Chewy Announces Fiscal Fourth Quarter and Full Year 2024 Financial Results
PLANTATION, Fla.--(BUSINESS WIRE)--March 26, 2025--
Chewy, Inc. $(CHWY)$ ("Chewy"), a trusted destination for pet parents and partners everywhere, has released its financial results for the fiscal fourth quarter and full year 2024 ended February 2, 2025.
Fiscal Q4 2024 Results (1) :
-- Net sales of $3.25 billion improved 14.9 percent year over year
-- Gross margin of 28.5 percent expanded 30 basis points year over year
-- Net income of $22.8 million, including share-based compensation expense
and related taxes of $99.7 million
-- Net margin of 0.7 percent declined 40 basis points year over year
-- Basic earnings per share of $0.06, a decrease of $0.01 year over year
-- Diluted earnings per share of $0.05, a decrease of $0.02 year over year
-- Adjusted EBITDA (2) of $124.5 million, an increase of $38.1 million year
over year
-- Adjusted EBITDA margin (2) of 3.8 percent expanded 70 basis points year
over year
-- Adjusted net income (2) of $120.0 million, an increase of $39.7 million
year over year
-- Adjusted basic earnings per share (2) of $0.29, an increase of $0.10 year
over year
-- Adjusted diluted earnings per share (2) of $0.28, an increase of $0.10
year over year
Fiscal 2024 Results (1) :
-- Net sales of $11.86 billion improved 6.4 percent year over year
-- Gross margin of 29.2 percent expanded 80 basis points year over year
-- Net income of $392.7 million, including share-based compensation expense
and related taxes of $332.1 million
-- Net margin of 3.3 percent expanded 290 basis points year over year
-- Basic earnings per share of $0.93, an increase of $0.84 year over year
-- Diluted earnings per share of $0.91, an increase of $0.82 year over year
-- Adjusted EBITDA (2) of $570.5 million, an increase of $202.5 million year
over year
-- Adjusted EBITDA margin (2) of 4.8 percent expanded 150 basis points year
over year
-- Adjusted net income (2) of $446.8 million, an increase of $150.6 million
year over year
-- Adjusted basic earnings per share (2) of $1.06, an increase of $0.37 year
over year
-- Adjusted diluted earnings per share (2) of $1.04, an increase of $0.35
year over year
"Topline growth and profitability exceeded the high-end of our guidance ranges for both the fourth quarter and full year 2024," said Sumit Singh, Chief Executive Officer of Chewy. "Our performance was underpinned by strong active customer growth, and compelling Autoship customer loyalty. As we embark on 2025, the momentum in the business has remained strong and we remain committed to executing Chewy's strategic priorities as we continue to drive innovation across the pet category."
Management will host a conference call and webcast to discuss Chewy's financial results today at 8:00 am ET.
Chewy Fiscal Fourth Quarter and Full Year 2024 Financial Results Conference Call
When: Wednesday, March 26, 2025
Time: 8:00 am ET
Live webcast and replay: https://investor.chewy.com
Conference call registration: https://events.q4inc.com/attendee/666747821
(1) Includes the impact of the 14th and 53rd week in Q4 and Fiscal Year
2024, respectively.
(2) Adjusted EBITDA, adjusted EBITDA margin, adjusted net income, and
adjusted basic and diluted earnings per share are non-GAAP financial
measures. See "Non-GAAP Financial Measures" for additional information
on non-GAAP financial measures and a reconciliation to the most
comparable GAAP measures.
About Chewy
Our mission is to be the most trusted and convenient destination for pet parents and partners everywhere. We believe that we are the preeminent online source for pet products, supplies and prescriptions as a result of our broad selection of high-quality products and services, which we offer at competitive prices and deliver with an exceptional level of care and a personal touch to build brand loyalty and drive repeat purchasing. We seek to continually develop innovative ways for our customers to engage with us, as our websites and mobile applications allow our pet parents to manage their pets' health, wellness, and merchandise needs, while enabling them to conveniently shop for our products. We partner with approximately 3,200 of the best and most trusted brands in the pet industry, and we create and offer our own private brands. Through our websites and mobile applications, we offer our customers approximately 130,000 products and services offerings, to bring what we believe is a high-bar, customer-centric experience to our customers.
