Chewy (CHWY) Morgan Stanley Technology, Media & Telecom Conference summary

Business performance and strategic progress

• Surpassed initial expectations for 2024, with active customer growth and revenue reaching the high end of guidance, and profitability up over 40% year-over-year at midpoint.

• Opened eight vet clinics in four states, expanded health care offerings, and reinforced leadership in the online pet pharmacy segment.

• Customer engagement and satisfaction remain high, with a customer-first approach driving loyalty and repeat business.

• Active customer growth inflected positively, driven by new additions, reduced churn, and improved reactivations.

• Net sales per active customer (NESPAC) reached $567 in Q3, with older cohorts spending significantly more as trust and basket size grow.

Industry trends and outlook

• Pet industry has normalized to historical mid-single-digit growth, with low single-digit inflation and renewed pet household formation.

• Online penetration is expected to exceed 45%, with continued migration benefiting Chewy disproportionately.

• Humanization and premiumization of pets are accelerating, supporting long-term growth above industry averages.

• Shelter data shows mid-teens growth in pet adoptions and reduced relinquishments, indicating positive household formation trends.

Vet clinics and ecosystem expansion

• Vet clinics are attracting more new customers than expected, with over half making retail purchases within 30 days of a clinic visit.

• Expansion pace is limited by vet supply and real estate, with 20-30 clinics per year considered an upper bound.

• Clinics are expected to contribute to long-term profitability, complementing the broader pet care ecosystem.