will that, With turn I the call Mario. to over

everyone. to you, I setting am record happy Thank a results quarter Chewy. hello, from Sumit, for share and

net sales $XXX.X over and increased consumables or collectively to to and our first XX.X% of continue Net million represented healthcare quarter sales. support $X.XX XX% Non-discretionary categories growth billion.

XXX up XX.X%, basis by net represent total exceeding overall customer growth sales. sales billion, net XX.X% to were Autoship almost grown sales points. of have $X.XX Autoship customer sales

customer increasing with primarily measure our by of Both $XXX, and us that by for primary NSPAC, grew company. reached sales the growing purchases more cross Autoship record time, Autoship customer large new Our NSPAC XX.X% spends customer over sales, category engagement, our of and year-over-year driven customers. levels base highs to customer

to customers, to pandemic are million reflecting XX.X ended levels, active first QX ahead to run growth of relative we headwinds outsized related modest attrition adds quarter the the the continue cohorts. with Gross seeing We pre-pandemic active customer gradual and our waning of net XXXX.

other please same as where the adjustments, of my to applicable, P&L, down discussion to note move and related refers outlook. my excluding as financials, and share-based where we relevant. The well financial discussion taxes compensation that applies guidance As metrics expense of certain

margin Sumit order buoyed better-than-expected remarks, size, freight expectations, and activity, Gross margin points in packaging. in in and promotional overall Gross QX, strength leverage basis noted expanding reached exceeded XX.X% as average his in year-over-year. lower-than-anticipated by were and XX

to or to from and basis announced XX% discipline, to X% improving million main spend fulfillment of favorability a expectation operating share-based smaller our included on on net of costs, The advertising improvement XXXX. Continuing with $XXX.X taxes, sales, million or our of of in efficiencies and totaled and team's size, order our compared to quarter net sales, we QX sales. X.X% the timing was higher this initiatives XX related average net operating $XXX.X leverage X% of degree, support SG&A a first call. excluding the of compensation marketing OpEx. expense the and line last drivers points and of incremental to

million, $XX.X a was quarter $XX.X net increase First million. income adjusted year-over-year of

margin margin expansion $XX.X expanded gross quarter And SG&A to First points $XXX.X of million. increased a EBITDA basis XXX X%, to adjusted million EBITDA a adjusted result leverage. and

of CapEx came remain XXXX the First quarter in flow million, net but investments of CapEx reflecting we $XX.X was our in X% a X.X% automated overall technology and ongoing center cash capital from than to fulfillment expect activities free the range lower in expenditures. primarily flow operating and comprised in projects. million first in our sales. averages, expenditures cash quarter in historical million to $XXX.X were Capital of $XXX.X new

year. equivalents at $XXX than and the at We $XXX.X cash nearly finished time liquidity and with on of our last ABL, hand, higher balance cash availability the At and our securities $X.X billion. end QX marketable cash this between million QX, on in marketable million securities, stood

my That quarter concludes first recap.

quarter and me So, cover full guidance. our now year XXXX let second updated

strength outlook. and engagement on view a the the that economic along Our with the of guidance model latest balanced reflects our incorporates views business customer evolving

growth expect to billion, billion XX% of and quarter be representing year-over-year net $X.XX to sales We $X.XX approximately between XX%. second

XX%. billion We year be billion, approximately of XXXX sales to $XX.XX between outlook are representing XX% $XX.XX and net to full raising growth our

year EBITDA X%. We are XXXX full raising our margin approximately to also adjusted

some as of your further usual, update me you models rest let the the provide thoughts As year. for you

As including normal slightly we the releases timing course as of other driven have or before, and contracts, of business. gross changes shared factors, quarter-to-quarter, EBITDA several adjusted of may fluctuate vendor accruals and margins by to the part investments, from our

example, and expense. temporary launch, including Fulfillment the and at For incremental some we our incur SG&A as Center operations we in Automated will international Nashville begin other ramp QX, in initiatives,

expanded for adjusted increase margin our Finally, to you EBITDA guidance. should full XXXX flow our alongside expect year cash free

questions, built our open intact, remains the results show; term, I'd for latest is team operating and our driving to that Chewy is financial committed profitable the what recap to that like and growth. to we sustainable, call our Before long philosophy is highly

that, for questions. call over the turn I'll the Operator? With to operator

of question Evercore. from The Certainly. Mark Mahaney with line [Operator Instructions] first the is

proceed. may You

Okay. Thanks.