Forward-Looking Statements
This communication contains forward-looking statements about us and our industry that involve substantial risks and uncertainties. All statements other than statements of historical facts contained in this communication, including statements regarding our share repurchase program, our future results of operations or financial condition, business strategy and plans and objectives of management for future operations, are forward-looking statements. In some cases, you can identify forward-looking statements because they contain words such as "anticipate," "believe," "contemplate," "continue," "could," "estimate," "expect," "forecast," "intend," "may," "plan," "potential," "predict," "project," "seek," "should," "target," "will" or "would" or the negative of these words or other similar terms or expressions, although not all forward-looking statements contain these identifying words.
Although we believe that these forward-looking statements are based on reasonable assumptions, you should be aware that many factors could cause actual results to differ materially from those in such forward-looking statements, including but not limited to, our ability to: sustain our recent growth rates and successfully manage challenges to our future growth, including introducing new products or services, improving existing products and services, and expanding into new jurisdictions and offerings; successfully respond to business disruptions; successfully manage risks related to the macroeconomic environment, including any adverse impacts on our business operations, financial performance, supply chain, workforce, facilities, customer services and operations; acquire and retain new customers in a cost-effective manner and increase our net sales, improve margins and maintain profitability; manage our growth effectively; maintain positive perceptions of the Company and preserve, grow, and leverage the value of our reputation and our brand; limit operating losses as we continue to expand our business; forecast net sales and appropriately plan our expenses in the future; estimate our market share; strengthen our current supplier relationships, retain key suppliers, and source additional suppliers; negotiate acceptable pricing and other terms with third-party service providers, suppliers and outsourcing partners and maintain our relationships with such parties; mitigate changes in, or disruptions to, our shipping arrangements and operations; optimize, operate and manage the expansion of the capacity of our fulfillment centers; provide our customers with a cost-effective platform that is able to respond and adapt to rapid changes in technology; limit our losses related to online payment methods; maintain and scale our technology, the reliability of our websites, mobile applications, and network infrastructure, including through the use of artificial intelligence; maintain adequate cybersecurity with respect to our systems and retain third-party service providers that do the same with respect to their systems; maintain consumer confidence in the safety, quality and health of our products; limit risks associated with our suppliers and our outsourcing partners; comply with existing or future laws and regulations in a cost-efficient manner; utilize net operating loss and tax credit carryforwards, and other tax attributes; adequately protect our intellectual property rights; successfully defend ourselves against any allegations or claims that we may be subject to; attract, develop, motivate and retain highly-qualified and skilled employees; respond to economic conditions, industry trends, and market conditions, and their impact on the pet products market; reduce merchandise returns or refunds; respond to severe weather and limit disruption to normal business operations; manage new acquisitions, investments or alliances, and integrate them into our existing business; successfully compete in new offerings; manage challenges presented by international markets; successfully compete in the pet products and services health and retail industry, especially in the e-commerce sector; comply with the terms of our credit facility; raise capital as needed; and maintain effective internal control over financial reporting.
You should not rely on forward-looking statements as predictions of future events, and you should understand that these statements are not guarantees of performance or results, and our actual results could differ materially from those expressed in the forward-looking statements due to a variety of factors. We have based the forward-looking statements contained in this communication primarily on our current assumptions, expectations, and projections about future events and trends that we believe may affect our business, financial condition, and results of operations. The outcome of the events described in these forward-looking statements is subject to risks, uncertainties and other factors described in the section titled "Risk Factors" included in Part I, Item 1A of our Annual Report on Form 10-K and in our other filings with the Securities and Exchange Commission, and elsewhere in this communication. Moreover, we operate in a very competitive and rapidly changing environment. New risks and uncertainties emerge from time to time, and it
is not possible for us to predict all risks and uncertainties that could have an impact on the forward-looking statements contained in this communication. The results, events and circumstances reflected in the forward-looking statements may not be achieved or occur, and actual results, events or circumstances could differ materially from those described in the forward-looking statements. In addition, statements that "we believe" and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based on information available to us as of the date of this communication. While we believe that such information provides a reasonable basis for these statements, this information may be limited or incomplete. Our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all relevant information. These statements are inherently uncertain, and investors are cautioned not to unduly rely on these statements. The forward-looking statements made in this communication relate only to events as of the date on which the statements are made. We undertake no obligation to update any forward-looking statements made in this communication to reflect events or circumstances after the date of this communication or to reflect new information or the occurrence of unanticipated events, except as required by law. We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures or investments.
