Chewy (CHWY) Q1 2027 earnings summary

Executive summary

• Net sales for Q1 2026 grew 7.7% year-over-year to $3.36 billion, with active customers reaching 21.5 million and net sales per active customer rising to $597.

• Adjusted EBITDA increased 31.3% to $253.1 million, with a margin of 7.5%, and net income rose 51.9% to $94.8 million.

• Autoship sales grew 10.5% year-over-year to $2.83 billion, now 84.4% of net sales, reinforcing recurring revenue strength.

• Record profitability and strong free cash flow were achieved despite a dynamic and weakening consumer environment.

• Completed acquisitions of SmartPak and announced Modern Animal, expanding the pet healthcare ecosystem.

Financial highlights

• Gross margin improved to 30.1%, up 50 basis points year-over-year, with gross profit of $1.01 billion.

• Adjusted net income was $179.9 million, with adjusted diluted EPS of $0.43.

• Free cash flow was $70.8 million, up over 45% year-over-year.

• Operating income rose 67.1% to $128.5 million.

• Active customers increased 3.6% to 21.5 million, with net sales per active customer up 2.4% to $597.

Outlook and guidance

• FY2026 net sales expected between $13.40B and $13.55B, or 6.3%-7.5% year-over-year growth, with adjusted EBITDA margin guidance of 6.6%-6.8%.

• Q2 net sales expected between $3.30B and $3.33B, with adjusted EBITDA margin of 6.3%-6.4% and adjusted diluted EPS of approximately $0.36.

• Active customer additions forecasted at the lower end of 150,000-250,000 per quarter.

• Management continues to monitor macroeconomic conditions, including inflation and interest rates, and expects to maintain operational discipline and value proposition.

• Ongoing pressure on discretionary attachment and premiumization expected to persist near term.