talk just of trends, that shouldn't kind But Just there's some higher sustainability of margins through now I higher fluctuations expect we And they've gross the for forward? why realized grinding of sustainably kind gross quite been to seasonal the margin going time. it.

on And this the then, solid balance just the quarter. for year, you the results revenue of pretty outlook had

guidance -- dramatically, For year. cohort as thought rates implies a are that your kind kind we digestion somewhat you've I decelerating of some of the COVID you'd through higher. but half at all able to worked have be rate, growth of levels not growth the of kind decelerating thought that these have back would would reason, as through that of sustain

So any balance should Thank one-time-ish the year? issues of know factors or are just we you. there for comp the

start anything I Hey, if miss Sumit and something Mark. Mario. add I'll It's here. may

off first exceeded So quarter. start that helped by and a off in the the We it. question, sustainability a gross quarter of The margin was packaging trends, part strong because size it our expectations. the it We started a I'll basket to had with first line high leverage note. freight year's -- the were in of good on your

seen quarters. a promotional year. and had second quarter. we may also have that into historically, or not may rest between in We And of lower-than-anticipated activity the We the get the quarter the fluctuations

that's -- change not that would be be a not here. would in -- the pattern new So

any guidance sales, million basis mid-teens One When XXXX would last And would dollar on things. back what tell year quarter is, of ahead start absolute rest at added very us; in the you we at $XXX question, quarter. I of first look quarter another say growth. two terms the the an guidance strong than for year. at that's again, provided. the you than midpoint the we in in I It's look if more more of QX good of terms your of year-over-year second also

second the bullish about heading we're So, where in we're quarter.

That some sales. in and said, a pullback seasonality first between historically There's we do small second see hardgoods quarter. our

tick had that flea and in season that, quarter. see we can in financials. You the And first our reported as we call a strong also

when think account into about you So the take that second quarter.

we second of of fact Now, the in fact us roughly that over year the sales are categories our bullish by also that that and and nature. to the in that's they're about And rest is makes quarter the about sales are have consumables, They're XX% our XX% what healthcare, the non-discretionary customers. that the we the helped of Autoship are talked like.

are good indicators makes the us the rest year. bullish these So, about that us for of

very your the half the implied look to second question, answer in still to Now the a year. the the out long half when at of year, specific, top-line very guidance, $X.X to add about billion we of the second it's but

out to focus on pretty -- the a how matter year. it's the now, big sizable it. company through the that quarter to that right no as play making we we second and So, of at positioned And we're execute our growth look a well rest is sure

you to want add anything Sumit, there?

second add only at first the Mark. dynamics over 'XX half, year-over-year at half guidance if the looked equal relative being look is the of structural thing No, kind between to the is The of combination of was what between volume. unit the 'XX, half I dynamic you 'XX, is, growth. overweighted you -- first price. it price growth weighting When composition of kind between would and the And implies a

we the half of nature, get more in as second composition of the first growth the So, into structural is the half. out

of baked kind that's So in.

of executed continue year. remember, What we're strong hardgoods strong. portfolio engagement. as through has business, move like reacceleration the continues in the And stronger as indication of the we to rest be baking current Autoship about we've then, we be the the which material any strong. continue sales is not NSPAC QX to to

year. and baking flowing checks and you, middle we're in get QX the balances the in more of of we're play We'll through we And standing update through. as the and course, chance one so, to

Thank Thank Mario. you, you, Sumit.

Mark. Thanks,

next Thank Mr. you, The Mahaney. from Doug Anmuth is question with JPMorgan.

may You proceed.

are a active macro much. the forward? the you customer attrition you going active ask happen to gives wanted return confidence growth how timing acquisition And long-term just Thanks. what so Thank customer to from I perspective? then, in needs to What you for just thinking about growth? or there or

Sumit. I'll is This Doug. Hey, start.