CHEWY, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share data)
As of
----------------------------
February 2, January 28,
2025 2024
------------ --------------
Assets
Current assets:
Cash and cash equivalents $ 595,765 $ 602,232
Marketable securities 899 531,785
Accounts receivable 169,031 154,043
Inventories 836,695 719,273
Prepaid expenses and other current
assets 59,976 97,015
---------- ----------
Total current assets 1,662,366 2,104,348
Property and equipment, net 562,180 521,298
Operating lease right-of-use assets 450,393 474,617
Goodwill 39,442 39,442
Deferred tax assets 257,453 --
Other non-current assets 42,693 47,146
---------- ----------
Total assets $ 3,014,527 $ 3,186,851
========== ==========
Liabilities and stockholders' equity
Current liabilities:
Trade accounts payable $ 1,175,869 $ 1,104,940
Accrued expenses and other current
liabilities 1,030,854 1,005,937
---------- ----------
Total current liabilities 2,206,723 2,110,877
Operating lease liabilities 502,404 527,795
Other long-term liabilities 43,941 37,935
---------- ----------
Total liabilities 2,753,068 2,676,607
---------- ----------
Stockholders' equity:
Preferred stock, $0.01 par value per
share, 5,000,000 shares authorized,
no shares issued and outstanding as
of February 2, 2025 and January 28,
2024 -- --
Class A common stock, $0.01 par
value per share, 1,500,000,000
shares authorized, 193,892,875 and
132,913,046 shares issued and
outstanding as of February 2, 2025
and January 28, 2024, respectively 1,939 1,329
Class B common stock, $0.01 par
value per share, 395,000,000 shares
authorized, 219,698,561 and
298,863,356 shares issued and
outstanding as of February 2, 2025
and January 28, 2024, respectively 2,197 2,989
Additional paid-in capital 1,840,160 2,481,984
Accumulated deficit (1,582,914) (1,975,652)
Accumulated other comprehensive
income (loss) 77 (406)
---------- ----------
Total stockholders' equity 261,459 510,244
---------- ----------
Total liabilities and
stockholders' equity $ 3,014,527 $ 3,186,851
========== ==========
CHEWY, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(in thousands, except per share data)
14 Weeks 13 Weeks 53 Weeks 52 Weeks
Ended Ended Ended Ended
----------- ----------- ------------ --------------
February 2, January 28, February 2, January 28,
2025 2024 2025 2024
----------- ----------- ------------ --------------
Net sales $3,247,386 $2,825,904 $11,861,335 $11,147,720
Cost of goods
sold 2,321,383 2,027,819 8,393,631 7,986,202
--------- --------- ---------- ----------
Gross profit 926,003 798,085 3,467,704 3,161,518
Operating
expenses:
Selling,
general and
administrative 700,705 626,030 2,551,004 2,442,683
Advertising and
marketing 235,010 194,036 804,113 742,460
--------- --------- ---------- ----------
Total
operating
expenses 935,715 820,066 3,355,117 3,185,143
--------- --------- ---------- ----------
(Loss) income
from operations (9,712) (21,981) 112,587 (23,625)
Interest income,
net 3,723 31,384 35,068 58,501
Other income, net 3,292 27,122 4,038 13,354
--------- --------- ---------- ----------
(Loss) income
before income
tax (benefit)
provision (2,697) 36,525 151,693 48,230
Income tax
(benefit)
provision (25,489) 4,639 (241,045) 8,650
--------- --------- ---------- ----------
Net income $ 22,792 $ 31,886 $ 392,738 $ 39,580
========= ========= ========== ==========
Other
comprehensive
income
Net income $ 22,792 $ 31,886 $ 392,738 $ 39,580
Foreign
currency
translation
adjustments (587) (406) 483 (406)
--------- --------- ---------- ----------
Comprehensive
income $ 22,205 $ 31,480 $ 393,221 $ 39,174
========= ========= ========== ==========
Earnings per
share
attributable to
common Class A
and Class B
stockholders:
Basic $ 0.06 $ 0.07 $ 0.93 $ 0.09
========= ========= ========== ==========
Diluted $ 0.05 $ 0.07 $ 0.91 $ 0.09
========= ========= ========== ==========
Weighted-average
common shares
used in computing
earnings per
share:
Basic 407,834 431,600 421,351 429,457
========= ========= ========== ==========
Diluted 424,125 433,942 430,990 432,040
========= ========= ========== ==========
CHEWY, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
53 Weeks 52 Weeks
Ended Ended
-------------- --------------
February 2, January 28,
2025 2024
-------------- --------------
