Chewy Inc Q2 2024 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Doug Anmuth - JM Morgan - Analyst : Thanks so much for taking the questions. I have two. Last quarter, you talked about signs of green shoots with pet adoptions exceeding relinquishments for the first time in about two years. So hope you could talk more about whether those positive trends are continuing based on the data and surveys that you're seeing. And then Sumit, I know it's early, but just as you think about fiscal '25, is it fair to expect more balanced growth between active customers and NSPAC then? Thank you.

Question: Doug Anmuth - JM Morgan - Analyst : Great. Thank you, Sumit.

Question: Mark Mahaney - Evercore ISI - Analyst :

Question: Mark Mahaney - Evercore ISI - Analyst : OK. Thank you, David. Thank you, Sumit.

Question: Eric Sheridan - Goldman Sachs - Analyst : Thank you so much for taking the question. Following up on your comments on repair marks on mobile, maybe a two-parter, Sumit wanted to know if maybe first you could take a step back and talk a little bit about the journey you've been on in improving the mobile experience for consumers and how that's approached up to this point? And then in terms of what you're seeing from the consumer on mobile, anything you want to call out in terms of how that might be a tailwind for the business beyond just 2024, any key investments you feel you need to make in mobile? Thank you.

Question: Rupesh Parikh - Oppenheimer - Analyst : Good morning, and thanks for taking my questions. So my first question is just on monthly trends, just want to get a sense of the cadence of trends during the quarter, and then maybe what you're seeing quarter to date? And then my second question is hard goods growth actually outpaced consumables. So just curious more color on what you saw in hard goods and just confident in being able to sustain that positive momentum?

Question: Rupesh Parikh - Oppenheimer - Analyst : Great. Thank you. I'll pass it on.

Question: Trevor Young - Barclays - Analyst : Great. Thanks. Two questions here. First, on the improvement in net ads, the first sequential growth in more than a year, how much of the contribution there was from Canada and were net ads in the US, maybe flatter or even up at this point? And then second one, back to the mobile app discussion, REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 28, 2024 / 12:00PM, CHWY.N - Q2 2024 Chewy Inc Earnings Call what portion of orders are from mobile web at present? And are you able to funnel those users toward the app install more quickly at this point? Or do we still have more work to do on the app before you're willing to really push that app install?

Question: Trevor Young - Barclays - Analyst : Thank you, Sumit.

Question: Dylan Carden - William Blair - Analyst : Appreciate it. I'm curious if there's any nuance to margin as active customer growth returns to the model. And particularly, Autoship now 78 plus percent, presumably that's in large part because you have more mature customers making up the balance of the business, should that come in as REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 28, 2024 / 12:00PM, CHWY.N - Q2 2024 Chewy Inc Earnings Call active customer growth accelerates? And will you spend on marketing and how much into sort of a better demand environment would be the two ones that I'm most focused on, but anything you can add there would be helpful? Thanks.

Question: Dylan Carden - William Blair - Analyst : Very good. Thank you very much.

Question: Anna Andreeva - Piper Sandler - Analyst : Great. Thanks so much for taking our question. And we have two. First off, just to follow up on the positive net ads and congrats on that. So sounds like the segmentation and the targeting initiatives that you guys have been working on are still early on and continuing. And, Sumit, I think you said, 2Q tends to be the peak for relinquishments. So are you expecting net ads to be positive again for the third quarter? I know you've reaffirmed flattish for the year. And then, secondly, to Dave, really strong gross margins. Can you rank the biggest drivers within that? Just again, looking at Sponsored Ads, the mix and promotionality, and how do you feel about sustainability of those? Thanks so much.

Question: Anna Andreeva - Piper Sandler - Analyst : All right. Fair enough. Thanks so much. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 28, 2024 / 12:00PM, CHWY.N - Q2 2024 Chewy Inc Earnings Call

Question: Curtis Nagle - Bank of America Merrill Lynch - Analyst : Terrific. Thanks very much. Two from me. Just one, I'm wondering if you could talk a little bit more in terms of competitive trends, particularly from the larger online platforms. I think you mentioned, and this is consistent with other calls, that maybe you were seeing, I don't know if it's pressure or just some ramping up on hard goods, but just generally speaking from the larger platforms, what are you seeing there?

Question: Curtis Nagle - Bank of America Merrill Lynch - Analyst : Understood. Yes, just a quick one on the clinics. Just sounds like in terms of acquiring vets, things are going well. Maybe dive into a little bit more in terms of what's resonating. Is it compensations? It's strengthen the brand? Where are you recruiting that's primarily from? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 28, 2024 / 12:00PM, CHWY.N - Q2 2024 Chewy Inc Earnings Call

Question: Curtis Nagle - Bank of America Merrill Lynch - Analyst : Understood. Thanks for the insight.