[Management View]
Chewy reported $3.12 billion in net sales, an 8.3% increase YoY, surpassing guidance. Active customers grew to 20.8 million, with AutoShip sales reaching $2.56 billion, up 14.8% YoY. The company emphasized strategic initiatives like Chewy Vetcare clinics and the Chewy Plus membership program, which transitioned from beta to full rollout.

[Outlook]
Chewy expects Q2 FY2025 net sales of $3.06-$3.09 billion, with full-year sales projected at $12.3-$12.45 billion. The company plans to open 8-10 new Vetcare clinics in FY2025 and anticipates continued growth in sponsored ads and Chewy Plus memberships.

[Financial Performance]
Chewy's gross margin expanded by 60 basis points YoY to 29.6%. Adjusted EBITDA was $192.7 million, reflecting a 6.2% margin, a 50 basis point increase YoY. Free cash flow was $48.7 million, with $23.2 million used for share repurchases.

[Q&A Highlights]
1. Question: Could you elaborate on the net customer additions and growth expectations for the year?
Answer: Chewy's customer growth exceeded expectations, driven by strong execution and market normalization. The company anticipates low single-digit growth, with improved customer retention and quality.

2. Question: How is Chewy approaching the advertising opportunity, particularly off-site?
Answer: Chewy is expanding its advertising capabilities, focusing on off-site channels and enhancing its first-party platform. The company aims to balance demand and supply, improving ROI for advertisers.

3. Question: Can you discuss the sustainability of active customer growth and retention strategies?
Answer: Chewy is confident in its customer growth, driven by a broader marketing strategy and improved product offerings. The company sees higher reorder rates and net sales from new customers.

4. Question: What are the adoption rates and economic impacts of the Chewy Plus program?
Answer: Chewy Plus has shown strong membership growth, with higher engagement and cross-category penetration. The program is expected to drive incremental contribution profit.

5. Question: How are new customers transitioning to AutoShip, and what drives hard goods growth?
Answer: Chewy focuses on assortment and personalized experiences to convert customers to AutoShip. Hard goods growth is driven by refreshed assortments and improved customer experiences.

6. Question: Where is Chewy gaining market share, and how does it compare to industry growth?
Answer: Chewy is gaining market share, capturing a significant portion of online sales growth. The company is executing a share-gaining plan, outperforming industry growth rates.

7. Question: What are the gross margin dynamics and operating expense leverage expectations?
Answer: Chewy's gross margin expanded due to sponsored ads and product mix. The company expects continued leverage from operating expenses, with consistent advertising and marketing spend.

8. Question: What is the potential of Chewy Vetcare clinics, and what are the expansion plans?
Answer: Chewy plans to expand Vetcare clinics, tapping into a $20 billion market. The clinics drive new customer acquisition and enhance pharmacy business insights.

9. Question: How is Chewy managing pricing and category dynamics, particularly with tariffs?
Answer: Chewy sees little inflation in like-for-like products, with premiumization trends continuing. The company is minimally impacted by tariffs, with most products sourced domestically.

[Sentiment Analysis]
Analysts and management expressed optimism about Chewy's growth prospects, highlighting strong execution and strategic initiatives. The tone was positive, with confidence in achieving guidance and market share gains.

[Quarterly Comparison]
| Metric | Q1 2025 | Q1 2024 |
|-----------------------|---------|---------|
| Net Sales | $3.12B | $2.88B |
| Active Customers | 20.8M | 20.0M |
| AutoShip Sales | $2.56B | $2.23B |
| Gross Margin | 29.6% | 29.0% |
| Adjusted EBITDA | $192.7M | $172.5M |

[Risks and Concerns]
Potential risks include market normalization impacts, competitive pressures, and tariff-related cost increases. Chewy's reliance on strategic initiatives for growth may also pose execution risks.

[Final Takeaway]
Chewy's Q1 2025 performance exceeded expectations, driven by strong customer growth and strategic initiatives like AutoShip and Chewy Plus. The company is well-positioned to capture market share, with plans to expand Vetcare clinics and enhance advertising capabilities. Management remains confident in achieving its financial targets, supported by a robust business model and favorable industry trends.