Cash flows from operating activities
Net income $ 392,738 $ 39,580
--------- ----------
Adjustments to reconcile net income to
net cash provided by operating
activities:
Depreciation and amortization 114,557 109,693
Share-based compensation expense 306,435 239,107
Non-cash lease expense 32,951 37,818
Change in fair value of equity
warrants and investments (1,504) (13,069)
Deferred income tax benefit (257,453) --
Unrealized foreign currency losses
(gains), net 1,122 (391)
Other 1,049 3,914
Net change in operating assets and
liabilities:
Accounts receivable (15,069) (27,072)
Inventories (117,814) (41,259)
Prepaid expenses and other current
assets (14,049) (50,099)
Other non-current assets 3,543 (29,942)
Trade accounts payable 71,080 71,762
Accrued expenses and other current
liabilities 109,682 152,329
Operating lease liabilities (32,018) (27,179)
Other long-term liabilities 1,075 21,019
--------- ----------
Net cash provided by operating
activities 596,325 486,211
--------- ----------
Cash flows from investing activities
Capital expenditures (143,831) (143,282)
Proceeds from sales and maturities
of marketable securities 538,402 3,078,000
Purchases of marketable securities -- (3,221,714)
Cash paid for acquisition of
business, net of cash acquired -- (367)
--------- ----------
Net cash provided by (used in)
investing activities 394,571 (287,363)
--------- ----------
Cash flows from financing activities
Repurchases of common stock (942,848) --
Income taxes paid for, net of
proceeds from, parent
reorganization transaction (51,949) 60,601
Payments of secondary offering costs (1,066) --
Principal repayments of finance
lease obligations (866) (510)
Capital contribution from parent
reorganization transaction -- 21,966
Payments for tax sharing agreement
with related parties -- (10,279)
Other (13) (180)
--------- ----------
Net cash (used in) provided by
financing activities (996,742) 71,598
--------- ----------
Effect of exchange rate changes on
cash and cash equivalents (621) 145
--------- ----------
Net (decrease) increase in cash and
cash equivalents (6,467) 270,591
--------- ----------
Cash and cash equivalents, as of
beginning of period 602,232 331,641
--------- ----------
Cash and cash equivalents, as of end of
period $ 595,765 $ 602,232
========= ==========
Key Financial and Operating Data
We measure our business using both financial and operating data and use the following metrics and measures to assess the near-term and long-term performance of our overall business, including identifying trends, formulating financial projections, making strategic decisions, assessing operational efficiencies, and monitoring our business.
14 Weeks 13 Weeks 53 Weeks 52 Weeks
Ended (1) Ended Ended (1) Ended
-------------- -------------- --------------- ---------------
(in thousands,
except net
sales per
active
customer, per
share data, and February 2, January 28, % February 2, January 28, %
percentages) 2025 2024 Change 2025 2024 Change
-------------- -------------- --------- --------------- --------------- --------
Financial and
Operating Data
Net sales $3,247,386 $2,825,904 14.9% $11,861,335 $11,147,720 6.4%
Net income
(2) $ 22,792 $ 31,886 (28.5)% $ 392,738 $ 39,580 n/m
Net
margin
(2) 0.7% 1.1% 3.3% 0.4%
Adjusted
EBITDA (3) $ 124,533 $ 86,467 44.0% $ 570,537 $ 368,068 55.0%
Adjusted
EBITDA
margin
(3) 3.8% 3.1% 4.8% 3.3%
Adjusted net
income (3) $ 120,009 $ 80,278 49.5% $ 446,785 $ 296,231 50.8%
Earnings per
share, basic
(2) $ 0.06 $ 0.07 (14.3)% $ 0.93 $ 0.09 n/m
Earnings per
share,
diluted (2) $ 0.05 $ 0.07 (28.6)% $ 0.91 $ 0.09 n/m
Adjusted
earnings per
share, basic
(3) $ 0.29 $ 0.19 52.6% $ 1.06 $ 0.69 53.6%
Adjusted
earnings per
share,
diluted (3) $ 0.28 $ 0.18 55.6% $ 1.04 $ 0.69 50.7%
Net cash
provided by
operating
activities $ 207,516 $ 99,547 108.5% $ 596,325 $ 486,211 22.6%
Free cash
flow (3) $ 156,605 $ 67,167 133.2% $ 452,494 $ 342,929 31.9%
Active
customers
(4) 20,514 20,083 2.1% 20,514 20,083 2.1%
Net sales per
active
customer
(5) $ 578 $ 555 4.1% $ 578 $ 555 4.1%
Autoship
customer
sales (6) $2,617,343 $2,158,959 21.2% $ 9,393,326 $ 8,493,199 10.6%
Autoship
customer
sales as a
percentage
of net sales
(6) 80.6% 76.4% 79.2% 76.2%
n/m - not
meaningful
(1) Includes the impact of the 14th and 53rd week for Q4 and Fiscal Year
2024, respectively.
