Chewy (CHWY) 4 Dec 242025 Q3 Earnings call transcript

Hello, everyone, and welcome to the Chewy Third Quarter 2024 Earnings Call. My name is Emily, and I'll be coordinating your call today. [Operator Instructions] I will now hand the call over to our host, Chewy's CFO, David Reeder, to begin. David, please go ahead.

Thank you for joining us on the call today to discuss our third quarter results for fiscal year 2024.

Chewy's Singh. is today me CEO, Sumit Joining

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

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

in Chewy's statements initiatives, which call concerning forward-looking share and are the and environment we in repurchase operate. Litigation described not of performance. could those including today, performance, Such Form Reform considered and in our the factors other Reported fiscal subject XXXX contemplated be to making first program actual results On Factors statements, Private in section Securities and with and results industry statements. we statements should uncertainties forward-looking to Risk of under will results statements an financial trends, from strategic of XX-Q Act other SEC, risks, the certain considered our the our quarterly cause are differ filings which for by titled report materially future quarter forward-looking indication on XXXX be our the year

release. in We as note no earnings financial any results. comparable certain GAAP provided during non-GAAP forward-looking our statements financial as measures. on date. information available non-GAAP will on website Reconciliation to this a items not to measures intended are GAAP and obligation Also this required for except Investor discuss of most directly measures to by these the substitute non-GAAP our are Relations us These we that law. forward-looking of call, today's are statements, based update as call the on assume Also

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

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

turn over Sumit. And like I'd with to call that, the to

you, Thank on today's you us all and joining call. thank Dave, for

margin range, in observed momentum our growth a increase active top build and of and our adjusted QX. results cash end free discipline. sequential line focus on flow execution high-quality continued guidance we underscore EBITDA model customers, robust third our the continued exceeding to expansion quarter the generation. team's on sales the We in Our operational of positive results These high delivered relentless net durability business and

dive increased With the that, details. Both to health approximately net strength billion. Autoship particularly let's and consumables net QX of program categories, flagship our the customers' into our QX sales anchored $X.XX and in our performance. by nondiscretionary within sales loyalty X%

high customer and ability for in for QX accounted drives $X.X XX% and Chewy. QX business sales of categories, and the billion services quarter, care stickiness consumables including Our predictability products Nondiscretionary Autoship and and our increase health of representing of enables net approximately net X%. year-over-year customer sales. Autoship program XX% sales a reached in

appreciate our treats product food, and and ongoing hard comprehensive refresh our across Customers catalog assortment efforts goods. to

exclusively on as adding few Over the of have premium which a several chewy.com. increased such we supplements and new brands, last launched name to assortment popular tech, pet categories wet across few, our food most quarters,

for overall to in-app ensure Last parents. we for both our out our last QX I brings mobile experience rolling the app more least continue excited enjoyable or on providing to one the at and average on-site the range In compared to about customers. by we quarter, users, Additionally, make the year. our in app engagement and monthly observe to order placed experience are spoke continuously app of journey pet convenient customers. and who app active MAU, and to to our strong it am I the mid-teens customers we increased unique app enhancements app through shopping QX, are our even more an efforts mobile and convenient experiences redesign

out of Continuing customer active momentum second to growth, established I on on building pleased coming the that the our customers, marked we quarter QX topic sequential of of share am quarter. another

powerful efforts drive innovations, Our macro our steadily marketing outperformance CRM strategy and to assortment and background. ongoing continues while to continue enhance shopping expand various with normalization combined in experiences, the

We ended up to to active fiscal expect last trend we with now approximately up with to sequentially. XXX,XXX the We quarter million year, end a XXXX. third in strengthen which XX.X continue customers over XXXX active customers, expect modestly

margin $XXX basis profitability. of XXX million margin in points We expansion representing quarter, of X.X% generated adjusted to Turning EBITDA and the a year-over-year. approximately

