Chewy Q3 2025 Earnings Beat, Shares Reverse
Chewy Q3 2025 earnings showed an EPS beat and margin gains, but shares reversed after an initial uptick, creating near-term trading caution.
KEY TAKEAWAYS
- Adjusted EPS was $0.32, about 5.4% above consensus.
- Net sales were $3.12 billion, up 8.3% year-over-year.
- Shares reversed lower after an initial uptick, signaling investor caution on top-line momentum.
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Chewy Inc.'s Q3 2025 earnings showed an EPS beat and margin improvement when the company reported results on Dec. 10, 2025. Shares reversed lower after an initial uptick, underscoring investor caution despite accelerating customer growth.
Quarterly Financial Results
The company said in a press release on Dec. 10, 2025, that it reported Q3 fiscal 2025 results for the quarter ended Nov. 2, 2025. Net sales rose 8.3% year-over-year to $3.12 billion. Adjusted earnings per share (EPS) came in at $0.32, about 5.4% above consensus estimates. Gross margin improved by 50 basis points to 29.8%, reflecting operational efficiencies and product mix enhancements. Free cash flow increased 15.8% year-over-year to $175.8 million, producing a free-cash-flow margin of 5.6%.
Customer Growth and Market Reaction
Active customers grew 4.9% year-over-year to 21.155 million, driven by Autoship subscriptions, which accounted for 83.9% of net sales, up from 80% a year earlier. This recurring revenue helped sustain online market-share gains as Chewy expanded product assortments and technology investments.
Despite the earnings beat, shares initially rose but then reversed lower. The mixed signal of an EPS beat alongside revenue slightly below some consensus estimates tempered the market rally and highlighted investor focus on top-line momentum. The margin expansion and free-cash-flow improvement provide Chewy with flexibility to invest in fulfillment centers, pharmacy and veterinary services, and technology infrastructure—key areas for sustaining recurring revenue growth.
