Chewy Q2 2026: Autoship Hits 84.6% of Sales

Chewy is a Florida-based online retailer. From Plantation, in Broward County, the company sells pet food, supplies and medications online to more than 21 million active customers, and it has expanded into pet health care and veterinary clinics. Its business model rests on repeat purchases, especially through Autoship, its subscription service that automatically ships products on a schedule.

Chewy reported results for its fiscal second quarter, which ended August 2, 2026, on September 9. The quarter showed steady sales growth, rising profitability, growing reliance on subscription revenue and the first contributions from two acquisitions. This analysis walks through the results, the customer metrics, Chewy’s use of AI and its updated outlook.

What did Chewy report for the second quarter of fiscal 2026?

Net sales rose 7.3% to $3,330.2 million from $3,104.2 million a year earlier. Excluding the contributions of SmartPak and Modern Animal, two businesses Chewy acquired this year, growth was 5.7%. The result was at the high end of Chewy’s guidance and slightly ahead of the $3.32 billion analyst forecast, according to Finviz.

Profitability improved. Net income rose 29.8% to $80.5 million, or $0.20 per diluted share, from $62.0 million, or $0.14 per share. Net margin was 2.4%, up from 2.0%. Adjusted EBITDA rose 23.7% to $226.7 million, and the adjusted EBITDA margin widened to 6.8% from 5.9%. Adjusted diluted EPS was $0.36, up from $0.33, matching the consensus estimate. Gross margin was 30.4%, unchanged from a year earlier.

The quarter included a $24.0 million net legal settlement benefit, which Chewy excluded from its adjusted figures. Net income also reflected $85.9 million of share-based compensation and related taxes.

Chief Executive Officer Sumit Singh said, “Chewy delivered a strong second quarter, with growth of 7.3% to $3.33 billion of net sales at the high end of our guidance.”

Chewy Q2 fiscal 2026 at a glance

Source: Chewy Form 8-K, Exhibit 99.1, September 9, 2026.

How important is Autoship to Chewy?

Autoship is the core of Chewy’s business. Autoship customer sales rose 9.3% to $2,817.2 million in the quarter, faster than overall net sales, and accounted for 84.6% of net sales, up from 83.0% a year earlier.

That matters because subscription revenue is predictable. Customers who set up recurring deliveries of food, litter or medication tend to keep buying, which gives Chewy visibility into future sales and makes its revenue less sensitive to swings in discretionary spending. Singh pointed to “the durability of our recurring revenue base, continued customer growth, and disciplined execution” as reasons for confidence in the outlook.

Of every dollar of second-quarter sales, about 85 cents came from Autoship customers, based on the reported share. Non-Autoship sales were about $513 million. Autoship sales grew by about $240 million from a year earlier while total net sales grew by about $226 million, which means sales outside Autoship declined slightly and all of Chewy’s growth came from subscription customers, based on the reported figures.

Chewy Autoship trend

Prior-year Autoship sales calculated from the reported 9.3% growth rate. Source: Chewy Q2 FY2026 release.

Is Chewy adding customers?

Yes, at a modest pace. Active customers reached 21.705 million, up 3.8% from a year earlier. The figure includes about 43,000 customers from SmartPak and excludes Modern Animal. Chewy added 208,000 active customers from the prior quarter, according to Retail TouchPoints.

Customers are also spending more. Net sales per active customer, a trailing measure, rose 1.9% to $602. Growth in both customer count and spending per customer is what lets Chewy grow faster than the number of new customers alone would suggest.

Chewy customer metrics

What acquisitions did Chewy make?

Chewy spent $552.8 million in cash on acquisitions, net of cash acquired, in the first half of fiscal 2026, and its goodwill rose to $334.1 million from $39.4 million. The two acquisitions named in the release are SmartPak and Modern Animal.