EBITDA cost ongoing a to the cost of continuation as strong approach of performance, disciplined scale. adjusted reflect QX results we Our fixed leverage benefits a and management our gross margin

continue Our deployed third we to the million the to increasing shareholders $XXX capital meaningful profitability us quarter. by to has in return incremental reflected shareholders to enabled as

stated fiscal Now The provide some ads of well, on let range X% to fiscal expected, an fully of We remain me Chewy's strategic track in we net technology software and to forward sponsored new initiatives of XP update look to converted to to XP on XXXX. our as previously our continues remain business and and innovations. the end reach platform. low long-term our X% perform the migration target sales of with year starting on track

made Care Chewy's to care products Chewy care especially or services, I of Vet the CVC. this am progress year offerings. across Moving our proud and has health team health

earlier clinics $XX the across only launch the Care entire Chewy we services unlocked vet compelling Vet but the billion of this not complementarities also are ecosystem. we Chewy TAM observing year, With opportunity,

fiscal XXXX the opened X reach target later X clinics previously high our year. have to stated We range end openings to expect of of X this and today clinic in

footprint clinic about happy customers QX. new Chewy spoke have outperform quarter Performance The proportion of the Chewy we through relative to Care promising, to last success that Vet of continued expectations. across early share signs through to acquired continues and I'm our is

pet purchases with parents. including resonating to shopping indicating cross-category since seamlessly have with benefits, commerce our chewy.com ecosystem that post and quarter, visit broader strengthened care last Additionally, clinic on is ability connect

program's about in members summer success, shopping several representative and that launching behavior on we of accelerate the Chewy+ have higher been have cross-category customers. penetration greater the launched several Since wallet a analyzed are last members to a also have key to tracking engagement drive and of program. of and app like customers. XXXX over stronger share to Chewy+, to talk the more would Recall paid sample data Based Chewy+ seeing relative that I the engagement. carefully orders, the moment we indicators we including studying to membership are program, take potential months, place consolidation non-Chewy+ we consistently Chewy+ cross-category mobile our

the flywheel this adoption we seeing program. Furthermore, Autoship early a effect customers, of Chewy+ higher of from rates signaling cohort potentially are compelling

overall While introducing immaterial, look of are remains the we by encouraged our early results to enterprise to the and customers. base contribution program broader these forward to

completed improve including year of Canadian while net growth across a QX. still we metrics on Touching of business, sales Canada, Chewy, operations small key profitability. and relatively continues scale The overall full in Autoship the to immaterial where and to penetration,

excited Scotiabank to interactive brand leafs, signed perfectly passion Additionally, the life we we've maple the remain advertising at with focused Leaf's with Toronto Arena. are on with team. recently and hockey We Maple strengthening by passion for brand bringing pets and during this for and we Canada games Torontonian's the Chewy's awareness moments fan aligns partnership dynamic are in believe

inclusion XXX to as of for We the opportunities our November a as view our notable our endorsement our and this enduring like an our I in X. ahead. inclusion Lastly, would milestone of Chewy business compelling with acknowledge index S&P growth performance, recent in

third to In closing, quarter. strong work hard would dedicated in our the members like I execution of team Chewy thank and all their for

have executing on focused fiscal year now engagement this we quarter XXXX through about holiday are We excited and through high of our XXXX a look season to thus and seen far are the on forward customer final note. ending

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

Thank Sumit. you,

environment sales quarter. year-over-year end to remained last pricing, guidance the exceeding promotion grew The range net and quarter we X.X% stable Third the throughout billion, quarter. $X.XX the provided of high discount

As primarily growth penetration driven by customer was active cross-category growth resulting customer share and product such, continued revenue gain. wallet in year-over-year

a million both year-over-year. pre-COVID quarter approximately customers. additions, in churn Within the customers ended net and increase the exceeded gross improved active with customers, grew of new year-over-year reactivations reflecting XXX,XXX gross levels quarter. Gross sequential and additions We XX.X

trends positive of active pet balance with expect improving a specific and the modest We we XXXX customer now of year-over-year backdrop Chewy momentum active fiscal are modestly the these industry through continue strong Against by the year. execution, encouraged in year expect growth. end to the and customers to

as Autoship a net sales a approximately percentage quarter basis Third to sales total net billion, points. quarter points the outpacing total customer increased XX%, $X.X in of by by sales company customer to Autoship new record. XXX XXX increased sales basis X.X% by growth

we NSPAC, wallet sales net reaching to per of grow QX Additionally, share with active or customer, continued $XXX.

expansion year-over-year. third XX.X%, reported We representing basis of XX points margin gross to Moving margin of profitability. quarter

quarter Our was mix largest margin in growing improvement followed sponsored product consumables ads of including shift premium business categories, into driver by and the gross pharmacy. the

third was rational. in quarter in quarter activity expectations in with Additionally, remains promotional line to and environment fourth the promotional the date the our