us adds the where So, any and Number higher. in of to growth taking and a couple trends metric to sequential on the of. and trend hardgoods much customer in categories. line. though two, add worth are categories even all our health active are delivered we encouraging modest gross gross continue One, in less note And is so the consumables softness the

data the So point attrition third that's point. of cohorts. waning observing data another the is, we gradual A the are of

of the have steading of is the base of two no on we above that through kind that decline longer the trajectory statements so impact a And overall, were customer we kind XXXX. net active

much sharper all the a our from that delivery we're And pricing, Chewy of the call, and to to pivot point so so, half marketing perspective to in that setting second we're the value we've strong of view, in -- being and the the go come same earnings the that. convenience, we're ability rest just off -- more the as last year point in-stock, of market of our execution the relative the at we that shared was shared the in proposition, haven't team year-over-year bullish

us of that gives customers in customer what -- steading large alongside So, active we've through large confidence of of strengthen front is plus as base still played observed remains that to continues that proposition value the kind base QX. we the the us

Mario? Anything to add,

it. got You

you. Thank Okay.

question next of Thank Andreeva line Anna you, Mr. The from is Needham. the Anmuth. with

proceed. You may

a Two us. you just the guide. Mario, Thank on so Good much. from follow-up guys. questions Great. afternoon,

as the second international. quarter in ramp you mentioned incremental You some investments

color about we should on the those? expense thinking be any how Just of

that? see seeing to you But about we good category some expecting you secondly, now. And and lapping And improvement hardgoods in drove continued are see the year? talk to through sequentially, are stabilization as you can compares the go easier what

from hear to Good Anna. Hi, you.

off is start me first about investments So, we talked question, let about. that with the which the

The that we that's component, to XX year. had to basis SG&A in largest the XX our investments view and going launch. full points expect So, we We're that do XX to hold this to across Canada for marketing, XX year. said for still growth be basis points to the all of and

than was in was quarter Now, first first It that the you about saw XX the a investment points that that. in the little smaller basis quarter.

So throughout second the that the going to means that pronounced more to the timing year going see in that is change. We're quarter.

to are self-fund. looking we Now,

say, you had some as to guidance margin XX basis between full self-fund found investment, that that's about lower we and raise our to and EBITDA XX the our that, X.XX% points ways what said have grow us heard year; to for We X%, somewhere allows of -- us X.X%. originally now X%, than

X% So, we X%. to or are that it now to raise have raised looking or

of in quarter, us see to tell one other we But center, that as quarter. see fourth the something I'll the long we've in it term. international Specifically fulfillment over talked the a quarter. the the just the second launch And center, launched as one this And Nashville. you'll some in we second the launched you our the that provides the every that following investment it deleverage then benefits in our quarter about simple small flow fact is obviously, SG&A and we is fulfillment we time -- the through automated one things in

to the happen that's what in second you So quarter. expect again would

question sure expect I On hardgoods make that that followed on your do improve, question to the correctly. let and we me when

Sumit. I'll take it. Hi, Anna, is this

result in we effect QX over and primarily a of 'XX is comping in year. the lapping the 'XX years, particularly and So, that improvement the 'XX saw

that. that's so And

in starting pet formation reacceleration categories. hardgood trends, Where what material seeing you hardgoods would in even though strictly pet as to for example, those trends is color provide. to any on cetera, specifically new basis. trends or to yet assuming would improving the household a replenishable type tied stabilize core be not right aren't are We call categories to household, or are adoption crates, of such year-over-year sequentially pet we et That

Terrific. much, so guys. Okay. Thanks

Sure.

Oppenheimer. Parikh Andreeva. question from you, next line Rupesh is with The of Thank Ms. the

You may proceed.

afternoon. Canada back Good your my question. Thanks to go just for I expansion. taking wanted to

So, point? right you the you curious the Canada to at experience of the think compare Canada in you this Chewy in the to in brand look at how about Canada, landscape the how expansion just And competitive now then, as recognition what you U.S.?

Hey, Sure. Sumit. is Rupesh, this

expect So, terms we've the particularly extensive some trends behavior as in work, dynamics of to, learning market, the doing us you both been shopping and and se. customer would per

So, noteworthy a are to few us. things that

it's in One, present Canada, note to us though that encouraging for at in Canada. not even we're ground starting not we're zero

