Executive Summary

Chewy delivered Q4 FY2024 (ended Feb 2, 2025) net sales of $3.247B (+14.9% y/y) and adjusted diluted EPS of $0.28, with both revenue and EPS exceeding Wall Street consensus; adjusted EBITDA was $124.5M with a 3.8% margin .
Autoship sales rose 21.2% y/y to $2.617B and reached 80.6% of net sales, while active customers returned to growth (+2.1% y/y to 20.5M) and NSPAC increased to $578 (+4.1% y/y) .
FY2025 guidance points to 6–7% net sales growth (ex-53rd week), adjusted EBITDA margin of 5.4–5.7%, and Q1 adjusted diluted EPS of $0.30–$0.35; management expects minimal tariff impact and capex of ~1.5–2% of net sales .
Sponsored ads scaled to ~1% of net sales and were the largest driver of gross margin improvement in 2024; first-party ad platform and offsite expansion are expected to further support margin trajectory .

What Went Well and What Went Wrong

What Went Well

Returned to active customer growth for the first time in eight quarters (20.5M, +2.1% y/y), supported by improved marketing funnel, app conversion, and internal bidding models: “we invested ~15% higher in Q4 marketing spend… cost per gross adds increased less than 2%… we added over 400,000 customers in Q4” .
Gross margin expanded to 28.5% (+30 bps y/y), driven primarily by sponsored ads and premium mix, and adjusted EBITDA margin reached 4.8% for FY2024 (+150 bps y/y) .
Autoship strength: sales +21.2% y/y in Q4, 80.6% of net sales, providing subscription-like predictability; management expects continued share gains and margin expansion in FY2025 .

What Went Wrong

GAAP diluted EPS declined y/y to $0.05 (from $0.07) and net margin fell to 0.7% (−40 bps y/y), reflecting higher share-based compensation and taxes in the quarter .
Gross margin performance was “as expected” but modestly below some external expectations, with Q4 showing a slower pace vs prior quarters; management still expects 2025 expansion from similar drivers (sponsored ads, mix, OpEx leverage) .
Sequentially, revenue stepped down from Q4 to Q1 (seasonality), and free cash flow in Q1 was $48.7M vs $156.6M in Q4; management flagged typical quarterly margin seasonality and timing of investments in 2025 .

Financial Results

Quarterly Trend (Q4 FY2024 → Q1 FY2025 → Q2 FY2025)

Metric	Q4 FY2024 (ended Feb 2, 2025)	Q1 FY2025 (ended May 4, 2025)	Q2 FY2025 (ended Aug 3, 2025)
Revenue ($USD Billions)	$3.247	$3.116	$3.104
Gross Margin (%)	28.5%	29.6%	30.4%
GAAP Diluted EPS ($)	$0.05	$0.15	$0.14
Adjusted Diluted EPS ($)	$0.28	$0.35	$0.33
Adjusted EBITDA ($USD Millions)	$124.5	$192.7	$183.3
Adjusted EBITDA Margin (%)	3.8%	6.2%	5.9%
Net Income Margin (%)	0.7%	2.0%	2.0%
Active Customers (Millions)	20.514	20.756	20.906
Autoship Sales ($USD Billions)	$2.617	$2.563	$2.577
Autoship % of Net Sales (%)	80.6%	82.2%	83.0%

Q4 FY2024 vs Prior Year and vs Estimates

Metric	Prior Year Q4 (13 weeks ended Jan 28, 2024)	Q4 FY2024 (14 weeks ended Feb 2, 2025)	Consensus (S&P Global)*	Surprise (%)
Revenue ($USD Billions)	$2.826	$3.247	$3.197*	+1.6%
GAAP Diluted EPS ($)	$0.07	$0.05	—	—
Adjusted Diluted EPS ($)	$0.18	$0.28	$0.205*	+36.9%

Footnote: *Values retrieved from S&P Global. Consensus EPS based on “Primary EPS Consensus Mean”; consensus revenue based on “Revenue Consensus Mean.” [GetEstimates]

KPIs

KPI	Q4 FY2024	Q1 FY2025	Q2 FY2025
Active Customers (Millions)	20.514	20.756	20.906
NSPAC ($)	$578	$583	$591
Free Cash Flow ($USD Millions)	$156.6	$48.7	$105.9

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Net Sales ($USD Billions)	Q1 FY2025	—	$3.06–$3.09	Initiated
Net Sales ($USD Billions, ex-53rd week)	FY2025	—	$12.3–$12.45	Initiated
Adjusted EBITDA Margin (%)	FY2025	—	5.4%–5.7%	Initiated (implies +60–90 bps vs FY2024 4.8% )
Adjusted Diluted EPS ($)	Q1 FY2025	—	$0.30–$0.35	Initiated
Share-Based Compensation ($USD Millions)	FY2025	—	~$315	Initiated
Weighted Avg Diluted Shares (Millions)	FY2025	—	~430	Initiated
Net Interest Income ($USD Millions)	FY2025	—	$25–$30	Initiated
Effective Tax Rate (%)	FY2025	—	20%–22%	Initiated
CapEx (% of Net Sales)	FY2025	—	~1.5%–2%	Initiated
FCF Conversion (% of Adj. EBITDA)	FY2025	—	~80%	Maintained
Tariff Impact	FY2025	—	Minimal	Initiated

