Chewy (CHWY) 29 May 242025 Q1 Earnings call transcript

Ladies and gentlemen, thank you for standing by. Welcome to the Chewy First Quarter 2024 Earnings Call. [Operator Instructions]

I would now like to turn this conference call over to our host, Jennifer Hsu, VP of Investor Relations. Please go ahead.

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

are today David me Chewy's Singh; Sumit Joining and Reeder. CEO, CFO,

earlier Investor Relations of which with was Our section been earnings the the our release, SEC to posted today, filed website. has

our at addition investor.chewy.com. summarizing a to available also release, earnings is In on the presentation results our website

our initiatives, risks, factors statements XX-Q section statements. share will considered concerning subject today, Private programs Form Such differ On we in cause be industry in of to making filed Act by trends, statements, earlier in. performance, other and our those today and to Litigation results Securities environment forward-looking strategic financial Chewy's uncertainties could forward-looking the other are materially including repurchase SEC, results certain which and report from the the operate quarterly contemplated that filings and actual and with call forward-looking Reform on Factors described in our XXXX the titled statements we under are Risk our statements

GAAP are today. date. most to earnings These results our this on us SEC discuss not to comparable Reconciliations be Investor will items our we filed and considered an call note these financial the substitute website that as during call, statements, in a are was measures by available indication release, information with Reported directly update We measures. measures certain non-GAAP for today's intended except the provided disclaim forward-looking forward-looking Relations should financial any results. as GAAP Also non-GAAP on any non-GAAP which this future are of the performance. on to of statements required law. of not Also based obligation as

year on all discussed period the against comparable call stated, of otherwise unless Additionally, be XXXX. will fiscal today's comparisons

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

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

and call. performance, for Jen, solid cash record-breaking off you and today's you, all strong results, top with profitability the line us free joining robust on achieving flow. thank kicked Thank We year

a of Chewy dedication the First team on unwavering and member delivering testament every most convenient pet to to our be hard partners work destination is parents collectively and success everywhere. quarter trusted and for the mission

contributed let's X% by of With in end increasing into QX quarter sales range, billion. our that dive first to results. approximately net exceeded performance. the to guidance this key factors $X.XX introduction, Two high

nondiscretionary accounting in and categories XX% as such remains our loyalty customers' XXXX health our strong, sales. of consumables First, QX for net approximately

sales $X.X enterprise customer customer representing and sales outpaced achieved Autoship of convenience resonate totaling net value with of increasing to average record customers sales. Autoship and our Second, again, yet Autoship billion The continues program levels, XX.X% our X.X%. and growth

Autoship trends. Our on strong grow. been we we to proposition. our continuing customer already customer work saw to is sharpen The doing encouraging value Further, quarter, have base customers, of the some and this remains healthy topic

quarter. this For example, off began to personalization through type pay pet

new driving quarter prior rates relative mid-teens up well a customers, and had particularly are net response the higher were as period. effect the efforts in on Our which and year to strong reactivated customers positive as

the higher ads business, as Gross our a growing XX.X% margin for mix strength expectations P&L, expectations metrics. exceeded health profitability records from since reactivation time the internal benefited Notably, for Progressing for our customer QX. environment. exceeded quarter care and sponsored new the rational company in we first XXXX, our set across new acquisition into shift continued the a of the and modestly promotional both of through we

margin of items P&L elaborate call. upon supported a generated will later in $XXX quarter, onetime some million X.X% benefited this We were this EBITDA, Dave our there Additionally, that which representing adjusted a our performance and executing of manner. company, on business gross at controllable by teams in Across rigorous elements disciplined margin all our the the are OpEx methodically highly management. Chewy strong

quarter. Finally, generation of capital believe more From we a the our perspective, both to areas. the we cash Significant cash balance than exciting free our generation, in free have coupled point we financial enables profitability of flow generated our a flow and cash in that $XX inflection reached strong variety million an flexibility business. us with deploy in sheet

our across our always growth support As and long-term continue margin we in strategic to done, have invest we business will initiatives objectives. that

will to portion more to meaningful begin we detail, shareholders. we surplus our cash and Dave in as describe Additionally, cash our of generation a returning believe have the

to Chewy's member we explore maintaining different program, exclusive launched and the benefits, of impacts Chewy sensibility. Chewy membership state. it month, that Now innovation. a provide share this offers and while how to and initiatives perks. excited The consolidation which some I'd in economic a our all products cash acceleration, we like year, paid will growing calling rewards strategic discovery approaches Plus. accrual are test-and-learn and of earlier currently we shipping, including wallet an I'm compelling Plus update its range throughout free And to of NSPAC program services, understand is on beta

quarters. excited are the and to sharing look more program We over forward coming about the

to Health. Turning Chewy

to of veterinary reaching to clinic remain Florida, locations near to announced focused later XXXX. earning Colorado. in X X attract performance in first We across with are in areas. With our X excited excited the clinics that launch capacity openings located the more Greater Georgia we X our on last to clinics, headquarters today, year, have several calls, area vet X vet our in where one care And Chewy we clinic, the and early the are Denver, open share ability our both generate days, additional pleased Atlanta, care and we talent locations of our Chewy market is to end high Plantation, company opened although We range of our are bring demand for it we since our stated to strong this services.