Please Shifting taxes. and expenses. my discussion that compensation to SG&A expense related operating of share-based excludes note

efficiency payroll, $XXX SG&A points year-over-year with driven corporate of XX% and to basis. fulfillment on representing million totaled by SG&A of benefits. quarter respect discipline improvement or sales, Third efficiency other basis net at-scale continued and XX leverage a primarily was

to our in X% X.X% we end would and was at and of in previously marketing or primarily marketing full expect timing advertising certain that expense QX. year. I marketing advertising quarter of net sales. range high come sales of the note the This to stated to million due Third of is X% $XXX.X of expense pains for the

net was increase which diluted $X.XX million, representing on both quarter adjusted income for translated earnings quarter $X.X Net was and XX% basic a a million, share income per basis. Third the $XX.X year-over-year. into

points million, in expansion and reported of margin adjusted earlier. margin EBITDA improvements $XXX.X and gross XXX SG&A Finally, basis adjusted of the EBITDA described X.X% a margin year-over-year representing by driven we

million reflecting capital We reported activities in operating provided net of flow $XXX.X by million free $XXX.X quarter, and $XX.X million third cash expenditures. of the cash of

over invest to Our significant flow XX-month in our flow trailing million cash was quarter cash while returning and to growth free continuing to of demonstrates generate initiatives third ability $XXX levels our increasing free capital shareholders. and

transaction on provide update the we existing allowed activity million. repurchase to million executed million concurrently BC to the secondary stock repurchase our share underwritten stock $XXX $XXX Class from an an separately repurchase position A common September, by approximately shares XX.X us was in continue Class our million of Partners, Partners repurchase a shareholder repurchased to offering largest program. A like reduce and of common directly quarter. In ownership of from $XXX share with BC completed our I'd aggregate for This price of

for program quarter, stock, of the end the million million the and repurchases. shares of common $XXX the during $XXX.X shares repurchased we repurchased future spending our we program. XX.X X.X retired quarter, year-to-date. of Class under A under approximately a approximately total At repurchase $XX.X million remaining capacity Additionally, has approximately the Collectively, company million million of share had

to to the in marketable ability equivalents and generate flow $XXX shareholders. continue debt-free invest and increasing business billion. Our We of cash our and remain profitability levels and enable in an to us overall return cash, free with approximately $X.X ended meaningful of approximately we liquidity capital to cash securities, with quarter million will position

This and like or the that, or we XXXX. With approximately year-over-year to as in fourth to the will which and and net be billion XXXX XXrd between We a narrowing are and previously the includes anticipate X% week sales of of the fiscal noted, range full billion year be and billion approximately week, of quarter year $X.XX impact updated full year, the quarter XXXX sales reflects XXXX I'd outlook turn quarter raising fourth between to net impact $X.XX and full $XX.XX guidance. our growth. of XXrd XX% reflected $XX.XX our year-over-year XX-week growth, fourth fully billion

year margin full We to timing of are certain X.X% quarter. a year-over-year approximately to expect expansion midpoint decline XXX our range basis the EBITDA EBITDA to of EBITDA margin indicates investments, pertaining and adjusted of the guidance our of to adjusted pertaining to sequentially last full margin X.X%. margin guidance margin we adjusted of quarterly due adjusted adjusted EBITDA year raising fourth implies seasonality range and approximately comments points margin, The to XXXX EBITDA typical progression our primarily QX for marketing XXXX campaigns. with quarter Consistent the X.X%

free range in to cash Given to low the sales, remain full at and capital our to XXXX expect previous results year. net we quarters, stated the anticipate previously X% our of come for of expenditures XX% X.X% of conversion end the above of X flow we

and that Finally, we repurchases. nearly we potential does XXXX outstanding expect retired not fiscal shares future approximately basic This be year-end have shares XXX and at incorporate to year-to-date share million repurchased incorporates XX million. the any

as thank for strategic long-term results execution. I to credible their to profitable In Chewy closing, members execute our third continue strong growth. collective of priorities deliver against efforts want team our quarter quarter another to reflect we

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

comes Our Nathan Instructions] question Feather from Stanley. Morgan first with [Operator the today of line

And been the Really in trends to you continues working see encouraging customer what [ continued about momentum. customer ] you're of some to think how congrats penetration results. compared double-click the to should growth we [indiscernible] to ] on as on? overall growth [ the strong accelerate. prior seeing on you've initiatives relative Active contribution Can the and

key growth the given further improve customer in about for then expectation you're year? should think and in considering to the And we how for the growth 'XX, puts takes

appropriate. very Nathan, Dave Sumit, I'll jump in and this is start will

we I industry a more to see household formation normalized terms stable, continue that, level. Pricing in towards So normalization. to inflation remains with think continues you of started signs move of trends,

we of through fact, mentioned on benefit no earnings saw we as we QX. as pricing, call In the move

