10-K: Chewy Reports Strong FY25 Revenue Growth, Expands Vet Care

Chewy, Inc. announced a 6.2% increase in net sales to $12.6 billion for fiscal year 2025, alongside significant expansion in its pet healthcare services and a strategic acquisition.

Summary

• Net sales for Fiscal Year 2025 increased by 6.2% to $12.6 billion, or 8.3% excluding the 53rd week in Fiscal Year 2024.
• Net income decreased by 43.3% to $222.8 million in Fiscal Year 2025, with net margin falling to 1.8% from 3.3%.
• Adjusted EBITDA grew by 26.1% to $719.2 million, improving the Adjusted EBITDA margin to 5.7% from 4.8%.
• Active customers increased by 4.0% to 21.3 million, and net sales per active customer rose by 2.2% to $591.
• Autoship customer sales increased by 11.8% to $10.5 billion, representing 83.3% of total net sales.
• Expanded Chewy Vet Care practices to 18 clinics in Fiscal Year 2025, up from 8 in Fiscal Year 2024.
• Acquired SmartPak Equine, LLC for $175 million in cash on February 2, 2026, to strengthen its equine health and nutrition offerings.
• Approximately 20,000 veterinary practices are enrolled in PracticeHub as of February 1, 2026, representing an estimated 50% of all U.S. vet clinics.
• Donated $47 million in products and supplies to animal shelters and rescues during Fiscal Year 2025.

Sentiment

Score: 6

Explanation: StockSavvy.ai views this as a mixed report. While revenue growth and Adjusted EBITDA are strong, the significant decline in net income and EPS due to tax provision changes and other factors presents a notable concern, partially offset by strategic expansions and cash flow generation.

Positives

• Strong net sales growth of 6.2% (8.3% excluding the 53rd week in FY2024) to $12.6 billion.
• Significant increase in Adjusted EBITDA by 26.1% to $719.2 million, with Adjusted EBITDA margin improving to 5.7%.
• Growth in active customers by 4.0% to 21.3 million.
• Increase in net sales per active customer by 2.2% to $591.
• Robust growth in Autoship customer sales by 11.8% to $10.5 billion, indicating strong recurring revenue and customer retention.
• Expansion of Chewy Vet Care clinics to 18 locations, demonstrating commitment to pet healthcare services.
• Successful enrollment of approximately 20,000 veterinary practices in PracticeHub, covering an estimated 50% of all U.S. vet clinics.
• Acquisition of SmartPak Equine, LLC for $175 million, enhancing equine health and nutrition offerings.
• Generation of $562.4 million in free cash flow, a 24.3% increase year-over-year.
• Donated $47 million in products and supplies to animal shelters and rescues in Fiscal Year 2025.

Negatives

• Net income decreased significantly by 43.3% to $222.8 million.
• Diluted earnings per share decreased by 42.9% to $0.52.
• Net margin declined to 1.8% from 3.3%.
• Interest and other income, net, decreased by 77.0% to $9.0 million, primarily due to lower interest income generated from marketable securities.
• Income tax provision increased by $281.5 million to $40.5 million, primarily due to the non-recurrence of a large deferred tax asset valuation allowance release in the prior year.
• Other net sales (which includes services) decreased by 4.7% to $406.8 million.

