Chewy (NYSE:CHWY) reported first-quarter fiscal 2026 net sales of approximately $3.36 billion, up 7.7% year over year, while active customers increased 3.6% to 21.5 million. Autoship customer sales rose more than 10% year over year and represented 84.4% of total net sales.
The company delivered record profitability, with adjusted EBITDA of approximately $253 million and a 7.5% adjusted EBITDA margin, up about 130 basis points year over year.
Management connected Chewy’s operating plan to continued investment in AI, pet health, advertising products, customer engagement, and fulfillment automation.
CEO Sumit Singh said the company is “embedding AI across multiple layers of the business,” while CFO Chris Deppe cited early benefits from technology and AI-enabled efficiencies across the organization. Chewy said these efforts are helping the company manage costs while continuing to invest in growth areas.
Why It Matters: Chewy is using technology-enabled operations to support its growth plan, with investments that help lower service costs, improve fulfillment productivity, streamline clinic workflows, and enhance customer retention. The same priorities are also incorporated into Chewy’s margin plan as the company continues to grow its recurring revenue base.
- AI Efficiency Plans Move Into Execution: Chewy said it has built the foundation needed to deploy AI more widely across the company. Singh said AI is being used in customer service, pharmacy operations, fulfillment, and marketing workflows. The company expects AI-driven efficiencies to contribute a “low tens of millions of dollars” benefit in fiscal 2026, with a larger ramp expected in 2027 and later years.
- Chewy Vet Care Adds a Technology-Enabled Clinic Model: Management said Chewy Vet Care clinics are delivering strong standalone economics while helping bring new customers into their ecosystem. Singh said veterinary teams are supported by “technology-enabled workflows and AI-assisted tools,” which the company linked to productivity and employee satisfaction. Chewy also closed its Modern Animal acquisition after quarter end, adding 29 clinics and creating a path to integrate the business into Chewy’s operating and technology stacks.
- Digital Engagement Helps Support Customer Retention: The company cited improved CRM efforts and lower churn as contributors to customer growth. Management also discussed changes to the autoship product flow intended to improve product attachment, although current consumer pressure has limited the near-term impact. These programs demonstrate Chewy’s approach to support repeat purchasing without relying only on new customer acquisition.
- Sponsored Ads Add Another Margin Lever: Management cited sponsored ads as a contributor to gross margin expansion. Singh highlighted Cmax, a product that helps advertisers work with Chewy faster and improve results for new or smaller brands. He said roughly 40% of advertisers tried the product and gave it strong marks, while also noting that sponsored ads are helping offset part of the fuel pressure in the business.
- Fulfillment Automation Supports Cost Discipline: Deppe said first-quarter non-GAAP SG&A leverage came in part from fulfillment productivity improvements and early benefits from technology and AI-enabled efficiencies. Management also said automation and fulfillment network optimization remain investment priorities. Chewy is using these efforts to expand profitability while still funding AI infrastructure and customer acquisition.
Go Deeper -> Chewy’s Earnings Report – MarketBeat
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