scores value to our suggesting and that unique strong, us staffing is vet remain proposition with resonating Clinic vets. NPS

are of to than Net Chewy it relates modeled new observing. are customers appointment our demand expectations. better we early encouraged are by As generation, trending to utilization the we both success and signs

our ads business. to sponsored Moving

continues delivering our their map while ramp on planned a new dollars. compelling business and marketing partners deploy road digital well, ads products ROI Our to to of the offering product high channel

flow-through we to see approximately articulated bottom at As we Investor the net scaling business to sales at X% long term, sponsored to our Day, our attractive X% line. ads of

to our payment as and app expectations. options our into Canada Lastly, features as this quarter. in expansion such with ramp mobile additional continues customer-facing line out rolled We planned

assortment, underpinned in continues as such Customer consumables. Customer personalized and particularly categories gradually scaling NPS build. focused Autoship continue such high, awareness demand premium remain programs and as a we our we by business and Additionally, customer expand care. quality on to to remained

Canadian positioned With are meaningful the the its Pet become player believe we category in well to over continuing a we migration time. market online,

underscores positive the rates our relinquishment. basis. saw time In from QX right XXXX, on first healthy Moreover, formation growth for a in And pet ability shelter and closing, adoption that observed pet optimistic data QX since balance trends navigate are and industry. our the successfully a are partners, we to of we year-over-year outperformance household Based normalization direction. progressing the rescue we adoption cautiously our between for on this period in

pet an towards perspective that turnaround, industry is our declare we to premature is industry track on normalization. it the While maintain

to in remain for our execute I and we our the turn confident strategic our deliver shareholders. Dave. call to that, Meanwhile, against over compelling map ability road With results will to

of and year. then the financial results To will us through take Sumit. turn outlook start, I capital QX our our you, Thank the and allocation balance strategy for to

First to quarter X.X% approximately with sequential expectations. net customers internal $X.XX $XX our to sales range. end billion, marginally active on declined guidance in million line modestly basis of exceeding the grew high our a Broadly exceeding expectations,

formation respect reflecting Importantly seeing that to pet to mature $XXX sales increase particularly outpaced NSPAC reached CRM Health. and believe overall wallet into X.X%. that customer, and our an per growth, programs share positive our by engagement, new fruit. macro enhanced cohorts beginning with strong our within signals note, continued ability meaningfully initiatives and we to in expansion Autoship we namely Chewy active top are growth as but increase categories, believe we line bear Net NSPAC like of to early customer driven household are

and Autoship be to pillar scaled continues driving a business Chewy, for predictable strength differentiation of Our revenue. subscription-like

basis representing a Autoship $X.X QX, billion customer the sequentially. XXX XX.X% point total sales year-over-year QX XX.X%, point our increase a XXX increase net basis. of and margin year-over-year quarter, in on sales in of reported points gross in came at XXX representing basis basis We up

reflecting approximately respectively. fuel gross of for have margin items reimbursements, As and certain from year-over-year basis onetime would XX Sumit and vendor timing sequential previewed, benefited QX the improvement, approximately costs such of landed at XX%, as gross and margin lower promotionality. Adjusted lower-than-expected QX items, points XX onetime

On XXXX, improvement, operating followed the basis, mix reminder penetration consumables It margin a program is ads levels. promotional was in largest by were of premium sales our normalized gross benefits worth the partially Health product expanded. a offset net as and year-over-year sponsored These a by discounting Chewy below environment. was our driver environment that QX historical

excludes share-based OpEx expense discussion and OpEx. with nicely in to Please compensation taxes. related that to quarter of revenue. scale Moving note my a SG&A continued

disciplined leverage basis management XX.X% SG&A sequentially. or ending on quarter points moderating quarter was improvement sales and across throughout of members XXX a favorably than of and both representing year-over-year planned. and million of payroll by points improvement with First our count our team basis driven network totaled fulfillment net lower This continued QX corporate XX $XXX.X basis the head of

and we as management expenditures. of Additionally, personnel such areas customer delivered efficiency service our drove greater improved from in G&A cost

I due run expense our First the end of campaigns. advertising to the advertising X% X.X% note marketing sales. to stated target to or certain million timing X% throughout that of and $XXX.X expense our marketing marketing of we would high the to of year the quarter expect balance was and closer net