Risks

• Recent growth rates may not be sustainable or indicative of future growth, and challenges in managing future growth, including introducing new products/services and expanding into new jurisdictions.
• Business disruptions (natural disasters, health epidemics, supply chain issues) may adversely affect operations, financial performance, liquidity, and cash flow.
• Failure to acquire and retain new customers cost-effectively could hinder net sales growth, margin improvement, and profitability.
• Inability to manage growth effectively, including integrating new hires and scaling infrastructure.
• Dependence on positive perceptions of the Company and potential harm from negative publicity or failure to comply with ethical standards.
• Operating expenses may increase, potentially leading to operating losses as the business expands.
• Inability to accurately forecast net sales and appropriately plan expenses.
• Inaccuracy of addressable market size estimates.
• Inability to source additional suppliers or strengthen existing relationships with suppliers, or the loss of any key suppliers.
• Changes in or disruptions to shipping arrangements, including increased costs from third-party logistics providers.
• Failure to successfully optimize, operate, and manage the expansion of fulfillment center capacity.
• Inability to provide a cost-effective platform that adapts to rapid technological changes, including artificial intelligence (AI).
• Risks related to online payment methods, including fraud and compliance requirements.
• Dependence on network and mobile infrastructure, third-party data center hosting facilities (including cloud-service providers like AWS), and other third-party providers, with potential for significant interruptions or delays.
• Failure to protect websites, networks, and systems against cybersecurity incidents, or to otherwise protect confidential information, could damage reputation and brand and harm the business.
• Safety, quality, and health concerns regarding products could affect the business, financial condition, and results of operations.
• Risks associated with suppliers and outsourcing partners, many of which are located outside of the U.S., including political and economic instability, trade restrictions, and conflicts.
• Extensive laws and regulations, and potential material liabilities or costs related to complying with existing or future laws and regulations, with failure to comply resulting in enforcements, penalties, or recalls.
• Inadvertent non-compliance with various laws and regulations covering the pet health business, which may subject the company to reprimands, sanctions, or loss of licenses.
• Resistance from veterinarians to authorize prescriptions, or their efforts to discourage pet owners from purchasing from the company, could cause sales to decrease.
• Failure to comply with laws and regulations relating to privacy, data protection, cybersecurity, marketing and advertising, and consumer protection could adversely affect the business.
• Ability to utilize net operating loss and tax credit carryforwards, and other tax attributes, may be subject to certain limitations.
• Inability to adequately protect intellectual property rights, or being subject to intellectual property infringement claims or other allegations.
• Exposure to personal injury, workers' compensation, product liability, labor and employment, and other claims in the ordinary course of business.
• Reliance on the performance of members of management and highly-skilled personnel, and the risk of inability to attract, develop, motivate, and retain highly-qualified and skilled employees.
• Uncertainties in economic conditions, industry trends, and market conditions, and their impact on the pet market, could adversely impact the business.
• Significant merchandise returns or refunds could harm the business.
• Risks associated with growing the business through acquisitions or investments in new or complementary businesses, technologies, or offerings, or through other strategic transactions, and the failure to manage or integrate them.
• Business results could be adversely affected if new offerings are unsuccessful.
• Regulation of the sale of insurance for pets is subject to change, and future regulations could adversely affect the business.
• Inability to successfully manage the unique challenges presented by international markets, potentially hindering expansion outside the U.S. and Canada.
• Strong competition in the pet products and services health and retail industries, especially Internet-based competition, presents an ongoing threat.
• Evolving government regulation of the Internet and e-commerce, and unfavorable changes or failure to comply with these regulations.
• Changes in tax treatment of companies engaged in e-commerce may adversely affect the commercial use of websites and mobile applications and financial results.
• Substantial future sales by affiliates of BC Partners or others of common stock, or the perception that such sales may occur, could depress the price of Class A common stock.
• Potential conflicts of interests between the company and affiliates of the BCP Stockholder Parties, and directors encountering conflicts of interest.
• Stock price has been, and may continue to be, volatile and may decline regardless of operating performance.
• The dual class structure of common stock may adversely affect the trading market for Class A common stock.
• Anti-takeover provisions in charter documents and under Delaware law could make an acquisition more difficult, limit attempts by stockholders to replace or remove current management, and limit the market price of Class A common stock.
• Exclusive forum provisions in the amended and restated certificate of incorporation could limit stockholders' ability to obtain a favorable judicial forum for disputes.
• The BCP Stockholder Parties control the direction of the business and the concentrated ownership of common stock will prevent other stockholders from influencing significant decisions.
• The company is a controlled company within the meaning of NYSE rules and relies on exemptions from certain corporate governance requirements.
• Restrictions in the revolving credit facility could adversely affect operating flexibility.
• The terms of the revolving credit facility may restrict the ability to pay dividends.
• No guarantee that the Repurchase Program will be fully consummated or that it will enhance long-term stockholder value; share repurchases could also increase stock volatility and diminish cash reserves.
• Future litigation could have a material adverse effect on the business, financial condition, and results of operations.
• Ability to raise capital in the future may be limited, and failure to raise capital when needed could prevent growth.
• Fluctuations in tax obligations and effective tax rate could materially and adversely affect results of operations.
• If internal control over financial reporting or disclosure controls and procedures are not effective, the company may be unable to accurately report financial results, prevent fraud, or file periodic reports in a timely manner.

Future Outlook

Chewy expects to continue investing in the expansion of its health products and services, technology infrastructure, product development, marketing, customer support, and supply chain capabilities, focusing on long-term growth, margin expansion, and sustainable cash flow generation. The company aims to further grow sales from its existing customer base, acquire new customers, leverage technological and operational efficiencies, expand private brands, and explore broader platform opportunities, including international markets beyond North America.

Management Comments

• Our mission is to be the most trusted and convenient destination for pet parents and partners everywhere.
• We believe that we are the preeminent online source for pet products, supplies and prescriptions as a result of our broad selection of high-quality products and services, which we offer at competitive prices and deliver with an exceptional level of care and a personal touch to build brand loyalty and drive repeat purchasing.
• Our management team is committed to a disciplined use of capital designed to drive measurable improvements in unit economics and further improve our profitability.
• We expect to remain highly thoughtful, deliberate and ROI-focused as we evaluate expansion into additional international markets.

Industry Context

StockSavvy.ai notes that Chewy operates in a resilient and growing pet industry, driven by trends of pet humanization and premiumization, with U.S. pet market spending projected to grow at an estimated 4% CAGR from 2025 through 2029. The rapid shift to online shopping, which grew from 24% of U.S. retail pet product sales in 2019 to an estimated 41% in 2025, continues to benefit e-commerce players like Chewy. The increasing adoption of subscription-based purchasing (49% of online pet product shoppers in January 2025) further supports Chewy's Autoship model, enhancing customer retention and revenue visibility. Chewy's expansion into pet healthcare, including veterinary clinics and telehealth, aligns with the broader industry trend of increased spending on pet health and wellness.

