Online pet retailer Chewy (CHWY 4.22%) generated $3.1 billion in revenue during its latest quarter. The company makes a big deal about its Autoship subscription program, which allows customers to schedule recurring deliveries in exchange for a small discount. Nearly 84% of revenue now comes from what Chewy calls Autoship customer sales.
At first glance, you might think that "Autoship customer sales" represents sales made through the Autoship program. If that were the case, it would certainly be impressive and indicate that most of Chewy's revenue is recurring and predictable. Unfortunately, that is not the case. Instead, Chewy has carefully crafted a murky metric meant to dazzle investors.
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It's not what you think it is
The definition of Chewy's "Autoship customer sales" doesn't live in the company's earnings releases. Instead, investors must venture into SEC filings or the tiny footnotes in Chewy's investor presentations.
An Autoship customer, by Chewy's definition, is any customer who has had an order shipped through the Autoship subscription program during the preceding 364-day period. Autoship customer sales, then, "...consist of sales and shipping revenues from all Autoship subscription program purchases and purchases outside of the Autoship subscription program by Autoship customers."
If a customer places an Autoship order and immediately cancels after the first shipment, all that customer's standard orders over the next year are included in the Autoship customer sales metric. If a customer uses Autoship for dog food while also placing one-off orders throughout the year, all those sales are considered Autoship customer sales.
This metric does not measure the percentage of Chewy's revenue that should be considered recurring. I'm not sure what it really measures. You could argue that Autoship customers are the most engaged, so this metric is a proxy for sales to the most engaged customers. But even that seems like a stretch, since some customers likely try Autoship for the initial discount and then stop.
It would be far more useful for Chewy to report the actual sales through the Autoship program, or even the percentage of customers that are Autoship customers. It appears to disclose neither of those figures. Instead, investors are left with a metric that ultimately tells them very little about Chewy's subscription business
Is there still a bull case for Chewy stock?
The fact that Chewy's Autoship customer sales metric doesn't represent actual Autoship sales certainly undercuts the bullish thesis for the stock. There are other things to like about Chewy, though. The number of active customers has been rising, reaching 21.2 million in the latest quarter, and those customers have been spending more. The company's push into veterinary care could also one day become a significant growth driver.
Chewy's valuation has become more attractive as well. The stock has been hammered since mid-2025, dropping more than 40% from its 52-week high. It's also down nearly 80% from its all-time high, reached during the early days of the pandemic. Based on the average analyst estimate for 2026 adjusted earnings per share, the stock trades for roughly 20 times earnings.
NYSE: CHWY
Key Data Points
While Chewy stock is cheaper than it was last year, the retailer's sluggish growth and weak profitability make it a tough sell. Revenue rose by just 8.3% in the third quarter of 2025, and the core business remains a low-margin affair. GAAP operating margin was a scant 2.1%, an improvement from the prior-year period, but still not particularly impressive relative to its e-commerce peers. Free cash flow looks better, but only because a hefty dose of stock-based compensation is added back in.
At the right price, Chewy could be a decent investment, although the use of the tricky "Autoship customer sales" metric should give investors pause. Chewy is trying to portray itself as a recurring revenue powerhouse, but it's not clear how much of Chewy's revenue is genuinely recurring. Perhaps someday management will provide a clear answer.