XX% million, income was sequentially. increase year-over-year XX% a First quarter adjusted representing increase and a $XXX.X net

of Finally, QX we XXXX and relative XXX an basis margin of X.X% points expansion margin sequentially. reported XXX adjusted or points margin expansion the for quarter of basis to EBITDA

profit liquidity a million net securities, position cash million, cash $XX.X and equivalents of cash, initiatives. us operating we quarter lower EBITDA which enables invest of In leverage due in business, OpEx leverage margin demonstrates the we we are the the cash ended free by to the in We than described and marketable unlocking expenditures. in billion. capital remain the Overall, we of cost Adjusted growth reported scalability encouraged debt-free with margin with the operating billion activities this flow more strong of million provided by and our earlier. reflecting $XX.X $X.X accretive turn, In and and first expectations structure. exceeded quarter, our to gross are $X.X quarter, better-than-expected in I of the as for $XX.X incredibly quarter

of opportunities light expanding first with an priority. allocation In generation, update back our into the to share would remains flow you cash like high our Reinvesting our free business regarding capital I strategy. ROI towards

strong believe sufficient our cash balance taken acquisitions way to the investments when sheet implementing us if to affords with account, all firepower shareholder into of we of pursue further and a further such this share returns Our strategic provides opportunities Having us enhance ability by program. arise. and growing position value-accretive repurchase

share our to the share has expect of also excited program to the repurchases light compensation. updates we shares intend commence record providing strategy, offer mitigate to of profitability. continue and believe will to a program. balance enabling repurchasing use We authorized million. capital while of track we am this and that which repurchase through incremental us I $XXX impact as long-term progress expansion share-based Chewy's and to to forward look We first-ever our margin of Directors strong share accretive In of deliver to Board sheet, with up quarter dilutive compelling you Today, related

like to updated year turn guidance. second Now quarter our full I'd XXXX and to

trends, premature are the balance we overall the shoots to revise on of view is outlook we seeing certain our While demand for the year. in pet it industry's green believe

between $X.XX to approximately ability exceed growth. to anticipate our are however, that, outlook net growth are, X% incredibly maintaining irrespective X% quarter profitability. to year-over-year $X.XX year expectations we with of billion between environment, billion $XX.X XXXX our respect sales approximately and and full we our and pleased or We $XX.X sales billion X% second With with of team's billion X% or and of year-over-year net to execution,

this quarter, impact the XXrd year the of fully be XX-week in fiscal quarter and the range noted fourth will As reflected XXXX. week of XXXX a last includes

guidance. profitability to Moving

average to expected deliver guidance represent of ranges, our EBITDA raising the guidance EBITDA sequentially XXXX quarter we high profile, point are margin to range to We averaging XX% EBITDA expect full adjusted our margin guidance on plus throughout the above a per we X.X% XXXX and annum the X.X%, basis. to to that we flow-through flow-through a the year XXXX year range. midpoint adjusted this margin, of XX% first of reflects Similar notably at of to adjusted aforementioned quarterly results the expect the decline to

range We continue and flow sales expenditures in to remain of of above expect full X.X% conversion net to the year capital to XX%. free X% cash

questions, Before start our incredibly strong reiterate to I'd we the call proud like open we of year. the to are to that

most advance and quarter members believe that like trusted team convenient the their to well execute Chewy in parents strategic partners and to being of continue pet our road everywhere. and the enduring our as we execution for for of collective I'd destination We is efforts our deliver mission and drive all compelling equipped thank against Chewy map, dedicated exceptionally to shareholder results value.

to that, With questions. operator the the over will for call I turn

comes of Barclays. Trevor go line Our Instructions] first [Operator ahead. Young question of from Please the

Great.

on the of And appreciate is one bit the commentary a Q-on-Q softer trends, is XH really it back-half more XH so First improving a a still That's and story? net prior of on first uptick? a of Or that and we some my adds improving the the question. contemplate kind macro. kind a XQ inflection? versus Should I

Did Year-over-year, said with last the to guidance to we a the quarter. with consistent have some active quarter. similar pretty second or last with recovery down very first we half what we in flat follow-up? you the in provided Yes, slightly but the consistent guidance half, expect customers be that

to about breakeven? guideposts to track a EBITDA Yes. And ramp quarters think of that X launch quarters progress should of to expect and What to vet -- sort on kind going centers, we the measuring center us give you do the you there? of how the typical how are coming many get in

add Dave Trevor, this is might start and here. Sumit. I'll

that the we've Chewy highly veterinarian community. across a viewing both success as from, past, focused for customers scores, be So inputs articulated to we and to key are customers are are; a of Chewy few on the or satisfaction there in dimensions that will we sort customer --

ability is veterinarians. recruit to staff retain #X our and

So generation, is vet retention clinics. the operational throughout and one third And demand recruitment. execution it's these

we're what actually far, we're happy so And seeing, with.