SmartPak closed in the first quarter and added about 43,000 active customers. On the first-quarter call, Chief Financial Officer Chris Deppe said its contribution was in line with Chewy’s expectation of about $80 million in net sales for fiscal 2026. Modern Animal closed shortly after the first quarter ended, and Deppe said Chewy expects about $70 million of 2026 net sales from it and expects it to be “generally adjusted EBITDA dollar neutral in 2026.” Modern Animal operates veterinary clinics, and the acquisition added 29 clinics, according to Retail TouchPoints. Together, the two businesses contributed the difference between Chewy’s 7.3% reported sales growth and 5.7% organic growth, or roughly 1.6 percentage points.

How big is Chewy’s veterinary business becoming?

The Modern Animal deal extends Chewy’s push into veterinary care. Chewy ended its prior fiscal year with 18 Chewy Vet Care clinics, and Modern Animal’s 29 clinics brought the total to 47, according to the first-quarter call. Deppe said Chewy still plans “10 to 12 new openings in fiscal 2026,” and the company expects about 60 clinics by the end of the fiscal year, with embedded revenue approaching $290 million once those clinics reach steady state.

The clinics also bring in new customers. Singh said, “Approximately 40% of CVC customers are new to Chewy,” and that these customers tend to reach first-year net sales per active customer of about $900, well above the company-wide average of $602. Singh cited a pet health care market of about $54 billion, including more than $40 billion in in-clinic products and veterinary services.

Chewy Vet Care growth

Source: Chewy Q1 fiscal 2026 earnings call.

How did Q2 compare with Q1 and with guidance?

Chewy beat its own second-quarter guidance. In June, it had guided to net sales of $3.30 billion to $3.33 billion and an adjusted EBITDA margin of 6.3% to 6.4%, with adjusted EPS of about $0.36. Actual net sales of $3.33 billion were at the top of the range, the 6.8% adjusted EBITDA margin was well above it, and adjusted EPS matched.

Compared with the first quarter, which ended May 3, growth eased slightly. First-quarter net sales rose 7.7% to $3,357.2 million, Autoship sales rose 10.5%, and the adjusted EBITDA margin was 7.5%. First-quarter net income was $94.8 million, or $0.23 per share, and adjusted EPS was $0.43. Singh said then that “Chewy continues to outperform the pet category while expanding profitability and free cash flow.”

Chewy fiscal 2026 quarterly trend

Sources: Chewy Q1 and Q2 fiscal 2026 releases. Q2 repurchases calculated from first-half and Q1 totals.

What role does advertising play?

Sponsored advertising, in which brands pay to promote products on Chewy’s site, is a growing source of margin. On the first-quarter call, Deppe credited sponsored ads with driving gross margin gains, and Singh said Chewy underwrites a 3% sponsored ads contribution and expects about two-thirds of it to reach the bottom line. About 40% of advertisers had tried Chewy’s newer Cmax advertising product, he said.

How is Chewy using AI?

Chewy is using artificial intelligence mainly to reduce costs and improve service. The company has launched eight AI capabilities, and about 30% of customer chats are now resolved through self-service, according to Retail TouchPoints. Chewy expects AI-related savings in the low tens of millions of dollars this year and potentially about $50 million in fiscal 2027.

Singh said, “These efficiencies will also help offset the normal cost pressures,” and added that “we view AI as a powerful enabler of continued margin progression, not as a standalone pool of savings.”

Chewy is also testing Chewy+, a paid membership program that has run for about five quarters. Singh said, “We have really liked the program so far,” and that “it has helped us learn the boundaries of sales, customer penetration and profitability guardrails.” On the first-quarter call, he said the program is aimed at increasing spending per customer and is “neutral, not dilutive to 2026” from a margin standpoint.

How strong are Chewy’s cash flow and balance sheet?

Operating cash flow was $137.4 million in the quarter, up 2.6%, and $245.9 million for the first 26 weeks, up 11.6%. Free cash flow was $89.5 million in the quarter, down 15.5%, and $160.3 million for the half year, up 3.7%.