Regarding truth -- data. no there's household this pet source formation, truth single of for

triangulation adoption double-digit year-over-year believe We ranges and the dates. adoption trends and in growth to us better high both latest to that trending down a Our relinquishments single-digit in are single were direction. low relinquishment low continues was tell

So return a adoptions of external QX view. point cycle an of overall, to positive we observed net from a in

In had expectation takes. you terms let question for puts 'XX customer of active [indiscernible] me and -- here, another [indiscernible] and double see,

we Ultimately, industry a to now driving, course, active of I normalize the the good last factor I efforts lot that is Xx So it's growth we customer there's to background, own as trend, and mean due to stabilizing going -- our the largely are a quarter, see. that a now which very believe, on. is is, mentioned in continues

working strategy mobile that assortment, conjunction. CRM on-site our On and in and is the expanding all sort enhancing of experiences, performance what's side, and of

funnel what move of and move spend to to exposure focus teams the on we connecting demand. has driving to well our up audiences As marketing into as is flexibility share level the started right our funnel capture of to both the voice funnel and work that the as enabling really 'XX, for us both expanded to find down is efficiency and

around customer cetera. we when renovations, the site, of are the them assortment, efforts site improvement other And previous to we talked effectively convert them to experience, with able bring I've choices, about et that

with strengthened is for strategy 'XX our So line 'XX. playbook in the that very and we've much covered ourselves in operating

have data from to that cetera, to improved Another app second et Autoship drive them customers I your purchase just draw target is to point want segment attention said identify quarter engagement, last to more improved ability of sign-ups, we rates, cetera. mobile recall and we've et an and a

performance XXXX, least the on We're share we've repeat this so background, and X market. to in rinse the quarters. going for now of at QX sort and in and And played our playbook channel strengthening

The America next with Lynch. of Nagle question comes Curtis Bank Merrill from

the on on comments of the the guidance advertising spend. in terms a and focus and to want bit marketing I XQ specifically So maybe

context, high range, to big X% end a certainly the the other around extra of from relative leverage quarters, relative really year. at like the no for It terms like in the implies the increase, dollar of week. Just right,

Is dig or customers are products into of $XX I Just just one spend that whether it's guess Is to? that some there what specifically you're think about of does imply not? correct? we of and So or into And million kind apply digging me increase, time? targeting? $XX kind pertain it should to year-over-year. Looks that, to million like and that how kind the conservatism specific

let of this to build the then Sumit's it, one upon if build question. and Sumit, active want I'll know. I'll you about comments take any upon customers. me Thanks for

and quarter, year-over-year in you third quarter the customers got you've all the improvement think you that in and then, elements into So about when third actually reactivations And of a churn. those metrics added, have of the go we across course, new on additions saw X basis. gross got

so of elements normalizing continuation entering in shelter the previously well with we believe we've driving And we a We're inflation that as fourth some data activities which with is across quarter the that with has the quarter. what I third mentioned previously moderating X the momentum as the entering we're fourth the mentioned. quarter continued as referenced industry, on those well, as we're

going as with want quarter, in in some elevated fourth to into marketing fourth timing we the is that, such lean building and we you as momentum And little the typically see an season believe we certain where fourth we in that invest fourth that of quarter the So the of a of there's can in holiday that, given have believe on the continue elements the continue that Number and quarter one, a well quarter, build higher advertising opportunity XXXX. couple consider. then on then industry campaigns. we into in to to and course, the what industry to improvement the bit

fourth So year you about half, step the guidance. that. guidance, in we're second see customer an to and told first down of in in think invest being pulled half doing you that quarter that and We've we've the And to We've what active for opportunity to in in the take marketing, and up terms flat flat flat. back, in net-net, guidance. up you moved a our advertising the we growth,

range. the For being that for mentioned, the that Sumit? range end of you the to year, X% to as we'll the X% high be get specifically full for X% to imply quarter. of at above X%, year, fourth the the end And high to X% would

which on had developing and this the on. on that Curt, the the the add that we're we cohort that call share a of that customers potential to in more would we in like from seeing just LTV and market pick of current on wallet customer ROI up based past, we're we've spend the existing I is conversations Yes, the reminder of base