Our are clinics staffed. fully

We we're future good building have at pipeline a that clinics contemplating for this point.

recruitment of script through or the as returns, new initial we've trends mentioned earnings wet customer positive. in net generation trends we so trending the these as traffic sort demand are And roll around all acquisition or

likely terms we'll more, In and multiyear of not quarter a is period, returns, a David? few this duration back with observation period. This be is of

we've optimistic more release the some that towards And Yes. we models, running launched. that end year process I'd to ahead still Sumit currently get expect bit reiterate I paper clinics add what as we're white just this through testing our type and of we said. of the here, a after do little but say of internal would cautiously I the learning initial on would

comes go Please Rupesh question Parikh next ahead. from The Oppenheimer. of

you of more your just buyback it buybacks. consistent on or strategy a dilution? share offset an opportunistic program. to how the Is more cadence curious approach first, just I'm So of

year EBITDA think Sure. year, be perspective, pleased to well this We're XX% share Good Morning, here in same. a over guided Last we're repurchase quarter generation. going this conversion I'd We've start of in cash to the to for Rupesh, the very we from market the with our with again second very, delivered quarter. I cash. do

cash, valuation with this be market, how billion this stage. an balance position we'll So we and generation. With in sheet the think our our is at future cash respect attractive very happy current of $X.X to

of capital. So we plenty have

the Board. have from the authorization We

enter as you'll both as see share us side, the have willingness enter opportunistically and the methodically. market, We market consistently on repurchase well and somewhat I to the think the

So we'll do a both. Did you have Rupesh? follow-up,

Yes. Yes.

question. Just X follow-up

this So as quarter. hard the category, look at goods declined we it so

As to you hard expect or you point? are shoots do you Or in any challenges the at look term? at guys green category, -- near the goods in seeing it is continue this

Rupesh, this Sumit. is

your us we've is about of sort correct being been to So observation declining trends able seeing. yes, that arrest

of is saw This volume -- couple well. as And has continued is saw up, our period, together. On hard with that intent well. likely categories low in specific trend we're tied saw of was consumers an this declaring this the we from that for. we in kind was traffic to they're so increase in the up long to script, as and of the the we these the for sort Search adoption relinquishment point side, intent a every about inputs through was pushed moved industry mid-single up. after we And script view, things, period mentioned year. digits that to So year-to-date, our a encouragement return mid-single digit traffic of goods

the low by tune of saw hard decline, where teens we of actually rate cut XX% company. year. it we goods from arresting We've -- inside to high the the the started Secondly, the to start

we're and to encouraging little of not will the of environment know bit resting. it's here. a So take normalize time We sort

is on that we've on stuff. controllable talent everything of side, our our type best So put this

We looking for and categories. and the for conversion especially way through economically as a while we're about sensible demand we general both levers knobs play XXXX generate how hard That's to comment through well going at goods. that are for all as our maximize turning being demand

JPMorgan. next comes The Anmuth question from Doug of

Autoship? with early on of might anything you forward? from on? little you have about the kind talked rollout on driver going And add hearing that on ads sponsored you early can the how about Sumit, can any just gross marketers of Plus, just And margin how impact do feedback being -- and Chewy proceed you the biggest talk a here quantifying that interacts thoughts upside. the bit Maybe second, you're then

a the margin bit make question I'll gross longer, Sure. Doug.

that with asked. But warning. kind of question So fair the start you let's just

seeing I curve. even forward as bringing we're products ads such good the to platform. branded more ads, sponsored Last response mentioned So search life, quarter, us on

and as We've than on well inventory And as improved our we the return demand the done were that quarter increased We've that of in efficacy forecast. that stronger flowed first through now. are seeing improved the internally.

guided And a the that so ago. all with X% X% is on track consistent we of the that the positive. what to which exit of communicated year we've months low range end is few We're with to for,

this is all good on So side.

And here, right? building a development, forest premiumizing the look from In about and terms of margin consistently you last starting improvement of the years, the business, gross and we've over journey freight the sort just been few stability gross if trees of strong out has talked scale, back NSPAC -- in blocks to at the from say, achieving margin of economies the improving logistics. so

to the through are All been last newer of years is to sponsored working green that, compound the these the of such then work which yield now ads, right? starting sort starting that pass-through seeing you're culminate and are there we've that X X, shoots, as

remain on we gross story. overall, the margin bullish So

our we're yet about. credibility, haven't Brands excited something Private We started which that talking about business is

our about nascent, excited Our are and of potential the they're And businesses we're health they're nascent. might or other native though components the contribute in both native that they future.

that how there's and we're the fire, irons here. lot Chewy rollout is Autoship? and the So journey about gross it margin of #X, in interacts, a excited

Yes.