Chewy has stepped up share repurchases, buying back $400.0 million of stock in the first half of fiscal 2026, compared with $152.6 million a year earlier. To fund acquisitions and buybacks, it drew $811.7 million of debt and repaid $220.0 million. At August 2, Chewy had $611.0 million of cash and equivalents, down from $860.1 million at the start of the fiscal year, and $588.7 million of long-term debt plus $3.0 million current.

Chewy cash and capital, first half of fiscal 2026

Source: Chewy Q2 FY2026 release.

What is Chewy’s outlook?

Chewy raised its full-year revenue and profitability outlook. In June, it had expected fiscal 2026 net sales of about $13.40 billion to $13.55 billion and an adjusted EBITDA margin of 6.6% to 6.8%. It now expects fiscal 2026 net sales of $13.46 billion to $13.57 billion, growth of 6.8% to 7.7%. Finviz reported that the midpoint of $13.515 billion was above the $13.48 billion consensus. For the third quarter, Chewy expects net sales of about $3.32 billion to $3.36 billion, with a midpoint of about $3.34 billion, slightly above the $3.33 billion consensus.

Chewy guidance

Sources: Finviz; Retail TouchPoints. Published ranges for Q3 vary slightly by source.

What should readers watch next?

Chewy’s next report will cover its fiscal third quarter. Based on what management has emphasized this year, the key measures to watch are whether net sales land within the guided range of about $3.32 billion to $3.36 billion, whether Autoship continues to grow faster than total sales, and whether active customers keep rising from 21.7 million. Progress toward about 60 vet clinics by fiscal year-end, the size of AI-related savings and the contribution from sponsored ads will show whether Chewy’s newer businesses are adding to margins as planned. The balance between share repurchases, acquisitions and the higher debt taken on this year is also worth following.

Frequently Asked Questions

Where is Chewy based?

Chewy issues its results from Plantation, Florida, in Broward County.

What were Chewy’s Q2 fiscal 2026 results?

Net sales rose 7.3% to $3.33 billion, net income rose 29.8% to $80.5 million, and adjusted EPS was $0.36.

How much of Chewy’s sales come from Autoship?

Autoship customer sales were $2.82 billion, or 84.6% of net sales, up from 83.0% a year earlier.

How many customers does Chewy have?

Chewy had 21.705 million active customers, up 3.8%, spending an average of $602 each over the trailing year.

What is Chewy’s 2026 sales outlook?

Chewy expects fiscal 2026 net sales of $13.46 billion to $13.57 billion, up 6.8% to 7.7%.

How many veterinary clinics does Chewy operate?

Chewy had 47 Chewy Vet Care clinics after acquiring Modern Animal’s 29 clinics and expects about 60 by the end of fiscal 2026.

Sources and Further Reading

1. Chewy, Inc., Second Quarter Fiscal 2026 Results, Form 8-K Exhibit 99.1, September 9, 2026 – U.S. Securities and Exchange Commission
2. Chewy, Inc., First Quarter Fiscal 2026 Results, Form 8-K Exhibit 99.1, June 10, 2026 – U.S. Securities and Exchange Commission
3. The Motley Fool, Chewy Q1 2026 Earnings Call Transcript, June 10, 2026
4. Finviz, “Chewy Q2 Earnings Meet Estimates as Company Raises Full Year Outlook,” September 2026
5. Retail TouchPoints, “Chewy Builds Loyalty Amid Pet Market Pressure,” September 2026

About the Author

By Brian French | Tech Intelligent Curation

Administrator

Brian French is a digital authority architect with over 15 years of experience in cutting-edge content strategy and the driving force behind the Florida Authority Network, a ecosystem dedicated to regional business intelligence. Leveraging his professional background in finance, including his tenure at Merrill Lynch Investment Managers (MLIM), Brian explores the intersection of traditional journalism and tech-intelligent curation. He specializes in Answer Engine Optimization (AEO) and Generative Engine Optimization (GEO) to ensure businesses remain visible and trusted before AI engines.

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