as back the picking you we're average. the left, now down the So we've all marketing And swung spend XX, that from know, in to our the past, XX basis up. way points

the we're this audience why and cohorts Why trend to based are efficiencies XXXX are solidify gaining and about as really because full in able well beyond. now. expansions continue the invest funnel And now? past? that ROI compelling the and didn't the to spend we the past, that see I as on we we're that in we to The for are behooves growth spending didn't Well, acquiring, us year talked be we

let kind you encouraging -- data the some customers because The picking an compels reorder seeing. the sort -- customers is that rates And and up X/X Autoship of these with categories. consumable repeatable engagements see cake If build the one type that a SKU then me flywheel layer spin we're our settlement as points share improving at growth least had of a promotes rates category. We're manner. the that's of from and and efficient our that we're orientation of these in new trend seeing more it

customer When new in to you X in basis rates, of the than acquisition, roughly periods XXX we're 'XX higher XXX reorder year-over-year averages. cohorts, of at running terms months points year-to-date look the post few first

of and we're that returns. some invest increase allows the data therefore, or we are right points out go That's if these see what propensity and So background the and doing values modeling just of study to decrease the now. us on sort

total makes sense. And just -- then Okay. that

you the follow-up, interesting. answering on quick adoptions were the really made points question Nate's a Just

down I Delinquents on [indiscernible] basis a think singles. double. low to gross you said high, singles low up

did size improvement? terms compare How a pretty that So trying of sort good to to Just XQ? in not rev of number.

relative the to think, I to by, margins by positive extended ranges low QX. It's mid-single-digit

question with from Next Anmuth JPMorgan. Doug comes

could. Two, if I

vet investments track that how you've may your Can the on be the First, looks talk what 'XX locations more year and about like It clinics. you're expansion this learned to year-end. then? required you by on just and informs plans that

over automation, perhaps to XX% that the talked time? kind of how XX% And long-term about an percentage give just update us on you you've also of relative kind you're then, Sumit, tracking if could of to volume

Yes.

[indiscernible]

were respect vet to as this seen X with to the that year. we the The we to trends end planning We're positive vet have X to at range. that clinics, be on continued. out talked of vet roll we've clinics So going about, clinics high

the high. levels The have been clinics Some utilization positive has corresponding net those of service operational of been those kind service those engagement the high. It's The the those clinics of been and high. promoter clinics. customer and metrics score customer around level, from

cross-category also in chewy.com, chewy.com, high. propensity customer to penetration, and online new vet then to Chewy through that and The clinics shop to their then at customers go new come

and fact, are more improvement customers, new half shopping In clinic to Chewy leaving online from and those vet consistent also quarter with quarter, customer new than of at last last the going actually chewy.com. then

clinics' space. the the roughly positive. been and across these on vet about the engagement that I'll would our billion customers. guidance of grow metrics this with tell presence clinics XXXX anything very there? you but the that Sumit, up leave size We're XXXX we've would you for encouraged all in So trending to we've build just vet by through I the by TAM, we're that continuing opened our $XX encouraged excited

no, Thank automation, that's the you. On perfect.

side, the any through on as you line, those some fulfillment our execute sort And script. centers if of Happy now dive through really peak. bottom chain combined is improved like. Doug, A through XG we we the that, have, tooling our than the and supply On with less area, to see the half network. and automation can us of shipping to that talked allowing efficiencies touching automation volume deeper in to in strong Dave trend little is continue scaling the gain flow upwards. in that about continue the a you OpEx to And we

and And points quarter. some from comments data that on build third just the using to

every and year, on basis, are so absorption on other the year-over-year, QX, variable we QX, through Given those QX orders an the year-over-year centers. fulfillment had improvement those And quarter fulfillment had a We fulfillment mentioned, on In across side. the side. efficiencies that this in up quarters improvement fixed we've total more year-to-date. cost all orders fixed words, you've got

during recent peak holiday or our fact, over In period most -- we the so. last had order week cycle highest this peak

so as you is both have that, Doug? the follow-up, well efficiency well executing referenced and big been here And as the in team of a terms a that's contributor is Did to very automation and productivity. output

good. All No.

next comes question Mizuho. with Bellinger David from The

Firstly, this of How is the last around up? app, quickly on we could get fast XX% you or update Is that I which think mentioned quarter can to there XX% any revenues. was percentage ramp how XX%?