(2) Includes share-based compensation expense, including related taxes, of
$99.7 million and $332.1 million for the fourteen and fifty-three weeks
ended February 2, 2025, compared to $60.7 million and $248.5 million for
the thirteen and fifty-two weeks ended January 28, 2024.
(3) Adjusted EBITDA, adjusted EBITDA margin, adjusted net income, adjusted
basic and diluted earnings per share, and free cash flow are non-GAAP
financial measures. See "Non-GAAP Financial Measures" below.
(4) We define active customers as the total number of individual customers
who have ordered a product or service, and for whom a product has
shipped or for whom a service has been provided, at least once during
the preceding 364-day period.
(5) We define net sales per active customer as the aggregate net sales for
the preceding four fiscal quarters, divided by the total number of
active customers at the end of that period.
(6) We define Autoship customers as customers in a given fiscal quarter for
whom an order has shipped through our Autoship subscription program
during the preceding 364-day period. We define Autoship customer sales
as a percentage of net sales as the Autoship customer sales in a given
reporting period divided by the net sales from all orders in that
period.
We define net margin as net income divided by net sales and adjusted EBITDA margin as adjusted EBITDA divided by net sales.
Non-GAAP Financial Measures
Adjusted EBITDA and Adjusted EBITDA Margin
To provide investors with additional information regarding our financial results, we have disclosed in this earnings release adjusted EBITDA, a non-GAAP financial measure that we calculate as net income excluding depreciation and amortization; share-based compensation expense and related taxes; income tax provision (benefit); interest income (expense), net; transaction related costs; changes in the fair value of equity warrants; severance and exit costs; and litigation matters and other items that we do not consider representative of our underlying operations. We have provided a reconciliation below of adjusted EBITDA to net income, the most directly comparable GAAP financial measure.
We have included adjusted EBITDA and adjusted EBITDA margin in this earnings release because each is a key measure used by our management and board of directors to evaluate our operating performance, generate future operating plans and make strategic decisions regarding the allocation of capital. In particular, the exclusion of certain expenses in calculating adjusted EBITDA and adjusted EBITDA margin facilitates operating performance comparability across reporting periods by removing the effect of non-cash expenses and certain variable charges. Accordingly, we believe that adjusted EBITDA and adjusted EBITDA margin provide useful information to investors and others in understanding and evaluating our operating results in the same manner as our management and board of directors.
We believe it is useful to exclude non-cash charges, such as depreciation and amortization and share-based compensation expense from our adjusted EBITDA because the amount of such expenses in any specific period may not directly correlate to the underlying performance of our business operations. We believe it is useful to exclude income tax provision (benefit); interest income (expense), net; transaction related costs; changes in the fair value of equity warrants; and litigation matters and other items which are not components of our core business operations. We believe it is useful to exclude severance and exit costs because these expenses represent temporary initiatives to realign resources and enhance operational efficiency, which are not components of our core business operations. Adjusted EBITDA has limitations as a financial measure and you should not consider it in isolation or as a substitute for analysis of our results as reported under GAAP. Some of these limitations are:
-- although depreciation and amortization are non-cash charges, the assets
being depreciated and amortized may have to be replaced in the future and
adjusted EBITDA does not reflect capital expenditure requirements for
such replacements or for new capital expenditures;
-- adjusted EBITDA does not reflect share-based compensation and related
taxes. Share-based compensation has been, and will continue to be for the
foreseeable future, a recurring expense in our business and an important
part of our compensation strategy;
-- adjusted EBITDA does not reflect interest income (expense), net; or
changes in, or cash requirements for, our working capital;
-- adjusted EBITDA does not reflect transaction related costs and other
items which are either not representative of our underlying operations or
are incremental costs that result from an actual or planned transaction
or initiative and include changes in the fair value of equity warrants,
severance and exit costs, litigation matters, integration consulting fees,
internal salaries and wages (to the extent the individuals are assigned
full-time to integration and transformation activities) and certain costs
related to integrating and converging IT systems; and
-- other companies, including companies in our industry, may calculate
adjusted EBITDA differently, which reduces its usefulness as a
comparative measure.
