Sep 9, 2026 earnings call — Chewy scales health and improves margins
Chewy reported Q2 net sales of $3.33 billion and adjusted EBITDA margin of 6.8%.
Revenue $3.3B (est $3.3B) · EPS $0.20 (est $0.18) · Next-quarter revenue outlook $13.5B
Key quotes
"Chewy vet care, continues to demonstrate strong customer satisfaction, attractive veterinarian productivity, and retention, compelling 4-wall economics, and importantly, the ability to drive incremental engagement across the broader ecosystem."
"We continue to expect AI related initiatives to generate low-tens of millions of dollars of cost savings in fiscal 2026, scaling to approximately $50 million on an annualized basis in fiscal 2027."
"Reflecting the strength of our underlying performance year to date, including the continued scaling of AI initiatives, we are raising the low end of full year fiscal 26 EBITDA margin guidance by 10-basis-points and narrowing the range to 6.7% to 6.8%,"
Analyst Q&A 6
treats vs core consumables
Q (Steven Forbes · Guggenheim): Analyst asked what share of consumables are treats (discretionary) and which treat types or pockets show notable consumer behavior.
A: Management declined to give a precise penetration number. They said discretionary is not just supplies and that treats and toppers are the discretionary part of consumables. They described dynamic customer behavior: some treat types go on Autoship, some do not, and customers experiment across many treat types at different price points.
"Consumables remains our largest and more most mature category, and Autoship fuels it with large penetration towards dog." — Sumit Singh (CEO)
reinvesting to grow and Chewy Plus redesign
Q (Nathaniel Feather · Morgan Stanley): Analyst asked whether the company might trade margin expansion to reaccelerate growth and what levers they could use. He also asked for learnings and where Chewy Plus can improve adoption.
A: Management said they prefer self-funded levers with high ROI instead of broad spending. They plan specific actions: a refreshed Chewy Plus program coming soon, targeted marketing and brand building, and new product launches to deepen engagement — all aimed to accelerate growth while staying disciplined on margins.
"we expect to introduce a refreshed program design very short into the market." — Sumit Singh (CEO)
industry stability and agentic search impact
Q (Dylan Carden · William Blair): Analyst wanted how the pet industry stabilization affects pricing and volume and how pricing is expected to trend into the back half. He also asked for an update on agentic/AI product discovery impact and Autoship reliance.
A: Management said they are not baking in a market rebound and do not expect pricing to materially help growth; the promotional environment is relatively stable. They expect to grow ahead of the category through execution (new customers, retention, Autoship engagement, cross-category adoption, health growth). They view AI/agentic surfaces as a net tailwind and are working to capture demand and deepen engagement with new product interactions.
"Our outlook reflects continued execution against the drivers that we can control, which is active customer growth, retention or reactivation, auto ship engagement, cross category adoption, health care growth, market share gains." — Christopher S. Deppe (CFO)
confidence in AI savings and cost-to-serve headroom
Q (Douglas Anmuth · JPMorgan): Analyst asked how confident management is in the stated AI-driven savings (low tens of millions in fiscal 26 and 50 million plus in 2027) and what longer-term headroom exists to lower cost to serve.
A: Management said they have high confidence in AI savings and see durable cost reductions across pharmacy, customer service, and fulfillment through multi-agent tools and automation. They cautioned AI efficiencies will offset normal cost pressures and may be partly reinvested, but overall these initiatives strengthen confidence in reaching long-term margin goals.
"High confidence in our AI driven efficiency for both the framework as well as the results that we are seeing flow through, into the P&L." — Sumit Singh (CEO)
Q3 gross margin and sponsored ads
Q (Steven Zaccone · Citi): Analyst asked why gross margin is down in Q3 sequentially and how sponsored ads are contributing to gross margin this year and next.
A: Management clarified Q3 is expected to be down sequentially from Q2 but will be up year-over-year; Q4 should modestly leverage year-over-year. Sponsored ads remain a gross margin tailwind (on-site and off-site) and will continue to grow, and mix premiumization from health ecosystem also helps, though the ad tailwind is at a lower level than in 2025.
"In the script, we talked about Q3 being down sequentially from Q2. It will not be down year-over-year." — Christopher S. Deppe (CFO)
early takeaways from Kai and Cali (AI agents)
Q (Benjamin Black · Deutsche Bank): Analyst asked for early takeaways from the customer-facing AI agents Kai (chat) and Kali (voice) and how customer experience might evolve over 12–18 months.
A: Management said the product must meet a high service bar and they are rapidly expanding coverage and use cases. Kai handles top contact drivers like shipment status, Autoship management, returns and refunds, and suits customers who prefer self-help; because it is built as first-party multi-agent orchestration, they expect to layer more capabilities and scale over time.
"These are multiple agents that sit under an orchestrator essentially allow us to direct customer traffic to bring back the appropriate response and self help." — Sumit Singh (CEO)