And then marketing secondly, line how should app? P&L through of that? Do bypass we think the and volumes ad sort -- spend more about more of on by the get leverage your you expense simply getting

our So very moving a the up quarter-over-quarter and essentially priority get purchase But for a to few are that to is of we so, like. we're quarters' a the to or is us, but not rates that we volume. this doubling through effort, the of years on couple perhaps sort of of standard volume are efforts to be a app. I ramping able consider kind XX%, progress basis is -- quickly XX% would of this making that market about we something efforts

course, an of from view. who customers direct it's capitalize really app, allows overall into us that It point conversion see with a for touch of in on closed more of revenue we which the like highly XP profitability engaged encouraging of trends the in data, fact on take and are stay market traffic, basis, are the a that we advantage And collect loop ecosystem. the it to yes, XP

in than are go over the the in higher For in attachment cross-category we engage higher. example, the the are ownership or is several with rates web see AOVs engagement customers who The us are hundred through that app. desktop. basis apps retention app app. The rates points higher higher

just also in experience enjoyable more be will relationship allows come all it's us and productive come side a experience. that [indiscernible]. more all, it alongside We'll to stronger a and So not to that of we'll size XXXX the it. a and XXXX believe we personalized only question quality even build taking I'm that size benefits note, [indiscernible] back the P&L into up. It's that with benefit

investment that looked In is on IT All capital right. system side, it like detract We'll correcting? there perspective. a just elaborate the that portion? some And back much a this then are within Perfect. the was you project XX-Q any can finance in on on follow-up. come XXXX? SG&A new around from filing, deficiencies not will meaningful language one. But there the that And your How

No. No, is the is are capability new no there deficiencies correcting. in us. this system for a that This

automated able do the I to intelligence the reporting comprehensive a planning all do So think think also being we're And suite. of more of operations P&L. get respect a some those By about more to our to you and to of and comprehensive AI get our to more with which by engines out of this be really able online way. should to no some to as operations, granularity some we're system going impact the to able migration being to in same that, that, had apply to material able

Steven from The next Citigroup. comes Zaccone question with

out pricing had said do the in pricing. time. First views benefit How quarter. question third just has no XXXX? XQ? see that playing then on Sumit, for from was you It seems like in been some preliminary the any flattish was I you there industry on And overall

like on So thoughts maybe next helpful. your year would be what looks

product the Sumit, to the respect to line, sizable We But third no had benefit With half either the and and detriment that in it, I'll P&L. David. way quarter, then the this material basis, us impact in. a with sponsored give largely goodness pretty pricing. ads in all leverage flowed pricing gross quarter then, build the through respect of want of half pricing. really take the nor really one ultimately third And roughly way gross course, by from no driven driven remainder year-over-year you to to margin on on and the mix. quarter beat margin is a if chime by through by on P&L This EBITDA driven for

impact the fourth kind in seen in periods, We in do quarter, holiday quarter season. guidance from deflation, fully which throughout is, years With prior our inflation piece the bit again, obviously, into respect quarter. prior and some We in But baked but have no had we for the little quarter. discounting material nor inflation XXXX. typically and a no the related fourth meaningful fourth had to to the you impact first that really pricing really of

moderated significantly. quarter Second

We're Third quarter, continue. quarter, same expecting nonexistent. other expecting that's rolling expecting XXXX. trends largely we're seasonality. than And relatively the how into of kind Fourth the traditional those to

environment, seasonal very overall which was remains Yes. spikes last us. with, of Cyber course, that we good the week, rational you through the a very Steven, as played would market for Week The week expect Yes. some

our you from part more as the into structural or unit growth composition beginning the from year. If shifted remember of pricing, weighted QX exit we much comments of part coming this to growth year this this growth has revenue year, towards of structural

seeing course, we peak discretionary are push cyber right We more as season. and volume through we goods of the through is not that you side, is normalizes holiday more particularly the now category. this QX, but seasonal happen industry hard that, the The move on would category deflation in elastic as and expect

And And the you should when 'XX industry the NSPAC we to in But 'XX normalize long-term as growth outside of mid- expect and revenue that roughly single into built X% mid-single of pricing active true to the if digit. long-term algorithm, growth continues you normalizes. a there's the will the industry that, of growth and high to -- is move recall, growth of a 'XX. customer of X.X% expect 'XX and in function algorithm, come our to low digit benefit out we in

had about in the XXXX, in idiosyncratic your stuff I -- of pet of efforts, that about talk the commentary versus you very the outlook point's follow-up context helpful. driven and how own data mentioned, by of customer getting just better, count and that That's like is the bit then that strengthening marketing The nature? is little much raising industry adoptions a Okay.

