Changes in US stocks | Q3 results exceeded expectations, Chewy (CHWY.US) rose 4%

The Zhitong Finance App learned that the stock price of online pet products retailer Chewy (CHWY.US) rose. As of press release, the stock had risen 4% to $36.2. The stock fell more than 7% before the market. The company reported better-than-expected third-quarter results, but its outlook for the fourth quarter and full year fell short of expectations.

In the third quarter, Chewy's revenue increased 8.3% year over year to $3.12 billion, driving profit up 60% year over year, and earnings per share (EPS) reached $0.32, significantly higher than market expectations. The company pointed out that the improved performance was mainly due to an increase in automatic ordering (Autoship) orders, an increase in sales contributed by each active customer, and a 5% year-on-year increase in the number of active customers.

The share of Autoship customer sales in net sales increased by 90 basis points to 83.9%, indicating increased customer stickiness. Other key financial indicators have also improved, including adjusted operating profit increased by 30.9%, adjusted EBITDA margin increased by 100 basis points, and net profit margin increased by 180 basis points.

In terms of cash flow, net cash from the company's operating activities increased 13.3% to US$207.9 million, driving a year-on-year increase in free cash flow of 15.8% to US$175.8 million.

However, despite strong quarterly results, investors were disappointed with future guidance issued by the company. Chewy's management expects earnings per share for the fourth quarter to be in the range of $0.24 to $0.27, and revenue is expected to be between US$3.24 billion and US$3.26 billion, both lower than market estimates of $0.29 billion EPS and US$3.26 billion in revenue.

In terms of the full-year outlook, Chewy raised the sales guidance to $12.58 billion to $12.67 billion (previously $12.50 billion to $12.60 billion). Although the new median value (US$12.62 billion) was slightly higher than market expectations, the market reaction was negative because some institutions expected annual revenue of up to US$12.67 billion.