Chewy, Inc. Q4 FY2025 earnings call

• Industry: Pet industry fueled by pet humanization, premium product adoption, etc., expected steady growth in 2026. • Chewy's model: Differentiated flywheel-like model with over 80% net sales on Autoship, world-class fulfillment. • Strategic priorities: CHUI VetCare opened 10 new practices in 2025, performance exceeding expectations. AI embedded across purchase experience, service/operations, supply chain/fulfillment. Chewy Private Brands launching Chewy Made, expanding assortment.

Fourth quarter net sales reached over $3.26 billion, total fiscal year 2025 net sales over $12.6 billion, 8.1% Q4 and 8.3% full year net sales growth. Active customers ended 2025 at 21.3 million, up ~4% YOY. Autoship customer sales in Q4 over $2.7 billion, $10.5 billion for year, 84% of Q4 net sales. NESPAC in Q4 2025 $591, up ~4% YOY. Q4 gross margin 29.4%, full year 2025 gross margin 29.8%, ~90bps Q4 and 60bps full year margin expansion. Fourth quarter adjusted net income $115 million, full year 2025 $541 million. Fourth quarter adjusted EBITDA $162 million, 5.0% margin, up 120bps YOY. Full year 2025 adjusted EBITDA $719 million, 5.7% margin, up ~26% YOY. Q4 free cash flow $232 million, full year 2025 $562.4 million.

• 2026 net sales expected $13.6 - $13.75 billion, ~8%-9% YOY growth, Smart Equine acquisition contributing ~$80 million. • Adjusted EBITDA margin expected $6.6 - 6.8% range, ~100bps YOY expansion at midpoint. • Q1 2026 net sales expected $3.33 - $3.36 billion, ~7%-8% YOY growth. • First quarter adjusted diluted EPS expected $0.40 - $0.45.

Refer to SEC filings, including Risk Factors in Form 10-K for discussion of risks.

Q: One on A&M leverage going forwards and on Chewy Maid strategy.

A: On A&M leverage expects to show leverage, refrains from annual extent comment, refers to long-range plan. On Chewy Maid, it's a step to expand assortment, fill gaps, boost margin, TAM expander and NESPAC per customer driver.

Q: Identify key areas in cost structure where AI can earn outsized returns and philosophical balance on efficiency gains.

A: AI applied in customer service, fulfillment, pharmacy, marketing operations, reduces handle times, contact rates, improves agent experience. Philosophically, want trifecta of growth, increased profitability, compound free cash flow to reinvest or return to shareholders.

Q: Views on agentic as incremental demand and distribution channel and fuel costs impact.

A: Believes Chewy insulated, genetic developments may shape interface but Chewy's value proposition plays to strengths. Fuel costs near term relatively well insulated, guidance stands.

Q: Revenue growth pick up through balance of year and lapping of non-repeatable items.

A: Q1 lowest in growth profile, growth builds with share gains, consistent execution. 100bps EBITDA margin expansion driven by leveraging model, not material one-time items lapping.

Q: Spending trends by cohort and Chewy Plus penetration.

A: Newer cohorts stronger, oldest cohorts progress well. Chewy Plus exited 2025 at ~4% penetration, still in test and learn phase, retaining flexibility.

Q: Net customer ads driven by pet adoption cycle vs performance marketing and industry growth backdrop.

A: No pet household formation improvement baked in forecast. Q4 net customer ads above expectations due to seasonality and good market deployment.

Q: SmartEquine growth and gross margin puts and takes.

A: SmartEquine acquisition sized ~$80 million top line in 2026, focused on stabilizing. Gross margin expansion continues, composition shifts with more operating leverage, sponsored ads growth continues but mix impacts margin mix.

Q: Industry growth backdrop and health category expectations.

A: Industry growth backdrop in low single-digit, expect pet household formation, pricing to normalize. Health category remains high growth, high margin, contributing to Chewy's growth.