Because of these limitations, you should consider adjusted EBITDA and adjusted EBITDA margin alongside other financial performance measures, including various cash flow metrics, net income, net margin, and our other GAAP results.
The following table presents a reconciliation of net income to adjusted EBITDA, as well as the calculation of net margin and adjusted EBITDA margin, for each of the periods indicated:
(in thousands,
except 14 Weeks 13 Weeks 53 Weeks 52 Weeks
percentages) Ended Ended Ended Ended
-------------- -------------- --------------- ---------------
Reconciliation
of Net Income
to Adjusted February 2, January 28, February 2, January 28,
EBITDA 2025 2024 2025 2024
-------------- -------------- --------------- ---------------
Net income $ 22,792 $ 31,886 $ 392,738 $ 39,580
Add (deduct):
Depreciation
and
amortization 29,121 27,441 114,557 109,693
Share-based
compensation
expense and
related
taxes 99,708 60,665 332,085 248,543
Interest
income, net (3,723) (31,384) (35,068) (58,501)
Change in
fair value
of unvested
equity
warrants (2,491) (26,621) (2,369) (13,079)
Income tax
(benefit)
provision (25,489) 4,639 (241,045) 8,650
Severance
costs -- 14,348 -- 14,348
Exit costs -- -- -- 6,839
Transaction
related
costs 679 4,660 1,607 7,827
Other 3,936 833 8,032 4,168
--------- --------- ---------- ----------
Adjusted EBITDA $ 124,533 $ 86,467 $ 570,537 $ 368,068
========= ========= ========== ==========
Net sales $3,247,386 $2,825,904 $11,861,335 $11,147,720
Net margin 0.7% 1.1% 3.3% 0.4%
Adjusted EBITDA
margin 3.8% 3.1% 4.8% 3.3%
Adjusted Net Income and Adjusted Basic and Diluted Earnings per Share
To provide investors with additional information regarding our financial results, we have disclosed in this earnings release adjusted net income and adjusted basic and diluted earnings per share, which represent non-GAAP financial measures. We calculate adjusted net income as net income excluding share-based compensation expense and related taxes, releases of valuation allowances associated with deferred tax assets, changes in the fair value of equity warrants, and severance and exit costs. We calculate adjusted basic and diluted earnings per share by dividing adjusted net income attributable to common stockholders by the weighted-average shares outstanding during the period. We have provided a reconciliation below of adjusted net income to net income, the most directly comparable GAAP financial measure.
We have included adjusted net income and adjusted basic and diluted earnings per share in this earnings release because each is a key measure used by our management and board of directors to evaluate our operating performance, generate future operating plans and make strategic decisions regarding the allocation of capital. In particular, the exclusion of certain expenses in calculating adjusted net income and adjusted basic and diluted earnings per share facilitates operating performance comparability across reporting periods by removing the effect of non-cash expenses and certain variable gains and losses that do not represent a component of our core business operations. We believe it is useful to exclude non-cash share-based compensation expense because the amount of such expenses in any specific period may not directly correlate to the underlying performance of our business operations. We believe it is useful to exclude releases of valuation allowances associated with deferred tax assets as this is not a component of our core business operations. We believe it is useful to exclude changes in the fair value of equity warrants because the variability of equity warrant gains and losses is not representative of our underlying operations. We believe it is useful to exclude severance and exit costs because these expenses represent temporary initiatives to realign resources and enhance operational efficiency, which are not components of our core business operations. Accordingly, we believe that these measures provide useful information to investors and others in understanding and evaluating our operating results in the same manner as our management and board of directors.
Adjusted net income and adjusted basic and diluted earnings per share have limitations as financial measures and you should not consider them in isolation or as substitutes for analysis of our results as reported under GAAP. Other companies may calculate adjusted net income and adjusted basic and diluted earnings per share differently, which reduces their usefulness as comparative measures. Because of these limitations, you should consider adjusted net income and adjusted basic and diluted earnings alongside other financial performance measures, including various cash flow metrics, net income, basic and diluted earnings per share, and our other GAAP results.
