Chewy, Inc. (NYSE:CHWY) Q3 2022 Earnings Call Transcript

Mario Marte: Yes, the gross adds, that is both new customers and customer reactivations. So, it is a combination of both customers that are lapsed and coming back and also gross adds. I wouldn’t try to tie the two directly together. We have gotten this question somewhat similar before on the active customer count increase and comparing that to investments in marketing. But I would say it’s €“ you have to sort of disconnect the two. They are not €“ they shouldn’t be tightly connected that way.

Sumit Singh: This is Sumit. We are continuing to see NSPAC growth, LTV growth. So, when you look at Q3, there were multiple areas that the spend actually went in €“ on top of the increased CPC or increased ad cost that we see in Q3, which you typically do coming out of a lull in Q2 as you gain as everybody tries to gain kind of mind share of the consumer in a current environment where the consumer pool remains shallow. So, CPCs have continued to increase. But beyond that, we saw opportunities to invest in three different areas where we did. First is customer development, focused on increasing engagement and expanding NSPAC. So, that was part of our investment. Number two, reactivating previously churned customers. And in Q3, we saw a double-digit year-over-year increase in customer reactivation.

And then three, there is always some experimentation and testing that we are doing with new channels that are designed to drive broader reach and awareness of the Chewy brand and positioning that right in front of the holiday season as we gain more traction with customers is just a prudent thing to do. So, all-in-all, we are €“ we €“ in the way that we spent the money, we kept it within the 5% to 7% range that we have talked about before, and we were satisfied with the outcome here.

Seth Basham: Got it. Okay. So, your TAC was up sequentially, but in line with expectations to maintain ROI and the customers you acquired in this quarter relative to last?

Sumit Singh: That’s right. Yes.

Seth Basham: Thank you.

Operator: Thank you for your question sir. I would now like to pass the call back to Mr. Sumit Singh for any closing remarks.

Sumit Singh: Thank you all for joining us. Happy holidays and a happy New Year.

Operator: And with that, we will conclude today’s Chewy third quarter fiscal year 2022 earnings call. Thank you for your participation. You may now disconnect your line.