E-commerce pet food and supplies retailer Chewy (NYSE: CHWY) met Wall Street’s revenue expectations in Q2 CY2026, with sales up 7.3% year on year to $3.33 billion. Its non-GAAP profit of $0.36 per share was in line with analysts’ consensus estimates.

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Company Overview

Founded by Ryan Cohen, who later became known for his involvement in GameStop, Chewy (NYSE: CHWY) is an online retailer specializing in pet food, supplies, and healthcare services.

Revenue Growth

A company’s long-term sales performance is one signal of its overall quality. Even a bad business can shine for one or two quarters, but a top-tier one grows for years. Over the last three years, Chewy grew its sales at a tepid 6.5% compounded annual growth rate. This was below our standard for the consumer internet sector and is a tough starting point for our analysis.

This quarter, Chewy grew its revenue by 7.3% year on year, and its $3.33 billion of revenue was in line with Wall Street’s estimates.

Looking ahead, sell-side analysts expect revenue to grow 6.8% over the next 12 months, similar to its three-year rate. This projection is underwhelming and suggests its newer products and services will not accelerate its top-line performance yet.

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Cash Is King

Although EBITDA is undoubtedly valuable for assessing company performance, we believe cash is king because you can’t use accounting profits to pay the bills.

Chewy has shown mediocre cash profitability relative to peers over the last two years, giving the company fewer opportunities to return capital to shareholders. Its free cash flow margin averaged 4.1%, below what we’d expect for a consumer internet business.

Taking a step back, an encouraging sign is that Chewy’s margin expanded by 1.2 percentage points over the last few years. We have no doubt shareholders would like to continue seeing its cash conversion rise as it gives the company more optionality.

Chewy’s free cash flow clocked in at $89.5 million in Q2, equivalent to a 2.7% margin. This cash profitability was in line with the comparable period last year but below its two-year average. In a silo, this isn’t a big deal because investment needs can be seasonal, but we’ll be watching to see if the trend extrapolates into future quarters.

Key Takeaways from Chewy’s Q2 Results

We enjoyed seeing Chewy beat analysts’ EBITDA expectations this quarter. Overall, we think this was a decent quarter with some key metrics above expectations. The stock remained flat at $23.50 immediately after reporting.

Chewy had an encouraging quarter, but one earnings result doesn’t necessarily make the stock a buy. Let’s see if this is a good investment. What happened in the latest quarter matters, but not as much as longer-term business quality and valuation, when deciding whether to invest in this stock. We cover that in our actionable full research report which you can read here (it’s free).