Chewy (CHWY) Q3 2026 earnings summary

Executive summary

• Net sales rose 8.3% year-over-year to $3.12 billion, exceeding guidance, driven by autoship sales, higher net sales per active customer, and active customers reaching 21.2 million.

• Autoship customer sales grew 13.6% to $2.61 billion, comprising 83.9%–84% of net sales, with net sales per active customer up 4.9% to $595.

• Adjusted EBITDA increased 30.9% year-over-year to $181 million, with margin reaching 5.8%.

• Free cash flow for the quarter was $176 million, up 15.8% year-over-year, supporting $55 million in share repurchases and strategic investments.

• Net income was $59.2 million, with diluted EPS at $0.14, and adjusted net income at $135.7 million.

Financial highlights

• Gross margin improved to 29.8%, up 50 basis points year-over-year, with gross profit of $942 million.

• Adjusted EBITDA margin was 5.8%, up 100 basis points year-over-year.

• Adjusted diluted EPS was $0.32–$0.33, up $0.12 year-over-year.

• Free cash flow for the quarter was $175.8–$176 million; cash and equivalents stood at $675–$675.4 million.

• Debt-free with $1.5 billion in total liquidity and no outstanding borrowings under the $800 million ABL Credit Facility.

Outlook and guidance

• FY2025 net sales outlook narrowed to $12.58–$12.6 billion (~8% year-over-year growth, excluding 53rd week).

• FY2025 adjusted EBITDA margin outlook narrowed to 5.6%–5.7% (+90 bps year-over-year at midpoint).

• Q4 2025 net sales expected at $3.24–$3.26 billion (+7–8% year-over-year, excluding 14th week); adjusted diluted EPS: $0.24–$0.27.

• FY2025 capital expenditures expected at 1.3% of net sales, below prior range.

• Management expects to use about 25% of cash and equivalents to fund the SmartPak acquisition.