The following table presents a reconciliation of net income to adjusted net income, as well as the calculation of adjusted basic and diluted earnings per share, for each of the periods indicated:
(in thousands,
except per share 14 Weeks 13 Weeks 53 Weeks 52 Weeks
data) Ended Ended Ended Ended
--------- --------- ---------- -----------
Reconciliation of
Net Income to
Adjusted Net February January February January 28,
Income 2, 2025 28, 2024 2, 2025 2024
--------- --------- ---------- -----------
Net income $ 22,792 $ 31,886 $ 392,738 $ 39,580
Add (deduct):
Share-based
compensation
expense and
related
taxes 99,708 60,665 332,085 248,543
Change in
fair value
of unvested
equity
warrants (2,491) (26,621) (2,369) (13,079)
Deferred tax
asset
valuation
allowance
release -- -- (275,669) --
Severance
costs -- 14,348 -- 14,348
Exit costs -- -- -- 6,839
------- ------- -------- -------
Adjusted net
income $120,009 $ 80,278 $ 446,785 $296,231
======= ======= ======== =======
Weighted-average
common shares
used in computing
adjusted earnings
per share:
Basic 407,834 431,600 421,351 429,457
Effect of
dilutive
share-based
awards 16,291 2,342 9,639 2,583
------- ------- -------- -------
Diluted 424,125 433,942 430,990 432,040
======= ======= ======== =======
Earnings per
share
attributable to
common Class A
and Class B
stockholders
Basic $ 0.06 $ 0.07 $ 0.93 $ 0.09
======= ======= ======== =======
Diluted $ 0.05 $ 0.07 $ 0.91 $ 0.09
======= ======= ======== =======
Adjusted basic $ 0.29 $ 0.19 $ 1.06 $ 0.69
======= ======= ======== =======
Adjusted
diluted $ 0.28 $ 0.18 $ 1.04 $ 0.69
======= ======= ======== =======
Free Cash Flow
To provide investors with additional information regarding our financial results, we have disclosed in this earnings release free cash flow, a non-GAAP financial measure that we calculate as net cash provided by operating activities less capital expenditures (which consist of purchases of property and equipment, capitalization of labor related to our websites, mobile applications, software development, and leasehold improvements). We have provided a reconciliation below of free cash flow to net cash provided by operating activities, the most directly comparable GAAP financial measure.
We have included free cash flow in this earnings release because it is used by our management and board of directors as an important indicator of our liquidity as it measures the amount of cash we generate. Accordingly, we believe that free cash flow provides useful information to investors and others in understanding and evaluating our operating results in the same manner as our management and board of directors.
Free cash flow has limitations as a financial measure and you should not consider it in isolation or as a substitute for analysis of our results as reported under GAAP. There are limitations to using non-GAAP financial measures, including that other companies, including companies in our industry, may calculate free cash flow differently. Because of these limitations, you should consider free cash flow alongside other financial performance measures, including net cash provided by operating activities, capital expenditures and our other GAAP results.
The following table presents a reconciliation of net cash provided by operating activities to free cash flow for each of the periods indicated:
14 Weeks 13 Weeks 53 Weeks 52 Weeks
(in thousands) Ended Ended Ended Ended
--------- --------- ---------- ------------
Reconciliation of
Net Cash Provided
by Operating
Activities to February January February January 28,
Free Cash Flow 2, 2025 28, 2024 2, 2025 2024
--------- --------- ---------- ------------
Net cash provided
by operating
activities $207,516 $ 99,547 $ 596,325 $ 486,211
Deduct:
Capital
expenditures (50,911) (32,380) (143,831) (143,282)
------- ------- -------- --------
Free Cash Flow $156,605 $ 67,167 $ 452,494 $ 342,929
======= ======= ======== ========
Free cash flow may be affected in the near to medium term by the timing of capital investments (such as the launch of new fulfillment centers, pharmacy facilities, veterinary clinics, customer service infrastructure, and corporate offices and purchases of IT and other equipment), fluctuations in our growth and the effect of such fluctuations on working capital, and changes in our cash conversion cycle due to increases or decreases of vendor payment terms as well as inventory turnover.
View source version on businesswire.com: https://www.businesswire.com/news/home/20250326617117/en/
CONTACT: Investor Contact:
ir@chewy.com
Media Contact:
Diane Pelkey
dpelkey@chewy.com
(END) Dow Jones Newswires
March 26, 2025 07:05 ET (11:05 GMT)
Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.