Our in in not And States, lower that the That's we worth broadly market it's enjoy here what the it's zero. mid-XXs. though that's noting one. obviously awareness sits even than United

and Number service proposition against the two, to ability a against tremendously we Chewy brings be of bullish the what towards which desires, when United And in compare that we the more our in market, the compare so Chewy the towards are to meet consumer in propensity is the States, want met. wants towards to proposition convenience. And heavy orientation. brand much propensity a where leaning that they really consumer value, then a value Canada,

the high-quality When ours e-comp core and a drive present Canada. per e-commerce -- you look sustained without e-commerce being at Canada provider a present in in like se, e-com yet provider the scaled are inputs growth landscape that

our the is So, And will is our the -- opinion, follow. these remains no should we inputs, that not, taking, well high doubt when outputs outcome you to which have combine insight-driven. extent and we're that in the it execution that approach quality, the

it pass I'll you. Thank along.

you. Thank

James. is the Patel Mr. Rick Thank next with you, from Raymond line of Parikh. question The

You may proceed.

wanted question understand just follow the Thank afternoon, it little that. on of you market? have to the that awareness. consider start TAM is is you. Canada of and to what strategy customers What us the your And Good seems growing? go-to-market I to and for better. a strong up how you light curious I'm quickly in And help opportunity it capture new the a running bit brand do like on execution. congrats

Yes. Sure.

States, between market at billion next to the $XX So, the the years, four an slight look billion that you data trend, States, zero. $XX e-comm basis penetration When points encouraging starting X,XXX United be is not you're Canadian the to obviously is and e-comm expected penetration, premium point. encouraging to both roughly at which X,XXX which growing over a ground is five to United below point an from roughly from also sits the

time, As high-quality the who efforts States. I from there, a here the are our said, in playbook providers the United ourselves, inputs has and appreciate could the a same at market proven as such scaled,

the so against in in to going way, be And proposition bring to the the that results are value combine should market what customer we that that we amplified. particular the strong and desires market,

acquisition enjoy an word-of-mouth we well strategy, up by market. we dynamic having as United options strong in we In go customer way of delight as full or in terms to all our States brand surprise trust of will enjoy advertising here a to the deploy way we enter -- array customers, that and to the of that the valve mechanisms of that in our earn we of are utilizing funnel array we delivering array in dynamic from a range awareness, customer pick market the as options of the word kind -- approach that

And so, we're looking forward to it. Thanks.

very you Thank much.

next Mr. with The Corey Patel. Jefferies. line is of the you, question Grady Thank from

may You proceed.

thanks taking question. Hi, for my

I to seen consumer So in you've about changes ask quarter. behavior wanted any during the

trade letter if you're You down. of any like seeing noted other I'm or But Thanks. consumers in shareholder up less. your consolidation trading seeing no trip signs changes you're potentially that curious

Hey, no, Corey, not. we're

see. -- we're as in seeing seeing comes are which behavior has not non-discretionary it for us to strengthening super We categories, been encouraging any to

point growth in or a from view customer in of to year-over-year subscribed base customer improvement of is as customer Autoship Autoship a growth active well Autoship combination per the at customer it the improved -- sales as notice XX%, NSPAC you program. If Autoship

there, inflation major improvement an point note. driver encouraging that not is is to in a price not NSPAC by -- which or the So ASP way, is obviously and the in

on at say of improved of here. sharper look and talking about for, same us the service inventory intact. therefore, personalized look is loyalty So, pricing, the platform, the keeping we're promise seeing and in combined And we're AOEs ASPs stronger the better engagement when expectation which also I'd is high kind positions, being with delivery customers we on proposition that that

you. Thank

Sure.

The you, from is Grady. Bellinger of question Mr. ROTH the line next Thank MKM. David with

may You proceed.

Hi, everyone. Thanks for the question.

terms extent somewhat it promotional shift but maybe seems more to intense you of the a anticipating. not like In of are to activity, QX a lately, QX, little

So, customers? fact, actives discern you additional can whether sustainably pulling use extent you to some your of higher in your in can promos promotions are, get what moving to new And net again?

