Chewy (NYSE:CHWY) posted second-quarter revenue of $1.7 billion, topping analysts' consensus estimate for $1.6 billion. The 47% year on year growth in sales resulted from capturing new customers and a portion of the expanding online pet products segment.

Here are three points investors need to know from the earnings release, delivered on Sept. 10.

Cute dog and kitten

Image Source: Getty Images

1. Sales growth and new customer acquisitions were strong

Chewy's revenue momentum continued into the second quarter, as consumers increasingly shifted more of their pet-related shopping online due to store closures caused by the coronavirus pandemic. The company's focus on customer service is also resonating with consumers. Personally, I've had only positive experiences with Chewy's customer service, which is seamless and quick both via email and phone.

CEO Sumit Singh said: "We built Chewy by putting the customer at the center of everything that we do. In a world of uncertainty, qualities like trust, convenience, and customer service really matter, especially when it comes to caring for family or loved ones."

The company's new customer acquisition rate is significantly higher than it was before the pandemic; it added more active customers in the first half of 2020 than it did in all of 2019.

2. Revenue growth is expected to continue at a nice pace through 2020

The company's guidance for third-quarter revenue is in the range of $1.7 billion to $1.72 billion, similar to analysts' consensus estimate of $1.7 billion, or 38% to 40% year-over-year growth. While that's a fast clip, it's slightly slower than the second quarter's 47% growth or the first quarter's 46%. For the year, revenue is projected to increase by 40% to 41%, landing in the $6.76 billion to $6.83 billion range. "We expect to capture over half of the growth in online pet product sales that the industry experts predict for 2020," said CFO Mario Marte.

Importantly, Chewy's new customers acquired this year are highly engaged and spending at comparable levels to those who began using the site prior to the pandemic. But in year two, Chewy anticipates that net sales per active customer will grow to about $500, in line with "mature cohorts." And the company foresees those new customers spending more on an expanded array of merchandise due to its better ability to market to them.

"Unlike our earlier cohorts who were primarily purchases of food and essentials, we now have the ability to expose our newer cohorts to a large variety of purchase options earlier in their customer life cycle," Singh said on the earnings call. "For example, Rx prescriptions, a wide variety of hard-goods options fueled by our private label products, or gift cards for friends and family members."

3. Secular trends will continue to support Chewy's revenue growth

Consumers continue to buy more of their pet products online. Data provider Packaged Facts projects that U.S. sales of online pet products will increase by $3.9 billion in 2020 (equivalent to 5 percentage points of market share), bringing the total to 27% of all sales in the segment. Chewy is well positioned to capture a good portion of this growth. If it hits the midpoint of its guidance, its revenues will increase by $2 billion this year.

One positive side effect of the pandemic has been a surge in animal adoptions and fostering. Social distancing can naturally breed feelings of isolation; as a result, many more people have felt the need to bring new pets into their homes. In the months since March 15, the New York City and Los Angeles branches of the ASPCA have experienced an increase of about 400% in online applications to foster animals, compared with what they would normally have seen. Trends toward more pet adoptions will likely help boost Chewy's revenue as well.

Even though the company's business has grown throughout the pandemic, and may expand further in the near term, the stock has traded down 14% over the last five days. This may possibly be, in part, due to news that Singh sold some of his shares. That said, this could be presenting a buying opportunity for investors looking to invest in a company that's growing revenue quickly and benefiting from several secular trends.