type. mean, think represented a compounds -- for perks. of gives paid one. diversified vice I membership invited We buying all And funnel And the greater of attracted price kind currently wouldn't essentially oh, entry, a why message great to that you of these Autoship the all well attractive thinking which And mean that's these you and very is what the So in program you than then across very thing Autoship really latte. and here's and a is beta sort pet less behavior see be on convenience, which for like question nested these an non-Autoship customers, each if versa, "Hey, other. customers. be of great I by and also way, it saying, to just you the We across, cohort that subscribe their a a We've their this, benefits. you of believe, a of says, with get all want and Autoship complementary And program we've first and itself." approach a to of we're even all, of of being insightful thoughtful. can and you savings customers is whole pay the X look,

is we these to so are Lots to want complementary observe behavior that incent and purchase in thinking programs. sort believe the we on. and of so as front so consistent we're far, repeat of basket but NSPAC, us, and in of rate, engagement learn So terms of building forth

line The the Please next question ahead. from of Eric Sachs. comes of Sheridan Goldman go

bit When incentivizing on could respect sense priorities you just ask about I net give characterizing existing better are for customers with you dynamics. you're the acquisition of investments? those see customers if either of When side. against a environment ROI the the among Can a behavior marketing new or SKU customer marketing versus maximize X-parter. Maybe you to think of us what retention your might little that

then towards would up being upper of second question? about in we go through the of range. talked brand historically of following spend just that so pushing And Is we as talked be, at. spend? lined characterize about what the year, band how that a you just marketing on you aimed plus against Is you've that know upper the this up would that sort band Doug's Or what's part what

pertinent. is this Eric, Sumit. add start and I'll Sure. Dave as might

marketing we're passing that. other, . reactivation same as each that back independent the So all, question avoided around being new retention to we customer acquisition and priorities. make first these teams. the not the the of about forth So on efforts Think on right? cohorts. of are led of this by as we're They're dynamic X CRM And when redundancies sure careful well and or a focused current good We're two way. it -- customer are

of think now funnel So look the when you a could at this full you effort. as marketing efforts, essentially marketing

millennial and internally on we're our several familiarity it increased our the something we as to in basis about. were up awareness building which something points, are Z and hundred happy levels upper and awareness Gen funnel. the we comes particularly is focused segment, have And that So that

that, want of result incremental the website. to that we comes a as capture traffic to So

we allows come conversion customer type website or customers of to funnel, lower you do capture across is incremental that intent declare our it LTV are of say new want? conversion? or they're to then that you existing the So spending once a for high to which convert it efforts that what then of traffic. the primed when we're to wants the an kind sort And at putting we conversion Or Is net to category. lucrative of a a type highly site

So the money across. spending effort it's that we're full funnel essentially

I of You ago, recall platform ability a company. the you to rebuilt had because to quarters perhaps we that our target we have content cohorts quarters the ago, entire and internally mentioned now inside segment the couple X

And we customer fingerprinting allows with the to targeting of once even can that an the so us to we behavior associate because that of sort more we have loss account browse per their targeting back IT a precise se. back kind customer of or identify

And to believe greater we that work So generate and kind shows will in returns. hope compound signs the is type of future. this recuperates of of recovery, this the market us or we exciting and as

X%. tight X% In it's range, marketing spend, mean to a terms of I the look,

of; the that. value efforts to invest, got can in the see we Or essentially we've so lot we not need see want a, on, can or all change the the that. the through making if and if other, market direction to is going that a in nascent And There's sure one we of that we that lean respond to do to play the much. of year option and that variance retain we

the XXXX, historically net advertising sales. in perhaps marketing sales. of X.X% was and to And We've Yes. of X% about for of X% just from guidance, clarification guided

quarter just a marketing some little timing It lower. was of it some campaigns, bit about X.X%. due to First was

X% X% spot for articulated the the remainder of of XXXX. higher to the of towards prepared the that be end year, range somewhat so our we in for similar what the ultimately a the commentary year, was would And to landing in we probably that's rest

line The from Morgan the of Nathaniel Feather next question Stanley. comes of

did guidance. green still XQ, see date? in above share that you Anything along with can your bit the you that evolved how So Where you quarter, came XQ given called outsized out quarter a the on strength, shoots over in to

Sure.

me highlight, feel want start Sumit, if anything to there's free. and Let then, you

from about First work we percentage time QX articulated highlighted, here. this think drivers call increase you let's commentary. When we expect ended underlying if margin last really, prepared what we primarily the the XX%, in you improvement the items our through driving to of really up margin, that's year. at and that's to it, year margin product normalized as quarter, items, gross QX mix, gross of X.X%, margin from It's as gross EBITDA a ended of we so which continue to those perspective an would at and we XX.X% in onetime have you exclude about due some in

business pharmacy. by led within also up health We being led are mixing our health care care being sponsored and ads, by

that product last us up Markets we mix of continue December course, presented our do we which to and So accrete confidence year. in product the Capital business, gives Day which, at of is margin averaging

marker time, XX% over we ultimately, So there. that EBITDA get that to placed out margin

basis, I which mix, associated, the really And of product so one, summarize really, cost infrastructure, continued scaling on a saying is the scaling improvement business business continued our with of the and go-forward also scale, and albeit our fixed with scale would by rollouts stage, although is with which and improvements run-maintain and and this continued at productivity at a capabilities at infrastructure more kind ongoing digital in in is mode improvements of of features.