David, Sumit. something. it's start. add Hey, I'll Mario might

an I and first of QX little of QX all, much. a relevant is QX, to isn't is QX given how as to bit seasonally and So, think oranges, elasticity comparing apples

year-over-year and remarks well. accurate which obviously saw So, we point promo same see that saw quarter a the in incremental more kind might the Mario view, And year-over-year margin that as activity, gross we be less-than-anticipated prepared comparison some promotional is we from did strength his buoyed said, encouraging, of perspective. the which, time, At of basis. helped on in activity of

And -- the dynamic. current not so, we're that's

as value of by to per allows CRM pass mechanism a to et cetera, demand we're promos test of use repeatable drives us build promos bigger it it Yes, some options. across et And It also customers. new array cetera. us an helping we But se. using customers baskets, allows part don't for elasticity,

to maintaining say the in destruction terms to you've allowing where to past, profitability we're while Anything are of kind add, not We demand line. sharply demand So prepare for of elasticity understand -- price bottom in sure heard demand really price, us make we without of kind priced -- and that we priced, leading. Mario? competitively the then

think right. All covered Thanks, David. it. I you

you, Thank is Mr. next Fargo. Bellinger. line Brian from of with Wells The Fitzgerald question the

You may proceed.

Thanks, guys.

Did QX. of out larger tax and lower issues. in even trajectory demand second crisis driven any of the weakness was cited banking see omnichannel macro refunds. that intra by the in consumer consumer whatsoever One quarter? It They in competitors your of called regional you half the some

not No, Brian. We're that. seeing

there? terms be next attack existing how the insurance in anything dynamics level of TAM Any foray the your awareness you suite? market? on launch. insurance the the the highlight about the Thanks. view tell on that my And then, or follow-up of just would can helps offerings you'd you Lemonade And with us your in Anything of

this. Yes, excited Brian, about we're really

mentioned I can to of therefore, expand price in in terms my it bottom a available incremental consumer, choice any to And expect a actually bring level flow-through on to prepared high vertical directly revenue. that, and with like remarks, outcome you of time points we insurance, correlates a As to of well. top line the consumer, as

So, Lemonade. about the we're addition excited of

that both tech array a obviously that of as as that player range full coverage demographic, appeals is is a the customers. customer point, from psychographic, we spectrum Lemonade bar alongside a forward point customer to which And a wide provider way a believe Trupanion, services, price high covered, have going market. to of of insurance well in we're we, at this

quotes you to tell our can improving. I are conversion ratios

market back these given built half be at onboarded from towards XXXX, ramp of ramping into up. Lemonade, that suggested, going kind the go scale year the and of the policies with traffic overall a we improving. now Our same towards is them to just time, it's providers. when month we're the really two And the as to we've prepared is And remarks

Mario? Anything to add,

No.

But Brian, our that's happy excited take We're a about it. current point to view. of follow-up.

so I of awesome. That's that. advantage puppy, got I'll be just taking dog [indiscernible] new a Nope.

it. Appreciate

Brian. Congrats,

Congrats.

Mr. you, Thank Fitzgerald.

Steven with from is Citi. question next Our Zaccone

proceed. may You

competitive earlier How pet the afternoon. curious consumer some category. Be loyalty? question. on have weakens, there's in been Good my was some back If spending environment curious How for talked Sumit, maybe Great. maybe softening the for Thanks your the positioning taking positioned consumer here, to peers starts I citing know if do think I you think your you or dynamics about perspective competitive on to perspective. on do your trends. the spending? get about pull you're price questions

of as XX% strong lead wide for sales results look convenience, we to of on results resilient the at a year-over-year delivery the such our B, data And categories think a improved Steven, two a where it pricing. -- sharp themselves. speak and health, I'll has proposition over A, you have with tremendously basis. when consumables attributed I were points: assortment; actually

give me some you points. Let data

sitting relative points on-time is higher. to delivery about Our at XXX basis 'XX

deliver roughly is sitting better click at Our point. XX% particular this to

positions levels sitting some roughly years. at observed in-stock lowest we've the last are the Our in two of that

to that And the loyalty sets combine mentioned we alongside just that we -- when you enjoy. so, inputs experience personalized we again, it I've deliver, fuel to up -- continue these the for

said second And XX% Autoship of points, the Autoship is lead predictable, repeatable proof point data going through sales. second point, a I'll our allows sales the the data two I program the with us a base the of that allows that volume kind in us of and to revenue that bottom asset into optimizes that allows utilization flow to manner the company demand across line. fulfill

have hit that, believe with just convenient well the know. unparalleled. of serves you that have everything year would obviously dynamics change, I -- that just that key are point Autoship the loyalty, here guidance selection our program if given pricing, dynamics this And brand happen, raised add And an to with would were positioned. that, we the Sumit that coupled you we full very we're say coupled have competitive on I customer that well, we the

So, yes, we're well positioned.

