Chewy’s latest earnings confirm what subscription executives already know: recurring revenue is the company’s lifeblood. In Q2 2025, Autoship orders accounted for 83% of net sales, while Chewy leaned further into membership offerings to deepen customer lock-in.

Chewy reported second-quarter fiscal 2025 results on September 10, showing the company’s subscription engine firing on all cylinders. Autoship customer sales rose to $2.58 billion, a 14.9% increase from last year, and made up 83% of total net sales of $3.1 billion.

The customer base also expanded, with active customers climbing to 20.9 million—150,000 more than last quarter. Spending per customer ticked higher as well, with net sales per active customer reaching $591 compared to $565 a year ago.

Profitability improved alongside growth. Adjusted EBITDA came in at $183.3 million, a 5.9% margin, while gross margin rose to 30.4% from 29.6% last year. Free cash flow totaled $106 million, giving Chewy room to invest and return capital to shareholders.

Looking ahead, Chewy expects fiscal 2025 sales of $12.5 to $12.6 billion, representing 7–8% year-over-year growth, and adjusted EBITDA margins between 5.4 and 5.7 percent.

INSIDER TAKE

Chewy has built one of the most successful consumer subscription businesses in the market today. With more than four out of every five dollars tied to recurring Autoship orders, the company enjoys predictable, high-retention revenue streams that rival the reliability of utilities.

But Chewy’s results also highlight the natural ceiling of a replenishment-only model. With subscription penetration already at 83%, the next stage of growth depends on membership innovation—programs that add perks, benefits, and reasons to stay beyond simple replenishment.

The playbook is clear: Amazon Prime and Costco have shown that memberships create stickier customer relationships and open the door to higher lifetime value. Chewy is now positioning itself to follow suit, moving from a pure replenishment model to a broader ecosystem of loyalty.

For subscription leaders, the lesson is simple: autoship builds the base, but membership builds the moat.