Chewy, Inc. (NYSE: CHWY) announced its Q3 2024 financial results, revealing a net sales increase of 4.8% year-over-year to $2.88 billion. CEO Sumit Singh highlighted that the results exceeded expectations, supported by a sequential rise in active customers, a gross margin expansion of 80 basis points, and an adjusted EBITDA margin of 4.8%.

A standout metric was Chewy’s autoship subscription revenue, which grew 8.7% year-over-year to $2.3 billion, now comprising 80% of the company’s total net sales. The autoship program, which automates recurring deliveries of pet supplies, has been central to Chewy’s strategy for increasing customer retention and lifetime value.

Key financial metrics include:

• Net income of $3.9 million, reversing a $35.4 million loss in Q3 2023.
• Adjusted EBITDA of $138.2 million, up 67.4% year-over-year.
• Net margin improvement of 140 basis points to 0.1%.

Chewy’s ability to maintain growth despite a challenging macroeconomic environment reflects the durability of its subscription-driven business model.

INSIDER TAKE

Chewy’s performance underscores the advantages of a robust subscription model in the e-commerce space. The autoship program’s 8.7% growth demonstrates its power to generate predictable revenue and improve customer retention. As subscriptions now represent 80% of net sales, they provide a stable financial backbone for the company, insulating it from fluctuations in one-time purchase behavior.

While the modest profitability improvement signals progress, rising operational costs and competitive pressures remain areas to watch. For subscription businesses, Chewy’s strategy highlights the importance of driving adoption through convenience features and loyalty programs.

Looking ahead, Chewy must continue refining its subscription offerings to sustain growth, particularly as customer acquisition plateaus. Expanding value-added services like veterinary care and pharmacy could further solidify its position as a subscription leader in the pet care industry.