Chewy, Inc. ($CHWY) Plummets 12% After Q1—Even With Revenue Beat

Wall Street''s favorite pet play bites back—hard.

Chewy''s stock got mauled despite topping estimates, proving once again that markets reward guidance over performance. Here''s the damage:

The numbers don''t lie (but the market does)

Revenue cleared expectations—no small feat in this economy—yet shares cratered 12% post-earnings. Classic case of ''buy the rumor, sell the news'' meets ''show me the raised guidance or GTFO.''

Pet parents keep spending (and analysts keep moving goalposts)

Subscription revenue? Up. Active customers? Growing. But when your stock trades at 50x earnings, even a 1% miss on the whisper number gets punished like a puppy chewing Wall Street''s favorite shoes.

Memo to growth investors: next time try beating expectations by more than the algorithmic traders already priced in. Or just buy Bitcoin—at least its volatility comes with 24/7 trading.

TLDR

• Q1 revenue of $3.12 billion beat expectations by 1.1%.
• Adjusted EPS of $0.35 topped estimates but GAAP net income missed.
• Shares fell over 12%  despite positive top-line results.
• Active customer count rose 3.8% to 20.8 million.
• Full-year guidance reaffirmed; CFO departure planned.

Chewy, Inc. (NYSE: CHWY) released its first-quarter fiscal 2025 results on June 10, 2025, showing mixed performance. The stock dropped sharply by over 12% during early market trading after reporting revenue that surpassed analyst expectations but a GAAP net income figure that fell short.

Chewy, Inc. (CHWY)

Q1 2025 Financial Highlights

Chewy posted net sales of $3.12 billion, marking an 8.3% year-over-year increase and exceeding Wall Street’s estimate of $3.08 billion. The company reported adjusted earnings per share (EPS) of $0.35, slightly ahead of the expected $0.34. Adjusted EBITDA reached $192.7 million, also beating projections of $190.7 million.

However, GAAP net income was $62.4 million, or $0.15 per share, below analyst forecasts of $68.9 million or $0.16 per share. The net margin declined to 2.0%, down 30 basis points from the previous year. Gross margin slightly dipped to 29.6%.

Chewy, $CHWY, Q1-25. Results:
🔴 -6.5% Pre-Market

📊 Adj. EPS: $0.35 🟢
💰 Revenue: $3.12B 🟢
📈 Net Income: $62.4M
🔎 Strong start to FY25 with customer growth, autoship sales at 82% of total revenue, and continued profitability momentum. pic.twitter.com/nuOBQbJlPZ

— EarningsTime (@Earnings_Time) June 11, 2025

Active Customer Base and Autoship Sales

Chewy’s active customer count grew by 3.8% year-over-year to nearly 20.8 million. Autoship sales ROSE 15% from the prior year to $2.56 billion, representing 82% of total sales. This steady growth reflects customer loyalty and recurring revenue strength.

Cash Flow and Profitability Metrics

Despite revenue growth, cash profitability weakened. Free cash FLOW came in at $48.7 million, translating to a 1.6% margin, below the two-year average and down from the prior quarter’s 4.8%. This modest cash flow performance raised some concerns among investors regarding future capital return potential.

Market Performance and Outlook

Chewy shares, which had risen 37% year-to-date before the report, dropped after the earnings release. The company reaffirmed its full-year outlook, projecting sales between $12.30 billion and $12.45 billion—a 6% to 7% increase. For Q2 2025, it expects adjusted EPS of $0.30 to $0.35 on sales of $3.06 billion to $3.09 billion, aligning with analyst estimates.

Leadership Transition

CFO David Reeder is set to depart in the coming months to lead a semiconductor firm as CEO. Chewy plans an orderly transition while searching for his successor. CEO Sumit Singh emphasized confidence in the company’s growth trajectory and market share expansion despite this leadership change.

Long-Term Returns Mixed

While Chewy delivered an impressive 83.63% return over the past year, its five-year performance lags, with a 14.68% decline compared to the S&P 500’s 101.35% gain. This disparity highlights the stock’s volatile long-term track record.