margin Did and profitability. infrastructure, mix, have scaling a Nathan? product you So improving increasing follow-up,

Yes.

line guidance, think shoots can those for XQ? anything as flowing you of quarter-to-date your the into top kind the And green of in about Just there we on -- then and XQ, how would what kind progress? share are exceeded

Sure.

I line obviously, broadly the end would So high or above our the range guidance, say, perspective, high a in range. with top line of from the at slightly of the end

we very much the I And outlook to for step that look this we leads think shelter what the year, take from. in maybe our shoots pet pretty full to industry is that our to the across versus U.S. for $XX.X we there's we is in shelters back billion. more had commentary quarter we seeing around held received what normalize much and since guidance data did first precursor which we $XX.X we we for see as year, pet market. #X, adoptions As we're that a of to last communicated the in relinquishments why billion data say that would the time many well, say, the green line continuing we our the that we with for is sentiment collect a and from XXXX, the that year the

positive Chewy, by for for as was So our models XXXX time really internally that net of internal we new exceeded and signal active also driven forecasts reactivations specific customers. was the well, by first own as since then that actually as customers a and customers well to and prior

in are So certainly, shoots. green to those be It's would probably are fully normalization seeing, industry normalized that signs premature we the kind seeing industry. is But I determine some this we're that X year. of the metrics signs looking of the we're think of at that what say, to going we're

The from of the line Forbes of next Guggenheim Partners. Steven question comes

but early, it's pretty care about realizing probably clinics. Sumit, optimistic vet you sound the

transfer journey, I repeat product around chewy.com members So the maybe what right sort maybe to what's in other customer seeing in regards rollout. to underpinning rate excitement of existing categories? mean was could versus speak if I accelerated optimism trends, a more the over curious new to account the you're you

able in try to it. at your to be I'll detail, much let's satisfy look it might too into but curiosity, Steve, not get

we believe the are better optimistic is as and planned inputs expected or than I our are and designed, So sound because the responding thoughtfully outputs why plan.

are the it's as very It's designed these that customer. So forward. the forward, what experience the know, modern, you inputs? sort a, the customer to we're providing thoughtfully we're veterinarian both of it's as well as the infrastructure clinic,

plagues is NPS strong. in in really or really the is been we expect retention. very be is the just to industry to you're rates right? that, strong, recruiting. And Response And what vet tailwind. have Customer -- it next so vet seeing vet it's good. really parallel is NPS cash to able on #X, really And

Capacity stressed. Vets or are continue underrun going to demand. outrun to vet is the

to that the right value is proposition and important, we be we the able standpoint, is team from motivated vets. to so attract that getting attractive very have And believe

more the And at look of customer profitable repeat demand When these trends, rate we then new at we that membership that up, been we look purchase three, all when the indicative at larger we look existing metrics customer building look mix. appointments of the when business. generation have kind when future suggest of plans, in and clinic are at sell-through the versus signed rate

inputs a it's So what answer, are. of hopefully, sort understand expectations bit how long-winded but our of the a we're and evaluating -- the you

No, was if David. that's And follow-up quick great for you I just to hear. maybe a the maybe -- just expand on maybe then can expectation.

out called what that throughout guys XQ? you very I over in year, to heard decline I the incremental think margins if your pressure us be expenses just comments you maybe on on help XQ sequentially XQ the I have XQ, But advertising would margins for over correctly, get specifically. step-up the

referring EBITDA clarity, And prepared referring EBITDA or margin margin was to you're at I for commentary. Sure. the in to least

and a of We're let ads high to our first, excited continued kind sponsored continue into level. me well execute as And product we shift at ability and mix Autoship first about as as just did drive start care. health perform and areas in we such to penetration if to as So continuing good very incredibly the a profile provide end And guide have year look high lower expect to from at to would the more we range. our to did that. versus going the would that range XXXX, our perspective, look we're of this seasonality similar a the towards aligned of if then you we be end quarter, year,

So down part I year think quarter would and kind margin normalized of a a the all the the of somewhat the first way through from kind fourth in the step be market. of year normal of customary of EBITDA

something we're environment, And that then the seeing. finally, the significant either macroeconomic lower environment not things indicated. And part aggressive about of the perhaps of industry softening so require or in talking which kind a end all currently lower really range. The the are that's we've more promotional range would of or pet what

for what we ads product trends both in to feel delivered good about us to And good long-term so the we in our We first sponsored business, quarter. up continue about feel mix And similar pharmacy profile year pretty a to clinics think in XXXX and health what vet well. into from in care XXXX. into looks ultimately as we the like perspective looked it

