Chewy, Inc.

your call today. After the presentation, you will have the opportunity to ask any questions, which you can do so at any time by pressing start, followed by the number one on your telephone keypad. I will now hand over to our host, David Reeder, Chewy CFO, to begin. Please go ahead, David.

Thank you for joining us on the call today to discuss our fourth quarter and full year results for fiscal year 2024. Joining me today is Chewy's CEO, Sumit Singh. Our earnings release, which was filed with the SEC earlier today, has been posted to the investor relations section of our website. In addition to the earnings release, a presentation summarizing our results is also available on our website at investor.chui.com. On our call today, we will be making forward-looking statements, including statements concerning CHUI's financial results and performance, industry trends, strategic initiatives, share repurchase program, and the environment in which we operate. Such statements are considered forward-looking statements under the Private Securities Litigation Reform Act of 1995 and are subject to certain risks, uncertainties, and other factors described in the section titled Risk Factors in our annual report on Form 10-K for fiscal year 2024 filed earlier today and in our other filings with the SEC which could cause actual results to differ materially from those contemplated by our forward-looking statements. Reported results should not be considered an indication of future performance. Also note that the forward-looking statements on this call are based on information available to us as of today's date. We assume no obligation to update any forward-looking statements except as required by law. Also during this call, we will discuss certain non-GAAP financial measures. Reconciliations of these non-GAAP items to the most directly comparable GAAP financial measures are provided on our Investor Relations website and in our earnings release. These non-GAAP measures are not intended as a substitute for GAAP results. Additionally, unless otherwise stated, all comparisons discussed on today's call will be against the comparable period of fiscal year 2023. Finally, this call in its entirety is being webcast on our Investor Relations website. A replay of the audio webcast will also be available on our Investor Relations website shortly. And with that, I'd like to turn the call over to Sumit.

Thanks, Dave, and thank you all for joining us on today's call. Our fourth quarter results mark a strong conclusion to the year. Our team's execution enabled us to successfully deliver on the strategic and financial goals that we outlined at the start of this year. Additionally, the durability and power of our highly predictable business model shined and led to another year of market share gains. We innovated at pace, made smart investment decisions, and maintained operating discipline throughout the year, allowing us to deliver both results that exceeded expectations and compelling returns to our shareholders. Now, let's review our Q4 and full year 2024 results. We ended the year on a high note. Topline growth exceeded the high end of our guidance ranges for both the fourth quarter and full year 2024. Q4 net sales increased approximately 15% year-over-year to $3.25 billion, resulting in full year 2024 net sales of $11.86 billion, representing 6% year-over-year growth. Fourth quarter net sales performance was underpinned by strong active customer growth a modest return to growth for our hard goods merchandise, and compelling Autoship customer loyalty across consumables and health and wellness categories. Our Autoship program represented 80.6% of Q4 net sales, delivering best-in-class service to our customers while also providing predictable subscription-like recurring revenue streams to Chewy. Growth in Autoship customer sales meaningfully outpaced overall top-line growth increasing by 21% in the fourth quarter and nearly 11% for the full year 2024. On the topic of active customers, I am pleased to report that our active customer performance in the fourth quarter maintained the strong momentum from the previous quarter. We ended fiscal year 2024 with 20.5 million active customers, marking our first year-over-year growth in eight quarters. Our efforts to expand and refresh assortment, enhance onsite and mobile app experiences, and refine our marketing strategy continue to drive outperformance across all areas of the active customer equation. Looking ahead, we believe that we have reached an inflection point with respect to active customer growth and expect to deliver active customer growth in 2025. Regarding profitability, Our adjusted EBITDA margin for fiscal year 2024 reached 4.8%, the upper end of the guidance range we set last quarter, and reflecting year-over-year expansion of approximately 150 basis points. This margin improvement was driven by both strong gross margin and continued operating expense leverage as we scale. We converted approximately 80% of our adjusted EBITDA in the year to free cash flow, resulting in a record $452.5 million of free cash flow in fiscal year 2024. Our increasing profitability and compelling free cash flow generation enabled us to not only invest in our strategic growth initiatives, but also return meaningful capital to shareholders as reflected by the $943 million that we deployed to shareholders in fiscal year 2024. Now, I would like to share some updates on a few priorities at Chewy. Our sponsored ads business scaled meaningfully this year, reaching approximately 1% of net sales for full year 2024 in line with our expectations and was the largest contributor to year-over-year gross margin improvement. As planned, we completed our 1P platform migration, which, going forward, will enable us to enhance the supplier experience expand our ad portfolio, including offsite, and explore additional content formats, such as video. Looking ahead, we continue to believe that the upper limit of our long-term entitlement for Chewy's sponsored ads business is up to 3% of total enterprise net sales over time. Turning to Chewy VetCare Clinics, or CVC, we successfully opened eight CVC locations, reaching the upper end of our target range for the year of four to eight openings. Our clinic network continues to exceed expectations in both utilization and overall ecosystem benefits, serving as both a strong customer acquisition channel and an engagement flywheel. As a result, both new and existing customers are deepening their engagement with Chewy. In fiscal year 2025, we plan to open eight to 10 new clinics. further expanding our presence in the approximately $25 billion vet services market. We are excited about the opportunities ahead and look forward to sharing our progress. Let me wrap up my section with the following comments. We believe that 2024 was an extraordinary year for Chewy, and our strong performance underscores the team's ability to successfully navigate through a period of normalization for the industry. Our entire team at Chewy, including and especially our fulfillment and customer care team members, worked incredibly hard, and I thank them for their dedication and commitment. As we move into 2025, the momentum in the business has remained strong. The team remains steadfast in executing Chewy's strategic priorities and delivering yet another year of share-gaining growth. Further, on the dimension of profitability, we are increasingly confident in our ability to reach our long-term adjusted EBITDA margin target of 10%. 2024 marks another year of strong progress towards this long-term goal, and looking ahead, we expect to expand adjusted EBITDA margin once again in 2025. Overall, we remain optimistic about the opportunity ahead for CHUI and look forward to a productive year ahead. With that, I will turn the call over to Dave.