Comparison to Industry Standards

• The U.S. pet market grew at an 8.1% CAGR from $98 billion in 2019 to an estimated $157 billion in 2025. Chewy's net sales grew 6.2% in FY2025, indicating it is growing in line with or slightly below the broader market's recent historical pace, but above the projected 4% CAGR for 2025-2029.
• During the 2008-2010 recession, U.S. pet spending increased by 12% while overall consumer spending declined, highlighting the pet industry's resilience, a characteristic Chewy benefits from.
• Online shopping grew from 24% of U.S. retail pet product sales in 2019 to an estimated 41% in 2025 (20% CAGR), demonstrating Chewy's strong positioning within a rapidly expanding e-commerce segment.
• Chewy's Autoship program, with 83.3% of net sales from Autoship customers, significantly exceeds the industry trend of 49% of online pet product shoppers using subscription services, indicating superior customer loyalty and recurring revenue compared to general online pet retail.
• Chewy operates the #1 pet pharmacy in America and has enrolled approximately 50% of all U.S. vet clinics in its PracticeHub platform, showcasing a dominant position in the pet healthcare e-commerce and B2B veterinary integration space.

Management Changes

Corporate Governance

Legal Proceedings

• Various legal claims arise from time to time in the normal course of business. Management believes it has adequately accrued for probable and estimable loss contingencies. The ultimate resolution of any current matters is not expected to have a material adverse effect on the company's results of operations, financial condition, or cash flows.
• The Company is currently under audit by the IRS for Fiscal Year 2022.

Related Party Transactions

• As of February 1, 2026, a $0.5 million receivable from affiliates of BC Partners with respect to tax payments made in connection with the Transactions.
• As of February 1, 2026, a $18.9 million receivable from affiliates of BC Partners with respect to the indemnification for certain tax liabilities in connection with the Transactions.
• BCP Stockholder Parties beneficially owned more than 40% of outstanding common stock and exercised control over more than 80% of voting power as of March 18, 2026.
• Secondary offerings of Class A common stock by Buddy Chester Sub LLC (an entity affiliated with the Sponsors) occurred in September 2024, December 2024, and June 2025, where Chewy did not sell shares or receive proceeds.
• Concurrent stock repurchases from Buddy Chester Sub LLC occurred in June 2024 ($500 million), September 2024 ($300 million), December 2024 ($50 million), and June 2025 ($100 million).
• Conversion of Class B common stock to Class A common stock by Buddy Chester Sub LLC occurred on multiple dates for sales or repurchases.

Stakeholder Impact

• Shareholders: Potential for increased long-term value through strategic growth initiatives and share repurchases, but also risk of stock price volatility and dilution from equity incentive plans. The dual-class structure and BCP Stockholder Parties' control limit influence for other shareholders.
• Employees: Benefits from competitive compensation, comprehensive benefits, career development, and a new omnibus incentive plan. Potential for increased workload due to business growth and expansion.
• Customers: Enhanced product selection, competitive pricing, improved delivery, expanded pet healthcare services (telehealth, vet clinics, insurance), and personalized customer service.
• Suppliers/Vendors: Opportunities for increased sales volume due to Chewy's growth, but also risks related to supplier concentration and potential for disruptions.
• Veterinarians: Integration opportunities through PracticeHub, partnerships for pet healthcare, and potential competition from Chewy's direct vet care services.

Next Steps

• Continue to grow sales from the existing customer base by broadening product/service selection and improving customer engagement.
• Acquire new customers by investing free cash flow in advertising and marketing.
• Leverage technological and operational efficiencies to improve margins, including investments in technology, automation, and product innovation.
• Continue to grow private brands through current brand expansion and new product innovation.
• Expand further into pet healthcare, enhancing partnerships with customers and veterinarians.
• Evaluate expansion into additional international markets beyond North America.
• Explore broader platform opportunities, including additional pet services and direct sales to businesses.
• The finance information technology architecture modernization project is expected to go live towards the end of Fiscal Year 2026.
• Complete the purchase price allocation for the SmartPak Equine, LLC acquisition in the first quarter of Fiscal Year 2026.
• The company is currently under audit by the IRS for Fiscal Year 2022.

Key Dates

Recommendation

While Chewy demonstrated strong top-line growth, improved Adjusted EBITDA, and made strategic advancements in pet healthcare and customer engagement, the significant decline in GAAP net income and diluted EPS is a concern. The acquisition of SmartPak and continued expansion of vet care are positive long-term moves, but the immediate impact on profitability and the ongoing macroeconomic uncertainties warrant a cautious 'hold' stance. Investors should monitor how the company manages its operating expenses and translates revenue growth into sustainable GAAP profitability in future periods.

Keywords

Pet E-commerce, Pet Supplies, Pet Food, Pet Health, Pet Pharmacy, Veterinary Clinics, Autoship, Online Retail, Animal Care, Chewy, SmartPak, SEC Filing, 10-K, Financial Results, EBITDA, Customer Growth, Share Repurchase, Corporate Governance, Risk Factors, Supply Chain, Cybersecurity, Private Brands, Connect with a Vet, CarePlus, PracticeHub, International Expansion