The next of of Lasser line question Michael comes from the UBS.

expect And in do drive term, counts the Sachin the is last category, Michael you Lasser. behalf that in would what turn is, of positive? seen Verma year-over-year higher the given customer your longer The years? e-commerce penetration is on This growth few when question

start little the year-over-year to period, be a to flat have to chime an to second mentioned the first little for last up if But Sumit, customer bit, did kind looking from ultimately, pretty the flat of please so XXXX. account in customer flat in a flat and this we we weaker, half. active quarter, on as full add. I'll with Maybe down counts bit relatively year maybe expect slightly in And year you slightly to -- half, anything XXXX

as see in terms the of like first actually certainly in an relinquishment respect to customer the saw to that positive on that I internal one well. in as data adoption what -- the saw And saw new expected, and that, we're that by we mentioned, to we versus increase fourth what driven industry that starting we our kind front with in was exceeded In normalization albeit feels perspective. so pet we an as reactivations. shelters, addition from that in slight then adds forecast the we count exactly That's it from active as of with the well of quarter, both customer difference,

accounts kind of that pet disproportionately then maybe from we've years, additional to them of calls, become positive needed So the in over give several the we turn for ability income would the would more in that be really market we seen as trends times And online, inflation moves market the what consumers, scenario. then couple to favored normalizing free last would of discretionary customer that normalize. mentioned of inflation last would up the parents in that future. the the And over couple a versus have we

spending And inflationary normalization with would you'd normalization of been talk seeing we're some discretionary talking think -- is so add? so shoots that that about of pressures is of about. what that. anything respect I we're what pressure, say to pet that the seeing we're currently we've market, Sumit, really to normalization households, green I with that we are normalization under when putting consumer And the normalization of referring

stores, On bags look, the higher the the e-commerce Well, heavy mean, retail Cat to heavy. not pills are wanting why are question customers on would back love and core continue. litter from penetration I food dog product around insights inconvenient. heavy

that in and ecosystem interest and channel their of technology to migratory north is value convenience via next over them digital and And to keep that so thing the online. touch experiences, we better second the their . And personalized at have the from you or much the over time, and expected that customers, when through the continues way points, we do experience understand put cetera. personalized of propel you high-touch cetera, XX% online the is sort proposition reach and transacting et a much them years. trust Online XX% of the the a through delivering to retain develop remains nurture deliver better few retail look can trends is we that way et

trends overall, So on onwards. we're from penetration point bullish continuing this e-comm

is, my do a you revenue And customers growing sustainable NSPAC growing your increasing strategy? this on Is year. without follow-up plan how

is at bit it have the wallet, model, something It of has underappreciated unlike share of customers an well. to where like your we've continue about ecosystem. past in that talked of you looked This a subscription a strength right, must fixed the as Chewy, growth been

and not second share believe A We from XX -- XX, shifting in we're addition for XX, first right? of focus away to point customer wallet. customer our wallet, So power combining of addition the to years. XX, is the pet of share lives

and with average from the of spend anywhere shown that a a power grew During of pet $X,XXX that to have of NSPAC. $XXXX $XXXX parent an we X.X%. LTV It time, to over and pet growing $X,XXX

we're the capturing our are means right $XXX mix to customer businesses now, NSPAC nascent. customers which customers, of reaching about right? they in of in bases, about X/X are other pool that XX% the into quarter fairly continue of and Our overall market, the This roughly health

net X active and reactivation. when sales comprised same that's of we bullish net number. And adds, components: and customer So expectant are acquisition, retention at of per the at our growing look different time, you

firing is on so we're all engine happy about that. reactivation cylinders, Our

the in cohort In We retention quarter point we're terms churn lower of year-over-year into come seeing saw retention, a better view. from behavior. of

intent that. and and pleased pool have inflation acquisition, is So explaining, recovered. was sort with as then essentially discretionary on finally, given of of we right were still not categories food customers you yet now And suppressed, that a shallower Dave are treats pretty are declaring high, haven't

to price whether of and overall capture. intent it's whether Chewy customer convenience broadly the and really speaking, loudly, it's value selection continues personalization proposition or resonate So

bullish. remain we So

the of line from Basham next question comes The Seth of Wedbush.

existing trending you This retention McCartney, historic just levels terms and on how behavior in hoping recent relative color cohorts, for NSPAC is give specifically Matt just could more Seth. cohorts, some maturation? their was I for up on they're the of to

that seen. the deviation we've trends Sure. Not much from

We continue to categories. health-related see into customers lean

of lean but categories. condition-based see and strong across We categories, and into kind continue pressure, treats given to continues other seeing premiumized to the toys muted we're performance sort customers be of

pandemic cohorts at relative take single-digit terms low in the of month XXXX In a point you positive cohort half percentage or when cohorts. range membership project back of XX, to each retention is timeframe, in cohorts and from XX cohorts -- to the look relative for our of past these XX,

So that is definitely encouraging.

more much call today. not on Matt, we've relative comment speaking, already to said to what the broadly So

up trend some seeing is the Yes. I also on a say is as we're Autoship we've just signing new very for company. that positive X seen would that build that it is customers and that of that highest

So positive respect new that's signal Did with have us to a you for another cohorts. the follow-up?

