When you look at the numbers, Chewy (NYSE:CHWY) has a lot of bite to back up its bark. Several key figures from the online pet product retailer's recent quarterly report give me confidence in the company as a long-term play.

While the market clearly disagrees with me, based on the 30% drop in stock price from the close of its first day of trading in June to its close on Oct. 3, I'm not going anywhere. Sure, the stock is near its low, but what I see is an undervalued and misunderstood opportunity.

Let's take a look at different figures that stood out in the most recent quarterly report and why I think they're critical to understanding Chewy's potential.

A woman walking four dogs in the country

Image source: Getty Images.

Net sales, active customers, and sales per active customer all increased...a lot

At the end of the day, companies make money by selling goods and services. Chewy reported net sales of $1.15 billion in its second quarter, the company's second quarterly report since its IPO. This is an impressive increase of 43% year over year. The driving forces behind the sales growth are new customers and an increase in net sales per active customer.

  • Active Chewy customers (those who have been shipped at least one order in the past 364 days) increased to 12 million, representing a 39% increase year over year. .
  • Net sales per active customer increased 10% year over year to $352. In other words, Chewy has found a way to get customers to spend more money, making each customer more valuable.

Chewy is selling a lot more product, bringing on droves of new customers, and making more money on average off of each customer. Does this sound like a winning formula to you? It does to me.

Sales to "autoship" customers grew 48.5%

A primary avenue Chewy is using to cash in on pet parents is its autoship service. The program allows customers to schedule regular deliveries of the pet products they know they're going to need. According to Chewy, autoship sales were $799.6 million in Q2, an increase of 48.5% year over year. Before you start wagging your tail too hard, let's make something clear. 

As fellow Fool Timothy Green noted, the company includes in that figure all sales made to a customer who was enrolled in autoship during the last 364 days. In other words, if you sign up for a subscription of dog food for $50 a month, cancel after a month, and then buy $200 worth of pet toys later in the year, $250 will be attributed to autoship sales. The figure could also include sales to someone who purchased items and then decided to join autoship to stay.

While this does muddy the waters of how impactful this figure is, it doesn't negate my optimism. The company at worst is gaining customers open to purchasing their pet products through a subscription and at best has a program driving hundreds of millions of dollars in sales that require no additional customer action.

Why is the autoship program so important? According to a QuickBooks article, subscription models outpace one-time purchase models with regards to profit by 217%. Subscription models lower customer acquisition costs for the company, remove the frequency the customer needs to make a purchasing decision, and offer convenience for customers, which helps to build loyalty.  Seeing customer growth in a more lucrative side of the business is always a great sign. This is probably part of why there's been a 10% increase in net sales per customer.

So what?

Let's bring this full circle. Chewy is a company not getting much love from the market. But, I see a growth company increasing sales, gaining customers, and driving up net sales per customer, all by double digits. Enjoy the bargain and get in on Chewy now.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.