Earnings Call Themes & Trends

Topic	Previous Mentions (Q1 FY2025 and Q2 FY2025)	Current Period (Q4 FY2024)	Trend
Sponsored Ads / Ad Tech	Q1: Gross margin 29.6%; adj. EBITDA margin +50 bps y/y; scaling performance . Q2: Sponsored ads largest contributor; GM 30.4% (+90 bps y/y) .	First-party ads platform launched; offsite ads, video, self-serve enablement; ~1% of net sales .	Expanding capabilities; supports GM and LT target (~up to 3% of net sales) .
Automation & Fulfillment	Q2: Network utilization ~70–75%; Houston ramp underway .	Overall automation >50% of volume; Houston and Dallas roles clarified .	Rising automation share; expected to reach 70–80% near to medium term .
Customer Growth & Marketing	Q1/Q2: Active customers up 3.8–4.5% y/y; Autoship 82–83% of sales .	Active customers +2.1% y/y; marketing funnel rebuilt; ~400k net adds in Q4 .	Sustained net adds in 2025 with balanced cadence across quarters .
Product Mix (Hard Goods)	Q1/Q2: Autoship and consumables dominate; premium mix accretive .	Broad-based hard goods outperformance (leashes, collars, tech, beds, toys) .	Improving hard goods aided by app and new customers; mix supports margin .
Macro / Pricing / Tariffs	Q1/Q2: Inflation declined to low single digits; MAP protection steady .	Minimal tariff impact embedded in guidance; promotional environment as expected .	Normalizing inflation; pricing steady; MAP protection supports pricing .
Health Ecosystem (Pharmacy/Vet Care)	Q1: Strong health categories; KPIs solid . Q2: Incremental capex for pharmacy and clinics .	8 CVC openings in 2024; plan 8–10 in 2025; strong acquisition and engagement flywheel .	Clinic ramp continues; ecosystem benefits to acquisition/engagement .

Management Commentary

“Topline growth and profitability exceeded the high-end of our guidance ranges for both the fourth quarter and full year 2024... strong active customer growth, and compelling Autoship customer loyalty.” — Sumit Singh, CEO .
“We expect to expand adjusted EBITDA margin once again in 2025... increasingly confident in our ability to reach our long-term adjusted EBITDA margin target of 10%.” — Sumit Singh .
“Sponsored ads... reached approximately 1% of net sales... largest contributor to year-over-year gross margin improvement.” — Sumit Singh .
“We will be providing supplemental information regarding adjusted diluted EPS expectations... Q1 2025 adjusted diluted EPS in the range of $0.30 to $0.35.” — David Reeder, CFO .
“First-party software [ads]... enables video, self-serve onboarding, and offsite ads; full speed ahead.” — David Reeder .

Q&A Highlights

Active customer drivers: Marketing funnel integration, improved bidding models, app conversion; ~15% higher Q4 marketing spend with <2% increase in cost per gross adds and ~400k net adds .
Gross margin expectations: Q4 played out as expected; 2025 EBITDA margin growth to mirror 2024’s drivers (sponsored ads, mix, SG&A leverage) .
Automation: Overall automation >50% of volume; Houston ramp progressing; target 70–80% over near to medium term .
Advertising & marketing: Maintain 6–7% of net sales in 2025; quarterly cadence can vary based on ROI/timing .
Hard goods strength: Broad-based outperformance (leashes, collars, tech, beds, toys) driven by improved site/app experiences and new customer file .
Capex: 1.5–2% of net sales in 2025; incremental spend towards pharmacy capacity and vet clinics; FC capacity stable .

Estimates Context

Q4 FY2024 (ended Feb 2, 2025) beats: Revenue $3.247B vs $3.197B consensus; Adjusted diluted EPS $0.28 vs $0.205 consensus; 14 EPS estimates and 24 revenue estimates supported consensus formation [GetEstimates].
Implications: Consensus likely needs to raise outer-quarter margin expectations given ad platform transition to first-party and offsite expansion, and persistent Autoship/share gains; management guided FY2025 adjusted EBITDA margin to 5.4–5.7% .

Footnote: Values retrieved from S&P Global.

Key Takeaways for Investors

Chewy beat Q4 consensus on both revenue and adjusted EPS, with gross margin expanding y/y and Autoship mix rising to 80.6% — reinforcing a durable, subscription-like revenue base [GetEstimates].
Active customers returned to growth, aided by improved marketing/app conversion and vet clinics, supporting sustained net adds across 2025 .
First-party ad platform and offsite capabilities should underpin further gross margin gains; sponsored ads are ~1% of net sales today with long-term potential up to ~3% .
FY2025 outlook (6–7% revenue growth ex-53rd week, 5.4–5.7% adjusted EBITDA margin, Q1 adj. diluted EPS $0.30–$0.35) suggests continued margin expansion despite seasonality and investment timing .
Capex focus on pharmacy and vet clinics; FCF conversion ~80% of adjusted EBITDA enables reinvestment and capital return flexibility .
Hard goods recovery and premium category mix accretion bolster margin narrative; minimal tariff headwinds embedded in guidance .
Near-term trading: Positive setup on margin trajectory and customer growth; watch quarterly ad mix/seasonality and any deviations in sponsored ads ramp or automation utilization .

Additional Relevant Press Releases for Q4 FY2024 Window

Conference call announcement (Mar 3, 2025) with reporting timeline and investor access links .
Q1 FY2025 results (Jun 11, 2025) showing continued top-line growth and margin progress .
Q2 FY2025 results (Sep 10, 2025) highlighting gross margin improvement and rising Autoship mix .

Chewy, Inc. (CHWY)·Q4 2025 Earnings Summary