have on a is of by but put a to believe hard It's Yes. internal we change this majority that it, ratio efforts. seen we driven

like fully industry tail on should incremental that like are get so to Currently, -- because are end bullish to not normalizes. we'd we the we'd be And top. taking we we into that an sit account when that

And efforts customer -- is are we success on and internally active around comments our so or back of seeing the growing presently that present with. us driving

from comes Oppenheimer. with Rupesh question next The Parikh

congrats on this quarter. Also

to back tower a to love during perspective, goods in the tariff more the And on Would the category. going expectations what color from front? terms exposure any going get then just forward. of So hard you does saw quarter,

in Sure. first Dave the on second will [ ]. the chime one. I'll take

did I well. as in we're you to can see, it mean, So goods as continues QX and improve, -- hard

the good And so of the industry recognize on it's really kind to normalizing. backdrop,

industry improvement steady goods that the hard that of of efforts in a viewing are about and indicative We our stabilization. performance as I've talked result both

and marrying bringing assortment includes improve our conversion to We've very padding, that efforts, to it across on excited been on onto discovery experience very Specific and campaign expanding site assortment platform, to focused partner are suppliers in us merge classes. vendors we execution. there. with high and our up with We're several value-added thoughtful upgrading the are and focused

so we is off. efforts work so by And paying our the believe these teams done --

we're that also with purchasing. see fulsome will And start note benefit in fully we more only from to the far. when happy results so to recovery I discretionary we And want this a

And excited building a hard goods basis. now growing quarters about a that, year-over-year row we're X in on look, on

third we've fourth seen year this excited pretty that of And second about on quarter. quarter now this trends excited that also about We're grown and year quarter year-over-year growth. here the basis. in we're have a both So early

So good goods the quarter. a certainly, hard category, today don't stand about by in feel want where fourth but product to guide we we

reliance do some some to We respect primarily China, at vast, have mentioned, source related on pretty specifically. hard our very Chewy vast goods presence domestically sourced. sales China question to net are goods. of we much and from you the of small hard tariff With that a the majority But our

any or So Chewy. our tariffs and on the reliance region -- impact the of low potential on relatively

comes Mahaney The Evercore ISI. from question next Mark with

please. questions, Two

reasons how tell is much had churn you any if reasons for come are? that reactivated what customers, past those the can growth, back? of so, And color up in from and you've customers customer active this whatever on have So to

else on competitive But intensity secondly, other is then your than given notable seeing anything like is moderate you're landscape? sounds in competitive And pricing, there the -- it relatively comments

new to adds. net customers relative from were customers count customers of we that number towards acquired greater that gross A we reactivated the

that net we so as on we reactivation. well absolutely as encouraging as portion stabilization which factor talking on gross new, expect, was other of the was customers time that But been between about, an the add, would this basis, all absolute exceeded saw positive, net new stabilized cohort the The we've comment lower churn earlier Dave's indicators reactivated churn. X were

that. happy would to of So we want see and course, were that, we

that cohorts encouraging terms cetera, you is engaging results that that the then how these And combine some around I of rates, see. second to if of et purchase shared with are in

we're which developed of a side, retention metric we is COVID the that orders, the as time settled frame. came we out tracking On

really settlement wins turnover of that year we're to and on that. or from calling customer improve And So success rates this from turnovers also so early we're PX be these we've rates cohorts. able settlement that early customer acquired not to see cohort before seeing

So encouraging all signs.

Competitive moderate, relatively of environment the And a playing intensity, of overall, in terms continuing strong right, both it basics to pretty playbook seems ourselves, rational. category the we're pricing is differentiate to excited life. convenience and initiative. bringing well, new assortment, is about Super excited are in Chewy+, well. sponsored price ramping Canada but around super also app about you're and ads the ramping innovations

to So report. nothing else

next with The Research. Khajuria Shweta comes from question Wolfe

as seeing to you and a has the some for One are please. or of you a the really surprise working channels talk past positive couple well please different into lean of that X, quarters better you over been could were you price try me channels is, returns? marketing positive for Let

quarter-to-date, so please And And versus expectations? saw could you about December? how then trend November, through your is, the October, second you did internal talk trends

Sure.