freight overall The still gross industry perspective, coming on you gross be the of balance I to freight down Because appreciate margin. year? to the just margin the was had costs an detail. expect over a would are Great. tailwind from follow-up I

a freight For our multiyear contract packaging? of which the logistics and we provider. part have Because with

we from point. things they down that go this should pretty at the thing are that at like locked de in rate, this fuel are be point. up may Obviously, or So, they're where prices. today, The minimis but can fluctuate

that our So, in and we chain off the starting incurred under said the offset on most, control supply in 'XX. we increases are launched those not very have And think we we things it's well of the -- the more of last that initiatives last transformation call, I that have and year. card terms the paid if logistics in we've all, that that rate

left which of a to helped in will able bit. XX But an on chains better. of points exploit margins. -- to us we've input kind we're supply point into of And this pretty kind into of XX And tightly. as running out view, Yes, it on were the buoy basis year. packaging, Mario the freight set. outside to like and that fuel out, execution, that some range multiyear months it, Steven, kind the happening we put well XXXX but feel a of improve variances, we'd basis, extent to placements our we're of pull impact It's right? us 'XX, a this of another inventory that most fairly I'd specifically, not if on from little say transformation said, likely to happen the pulled improve, that last we're of we XX might freight We've be helps heading

Okay. Thanks luck. for the detail. Best of

Steven. Thanks,

next Thank of Zaccone. question with Bank. line Lee is The from the you, Mr. Horowitz Deutsche

may You proceed.

the you've about seeing seeing horizon? maybe market? talking is think the Is And you stabilization the bit a underlying are past, the for on I little this the any Great. about growth time what that you range. spend we of time. maybe decline household low still perhaps single-digit in underlying the in growth? here pet hope you're talked the that in Can industry Thanks

test on you test? beta partners? were set you are ROAS advertising And progressing? how data out compelling looking roll then, you of been the broader in can customers advertising Have And markers that your product a driven update the what for us before to has

Sure.

question on underlying you. share so pet with formation I'll growth, household data flat. first your is two Pet So, household points

we yes, it's mentioned read extent So, is it's our that the in past, not the have like we least consider flat. declining could encouraging, recent at that to that

and data And you relinquishments, and that when aren't rescue at is look data shelter point then, another happening steadied. between relinquishments have and adoption adoptions

adoption. So time, in growth increase there the per a not relinquishments seeing we're se. isn't same At

time. signals helpful fuel inputs a overall kind that that's which term data point, So pet long over of resilience the growth for towards in these

published we conversations, our it always the isn't do, -- et points our cetera. and with isn't gather communities rescue which as X,XXX there aren't shelters this suppliers caveat source from these data work and relationships there that along -- I with, source. data is will vendors, I one across We of one

caveat that. to with want just I So

this progressing. Number two, advertising encouraged on data, is way really the the by we're

supply, So, is of of time. have now up We are right? share website. gating demand that bit I our doing knocking that in what we what phase process I'll a supply the We're little ramping said right doorstep. at last And the against demand available is on

moved ads bit are we've per against kind of to of the of experience. word from because enter the we've a softer parent QX, a guardrail QX of testing is user away little conscious into pet of beta expanding the se, we as we're actually on more ramp we up that So, impact hyper as exited internally inventory -- kind

as to guardrail this move XXXX. that good kind We about the half ability feel that's so supply of back we're the and program year, we then And ramp expand the full ultimately of maintaining. really towards in our

I didn't quite question. the catch

ROAS then in question I would I please think think And you I had repeat you do, not, if there. that? there. a If rest

ROAS the question the of of seeing Yes. sort [indiscernible]. sort you the beta I you're aspect? answered within The of know that around is And type

Sure.

is thing a at the recurring loyalty proposition, to we repeat going with the with courage, how LTV, which us fueled trend So, concept is Autoship. nature consumers their like purchase are to that is the Chewy right, of again, back of which programs unique

this go actually used and account at well industry loyalty to the returns you ROAS, And received. different so is we're ROAS compare then direct you we would and well would take the particular And as understood we ROAS therefore, And to to ROAS slightly consider above also when into LTV when the seeing And you by power LTV point. it's that's market. the industry quite that that, is ROAS our that consider from approach of way, healthy standard the been to.

we're So, the encouraged by ramp.

