Chewy (CHWY) 53rd Annual JPMorgan Global Technology, Media and Communications Conference summary

Business performance and industry trends

• Over 20 million active customers and $1.2 billion in net sales projected for fiscal 2025, with 80% of revenue from subscription-based Autoship and 85% from non-discretionary categories.

• Profitability continues to improve, with adjusted EBITDA margins expected near 5.5% and $525 million in free cash flow this year.

• The fulfillment center network is highly efficient, making the company the third largest direct-to-consumer shipper in the U.S.

• The pet industry is valued at $150 billion in the U.S., with online penetration at about 30% and room for further growth.

• The business is resilient to macroeconomic softness due to high recurring revenue from essential consumables.

Customer growth and engagement

• Active customer growth has returned, driven by increased gross ads, reactivations, and reduced churn through improved targeting and personalization.

• Enhanced tech stack and app engagement have enabled more direct, tailored customer interactions.

• Cohort spending is consistent, with older cohorts spending over $1,000 annually and newer ones at the lower end.

• Growth in active customers is attributed to internal efforts rather than overall industry growth.

• Chewy Plus membership program has shown early success in increasing engagement, frequency, and wallet share.

Product and category expansion

• Hardgoods returned to growth in 2024 after declines, with success attributed to refreshed product offerings and tailored marketing.

• Pharmacy and health care now represent about 30% of sales, with pharmacy growing faster than the core business and offering higher gross margins.

• Only 20% of active customers use pharmacy services, indicating significant room for cross-sell.

• Vet clinics are expanding, with 8 opened and 8-10 more planned for 2025, serving as a funnel for new customer acquisition.

• Over half of new vet clinic visitors place an order on the platform within 30 days.