on you I really comment and to fully made audiences the specific hey, we've expanded last to marketing trying call, has funnel the That I I the curiosity the comment us. were that your marketing won't satisfy around focus on for would over most what's change significant the connecting quarters. of different? at start been the us the few draw, So exposure. driving that would reorient made funnel full which channels to I if working back

arrive which Combine platforms believe, our perfect. we that and when with are those I continuing is on our to conversion, customers drive a to target recipe, they to better powerful ability

go but to about there seeing far. room we're are more so what So we excited

So I would likely just stick with that.

assortment Any by word, We a to color on classify great quarter-to-date marketing And Chewy in return and expectations, had the peak our Cyber quarter be trends. history. of engage up experience And our biggest holiday there of We and visits curated all strategy. successful. plan performance of wrapped and some with thoughtful measures net comprised offers, customers I exceeding would We're just performance. happy spending event with robustly Week. the driving in sales

heard Dave, the increasing specifically prepared we we've Dave? in weeks guidance not net you the as of the [indiscernible]. a in currently for out this add, the call And the that -- is through, Anything we last we're did sales range that we're our So from increase result seeing few while remarks, played are year. strengths to

Claus, us time marketing people program program of a Chewy part the but organic, it's of that and Santa not pets few program that is paid submit a It's when brand an build and this. It's program of in with certainly could it's emotive humanization even year. don't is a parents, the up here that's associate necessarily call love and but a this traction bit a trending we a program a I it's this quite it good on year, category an that It gets one, lot pets P&L time of a wish out, organic more traction that their and like It's run. play softer that give years. year. a Number at of this of trend where to pets they umbrella. especially points list, show gotten I'll If gotten in Yes. in it's prior that

that And motive to that, of I service I'd uplift experience wow day be Chewy just program every a out point provides type remiss finally, and then brand didn't the if and customer does. our attachment that the

is Shweta, Chewy better. program about really be working must the the it, Claus CFO talking

question. We for one have time more

Sandler. comes final our today so Anna from Andreeva Piper question And with

follow us. up Happy have from Chewy? congrats, within to your year? hard that to And category to that? us should is remind size into goods. of I own a want continue brands it. starting brands you the And results. still see growth own Sumit, for on made X And next there? business Are just nice higher-margin questions what's

see OpEx. story the benefit And still here, What's Masion And in to 'XX you guess you quantified you into how secondly, to been Dave, FDs Can the remind that to OpEx and automated have how per has FC I you [ now? automate are us or beyond? you ] big ahead pretty FC? do and benefit savings [indiscernible] a many

Sure.

you'll Let goods. that me the start And hard perhaps again, you we on report with if XX-Q, into go hard see goods.

with in after several As I where experienced we decline year-over-year. quarters had had in of goods have X hard earlier, now we mentioned kind quarters growth consecutive past, the

second year-over-year. quarter, the we So grew

second quarter. trends some again. -- we've have quarter, And third in than category, or here quarter. good did grown we fact, And hard we The in year-over-year experienced in fourth goods in guide product we've the did we line while the faster grown we by don't

So we're quite pleased from that perspective.

we our own comment to categories, us would on private other has either stable. for brands say, that. I don't or brands, goods regards general, within been in private With hard extensively

as in across not P&L quarter. several have produced consumables We and where future we're third as that we've both hard really that initiatives Most we of quarter well reflected or -- are guiding assortment goods. initiatives are that expanding fourth for those the for benefits

and fourth continuing improve And then general, yet for So goods benefits well consecutive private selection. Sumit? come. quarters, trending hard to goods, to X quarter. in within assortment up brands those are But our

that say though right. I stability would is absolutely just the even relative

scale, up points that area of margin penetration recall, private net core basis this you that XXX recognize we gross up to to business. of If level. We a to opportunity expect higher sales want to we pillar. get at an brands to And is as the strategic mid-teens contribute

across and that goods, we've that in It private penetration the our in in mentioned stable past hard For to the penetration. year, level. fluctuates teens the brands we relatively are mid-teens for high that is range

can and push through the of drives itself, what way, to have productivity, XX% true one automated. those And over XX% would currently network are to continue reach to results XX% fulfillment said we centers to the attention or would shape your look X form up these Capital foot in are at In improved processes. recall safety. touch Markets And pretty we I FC in our XX% said improvement draw automation, now. to at even per and Day, What volume square of ergonomics or terms to it across if is and you improvements volume just automate in up I of tune we in --

time all today. questions have for we the are Those

so Thank you, everyone, participation. concludes today's And call. your for this

disconnect now your lines. may You