Yes.

sorts that of your on those retention? of specifically target here? but benefits terms Or new wondering, materialize ability benefits was your yet I to might you cohorts I when early, so pretty it's Just seeing from CRM. specific know in program with are

seeing Chewy app the both improvement as seeing up of terms multifold of Both greater in out which seeing business, CRM purchase is year-over-year second teams. are benefit. We're our basis. programs in run benefit as We on well are a We're in rate the participation on also reactivation.

Horowitz the question Bank. of last Please go Lee ahead. Deutsche from line of The comes

X Then in just perhaps care, the evolve health Maybe Can year? likely quarter. from not users. share leaves that grew how and vertical, in -- help in follow-up in you that progressing Chewy success that share chase it there. of Great. bit discretionary the bad seeing number in on most the you're through Would business. seem share hardgoods, some category seeing given I in in certainly is and which share some that a at guess strikes about a likely that that vertical the how X% then line share, are better consumables, you consumable decided the to you contribution you on you of and have your on think the guys us that to us I guess higher given moment health understand expect that course to taking

with Sure. commentary. higher-level a start I'll

end we market QX, from X%. look negative at therefore, That's X% fairly good of share on consistent, is And to the take you observing. marketplace. growth of range We We're the right? in that, X% sitting sort to a have in in relative that market this of the story to players it high positive the the obviously share generally the read If ranged demand the will we're and year.

in break you we're intent discretionary would chasing. not It's hard that positioned I down, our reframe Now when the you and that not goods. way

we performed categories, green we're fact, In categories the relative that the category our in of seeing the that in still making to where shoots team make within as on as industry half, I at focused we're and loudly proposition in certain to and goods right? sure half mentioned competitive there discretion. need assortment positive sure hard that The we a just that other in are past, resonates least remain

say, then all focused absolutely of we you held could premium in or it. segment, the consumables, segments we're share in on the we across consumables. kind then and So and value And share gained

overall, a there cohort segmentation you that positive is range see. So that's and the of -- -- bit bit story upon it's depending customer the a it's of a a but

Did you have a follow-up, Lee?

that at guess, more maybe this churn the point? We you I color And X I down churn bigger terms is think, But how fit bit relative year, and quarter. any shoots outperformer I you talked reactivation exceeding maybe users. formation. helpful. think green your the in the household guess, being of just follow-up acquisition should on Very year-on-year. does Yes. the churn overall improving you more to how about And lot a talk progress customer new in the about Sumit, a in declines, progressing with talked And steepened I -- reactivations on helpful. turn guess guess quarter? Maybe and But acquisition how expectations I balance Can through the of maybe

you're Sure, trying to sure, see what sure. can here. correlate I

the So here's deal.

I seeing to customers of a right? back to we acquisition, to reactivations the normalization. Then -- acquisition than So as trend continuing amount customer that's acquisition pool aren't our customer the right? want discretionary to come industry or year-over-year. time, add we're categories, that of higher in the same the churn. held reactivations missing was there Our that, mid-teens there be new by was right? said share the new net reactivation At that is you about intent connecting just declaration our that is will up So net surpassing be clear rate, to So

down So the per back recall, are cohorts still out half are right? XXXX cohorts are that but we materially so cohorts, which we're you And sort the rates churn our of that cohorts, se. year-over-year, churning, hasn't in if that cohorts in those number of at signaled reversed the are we yet shoots more given or low so the than is had years playing seeing the through that to pandemic of green X statement last digit mid-single legacy that -- was our that true higher is right, the

we which continues trending to base that a us. year-over-year at normalize So arrest sort bottom, is the better, but healthy alongside still of there's need to

some that it's in numbers churn from from churn and decline it's, of absolute 'XX, XXXX. a of and of 'XX. helpful percentage QX from sequentially And Churn perspective Yes. in churn QX of perhaps for just down the 'XX, course, color. of QX it's for down of And QX a it's from

So to all that the the we kind in shoots data believe of of early industry. of points seeing that those kind some again, green we're point of, normalization

for a your gentlemen, and this like of call. now Have all I'd joining. day. today's thank to Ladies rest concludes great you

now disconnect lines. may your You