Thank helpful. you. Very

Lee. Thanks,

is Thank of next Carden Blair. with the Mr. Dylan you, William from line Horowitz. The question

You may proceed.

you very much. Thank

gross that guess implication you'd normalizes, there the kind line to fair the Just in pre-pandemic be of asking timeframe with that? Is of with back period. the levels, XXXX XXXX, you're without the churn you that curious, adds on be I put language add ahead would using a that to kind net of

Mario. one. ahead ready levels same are pre-pandemic It's adds of answer even to -- we gross It's quarter. But And are any ahead statement of to this until to of going levels. -- that reserve are expect running a I'll we make making last that running Hey, certainly, sort we year, statement. that I'm Dylan. our they're to return

say second we that said that would growth me in this hasn't Let thinking for year our expect active we have that. half What changed customers. is just

Okay, And fair I that? then, enough. guess what's --

given to pleased we're in the in quarter. the going obviously, stability a in And, active base we that first here. had That's customer be that -- the

Right, normalized sure. for of pandemic, middle per spend Is that kind then, Or customer, And metric? the of noisy that of that in are know that it cohorts. making I more year return seeing of levels? is component you certain the dipped kind to a still down hardgoods the the normalized?

of we the Well, the last similar to what increase, NSPAC, and was up the so, year. company, the all was for as new we've saw record or $XXX shown, a high XX%

So, strength there. we're seeing

(ph) volume driven play. is by the So, but as also [the it increasing prices, part] a

as customer. now, we're we're stay that longer even that the help with in [had seeing us, that, staying -- had and So, obviously (ph) us. us, more hold NSPAC more spend through hardgoods, with well. just overall continues NSPAC. if sales they customers seeing the are that Certainly, for seen] we in quarter increase to would grow, dynamic That an But the they with spent this per with we without

penetration think are to Do final quantifiable adding X grow margin I the the to much. over points for had where of of Okay. expected as history kind kind in any too that implications And of XX% of of there one public that surprised you from me. years? to. get that that early The wasn't have your number? you upside thought been more kind then, kind there's to you couple Autoship to kind rate of on last able the And percentage Thanks. you've

comment at I the that may think we grow. Dylan, point have that didn't Yes, was we it expect not to made

were is if but that it I XX% it at our saying, the customer When saying, were or you're As really mark, to that in warehouse were level from of look, give to that great, that ship. at the we XX% was we if point, -- good. product, company were flows think selling take. And sales. have benefiting Autoship every you we a And level, order grows around

customers. of a make anything. time. the over -- find doesn't you program think know That's gets program of to our better that handful just Certainly program friction it's easier reduce One function Certainly, things. is, very happy a grown about to XX%. is this to I ways the on the that cost We

who In discount leads fact, by vendors. and to for our funded to -- discount it the sign a up that for program, customers is that

ourselves. So, we it don't have to fund

the softness -- there grow and printed. shift healthcare fact seeing are XX% that you're given now we that seeing hardgoods, So, our to or just sales the we in and that consumables, between so the relative that more of to

factors. not whether But obsessing like or and XX% a or can that. it program get program a we're It's of good how So, it's handful over better. XX% necessarily a we it really we sort think the of as thing. We about make anything to

effective here for of that more really symbiotic find both their kind the helps. brand It's relationship obviously, brands. our of And, one -- It's value greatly loyalty fuel in supplier participation showcases us of to it. the mechanisms the

of And I of customers. power number kind customers about -- two, the for talked expanding choices

then build If baskets, three site more let and in expanded customers engage to years, SKUs experience you eligibility to which value from. they bigger we've continues greater the last or able manners our particular customers, observe over program productive the in led have be four of extract to the right,

growth leads You all driving we're, seeing the correlated that program as on growth. inputs on healthcare, basis. which all the the can of growth towards. kind in And obviously, that are you're you see of that it customer then, to -- we're categories to such the combination put both year-over-year is the times active program seeing NSPAC a here, why which increase amplification I It's mentioned

penetration? of healthcare in component the the big Has been a part increase

four same healthcare that's it years right? started point, And continue -- we propositions And that are over largest we or that -- e-com you on it's from about base credible in run this we've the pharmacy category who the pharmacy in America. serving talked building at pure customers play Well, enjoy I North think when and a ago. call. about -- the America a is, this to absolutely North mean,

