Chewy, Inc.

Q2 net sales were $3.33 billion, up 7.3% year over year; organic net sales rose 5.7% year over year excluding SmartPak and Modern Animal. Adjusted EBITDA was $227 million with a 6.8% margin, versus guidance of 6.3% to 6.4%, and adjusted diluted EPS was $0.36. Gross margin was 30.4%, flat year over year and up 30 basis points sequentially. Active customers were 21.7 million, up 3.8% year over year, Autoship sales were $2.8 billion, up 9.3%, and net sales per active customer was $602. Free cash flow was $90 million; cash, cash equivalents and marketable securities were $612 million. For fiscal 2026, Chewy now expects net sales of $13.46 billion to $13.57 billion, organic growth of 5.5% to 6.3%, adjusted EBITDA margin of 6.7% to 6.8%, about $912 million of adjusted EBITDA at the midpoint, Q3 net sales of $3.323 billion to $3.358 billion, Q3 adjusted EBITDA margin of 6.6% to 6.7%, and Q3 adjusted diluted EPS of around $0.39.

Sumit Singh framed the quarter as evidence that Chewy can keep taking share and expanding profitability even without a rebound in pet demand. He emphasized durable recurring revenue from Autoship, structural wallet-share gains from health and ecosystem expansion, and early momentum in Chewy Vet Care, Modern Animal, SmartPak, and fresh/frozen offerings. His tone was confident but measured: he repeatedly said the company is not assuming a meaningful consumer recovery and is focused on controllable levers like customer growth, health, and efficiency.

Christopher Deppe highlighted that Q2 adjusted EBITDA of $227 million and 6.8% margin exceeded expectations, while gross margin held at 30.4% despite about $10 million of timing benefits and more than $5 million of discrete benefits that he said were not indicative of run-rate performance. He noted non-GAAP SG&A was $612 million, or 18.4% of sales, with 70 basis points of year-over-year leverage, and said free cash flow was $90 million versus $106 million last year, with the difference timing-related. On capital allocation, he said Chewy ended with $612 million of cash and over $1 billion of total liquidity, spent $200 million on buybacks, and continues to view repurchases as an attractive use of capital while keeping the balance sheet flexible.

Analysts focused on weaker discretionary pet spending, the moderation in treats, and whether Chewy might trade off margin expansion for more growth investment. Management said treats and other discretionary items remain pressured, but core food, meds, and Autoship are healthy, and the company is seeing stable trends rather than further deterioration. Another key theme was AI and Chewy Plus: management said Kai is resolving about 30% of chats through self-service, AI should deliver low-tens of millions in cost savings in fiscal 2026 and about $50 million annualized in fiscal 2027, and Chewy Plus is being redesigned to better connect customers to the broader ecosystem without sacrificing margins.