think And health a proposition feed to at the forget are we of feeding when medication, you pets. bad about human's our customer, humans

have the you recurring of option compliance et when cetera, that it an program stronger fuels engine -- the notification and So, on engaged with put if et combined putting even ongoing it, you delivery, rates. behind cetera,

together our industry. healthy brand compliance it's in the compliance as so, that between Again, symbiotic us, build the enjoy And really return a I kind relationship and who is relative and -- way. suppliers average of in said, to loyalty the customers our bring

healthcare kind me point, I products add Autoship of eligible. thought of to Autoship data complete SKUs Let here. XX% But are are one our think, our just products over XXX% or of eligible. more that consumable

the overall profile in in and grown you sales that the time So, when of you those think get Autoship customer percent about have components lift sales, our that fact total as a over sales.

you. Thank guys. time, extra the appreciate Really Yes.

Yep.

Carden. Thank Mr. you,

of the next Young Trevor from with is question Our line Barclays.

may You proceed.

Great. Thanks.

just was quantify. it shipped the XX-Q orders what positive the I didn't growth think, in that was quarter? mentioned year-on-year, but one, it First specifically

around some investors there much you XQ. was. into that wondering over And clarify could was, quarter fact, lift and if you. some maybe then, and XQ of supplier if from questions second one, started in this some I'm carried how a one-time that had we've in just one-time rebates rebate Thank

Yes.

of it of the -- And, fewer those was took as just out off. we And the kind orders, was we some packages shipped. as course, into causing product packages Trevor, the had it we've shipping -- single everybody confusion. of we part purposely -- boxes. question. So, it the defining that's going The packaging at per by order that way I'll get We was answer better throwing that were of first it confusion. because XX-Q, -- actually And at created consolidating to

grew say unit Certainly, to the better overall. orders So that grew.

held getting at complete came us two-thirds the grew overall in at we're of than a in because from unit single rate, quarter let way, packages the put growth sales. slower But that heard of the sending the in me growth. say better You it package, that a orders number those

part did out. your to like supplier that was We in see not question call of around, second anything investors from on meaningful quarter, one-time rebates. first the The nothing questions

(ph). at let like growth to So, sort But, the this get Where rebates just you it's that of end of be something look, that tend the going [and me like] that. we're not that, that's say the you to as towards that's and assuming see is point a in something year, year. -- the

call So, the quarter. out nothing first in to

you. Thank Great.

Trevor. Thanks,

Thank you, Mr.

Young.

the line from comes question last of Lauren Morgan Our Stanley. with Schenk

You may proceed.

net back into you. year? the Nice Thank and Great. add see positive the second half your to turned that positive. quarter in of Is that the expectation the then remain will that

the half on And clarifier just growth customer of the back in expectations the year. a

on talking year-over-year You're that XQ XQ? in a and be positive basis, should

to way of Thanks. launch Canada from the second customer think in the any the lastly, the then, look year? half could contribution about like what And

Lauren, it's Mario. Hey,

could have for have that we and first the positive expectations the year. add -- of question, were have in putting set bit, start you Maybe this So is the we a the little perfectly of to -- I'll a have like is well. start been off with down your the I'm is, all bit, your net of look, that a mouth. half the say would But call statement were with gone expectations within see as I'll to pleased within little reality would the the quarter. went pleased words up first that we your on we I set repeating Could would that internally. which I

second for because some year, first growth -- to in changed, I'll thinking the be not just I the won't down into the into to coming customers. we half that has going bring quarter-by-quarter we but get the around you us to mean year the see just thinking in point are half active that's tell trouble. our expect full

that. of kind it to me Let keep

better trying I going to than be quarter-by-quarter. think it's to guide you

we outlined sales, initial impact But we're case or have out expecting And or top launch, customers. EBITDA point. have customer you is now we're will NSPAC launch meaningful from we as it us material that and we've have is. those is make on nothing this -- investments, a customers in Canada say or impact call expect -- quarter. gross line that third The the they what we is to The what this NSPAC in Canada margin, preparing expect for not heard net for on active at active contribution impact to

you. Thank Okay.

pass Ms. over question-and-answer any for team concludes you, the That further to the session. remarks. I Schenk. the call now management will Thank

Have Thank This us. evening. team. Sumit. great you, a Thank you joining is for

Thank you your That concludes today's participation. call. for

now may lines. disconnect your You