Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act:

This Quarterly Report on Form 10-Q contains forward-looking statements about us and our industry that involve substantial risks and uncertainties. All statements other than statements of historical facts contained in this Quarterly Report on Form 10-Q, including statements regarding our future results of operations or financial condition, business strategy and plans and objectives of management for future operations, are forward-looking statements. In some cases, you can identify forward-looking statements because they contain words such as “anticipate,” “believe,” “contemplate,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “should,” “target,” “will” or “would” or the negative of these words or other similar terms or expressions. These forward-looking statements include, but are not limited to, statements concerning our ability to:

You should not rely on forward-looking statements as predictions of future events. We have based the forward-looking statements contained in this Quarterly Report on Form 10-Q primarily on our current expectations and projections about future events and trends that we believe may affect our business, financial condition, and results of operations. The outcome of the events described in these forward-looking statements is subject to risks, uncertainties and other factors described in the section titled “Risk Factors” in our annual report on Form 10-K for the fiscal year ended February 2, 2020 and our subsequent quarterly reports, and elsewhere in this Quarterly Report on Form 10-Q. Moreover, we operate in a very competitive and rapidly changing environment. New risks and uncertainties emerge from time to time, and it is not possible for us to predict all risks and uncertainties that could have an impact on the forward-looking statements contained in this Quarterly Report on Form 10-Q. The results, events and circumstances reflected in the forward-looking statements may not be achieved or occur, and actual results, events or circumstances could differ materially from those described in the forward-looking statements.

In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based on information available to us as of the date of this Quarterly Report on Form 10-Q. While we believe that information provides a reasonable basis for these statements, that information may be limited or incomplete. Our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all relevant information. These statements are inherently uncertain, and investors are cautioned not to unduly rely on these statements.

The forward-looking statements made in this Quarterly Report on Form 10-Q relate only to events as of the date on which the statements are made. We undertake no obligation to update any forward-looking statements made in this Quarterly Report on Form 10-Q to reflect events or circumstances after the date of this Quarterly Report on Form 10-Q or to reflect new information or the occurrence of unanticipated events, except as required by law. We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures or investments.

Investors and others should note that we may announce material information to our investors using our investor relations website (https://investor.chewy.com/), SEC filings, press releases, public conference calls and webcasts. We use these channels, as well as social media, to communicate with our investors and the public about our company, our business and other issues. It is possible that the information that we post on social media could be deemed to be material information. We therefore encourage investors to visit these websites from time to time. The information contained on such websites and social media posts is not incorporated by reference into this filing. Further, our references to website URLs in this filing are intended to be inactive textual references only.


		As of							As of
		August 2, 2020		February 2, 2020			November 1, 2020		February 2, 2020
Assets	Assets	(Unaudited)				Assets	(Unaudited)
Current assets:	Current assets:					Current assets:
Cash and cash equivalents	Cash and cash equivalents	$	153,842	$	212,088	Cash and cash equivalents	$	505,828	$	212,088
Accounts receivable	Accounts receivable	93,776		80,478		Accounts receivable	97,920		80,478
Inventories	Inventories	453,040		317,808		Inventories	482,649		317,808
Due from Parent, net	Due from Parent, net	12,350		626		Due from Parent, net	20,689		626
Prepaid expenses and other current assets	Prepaid expenses and other current assets	20,302		18,789		Prepaid expenses and other current assets	29,457		18,789
Total current assets	Total current assets	733,310		629,789		Total current assets	1,136,543		629,789
Property and equipment, net	Property and equipment, net	169,636		118,731		Property and equipment, net	202,090		118,731
Operating lease right-of-use assets	Operating lease right-of-use assets	237,191		179,052		Operating lease right-of-use assets	297,871		179,052
Other non-current assets	Other non-current assets	4,704		4,749		Other non-current assets	6,736		4,749
Total assets	Total assets	$	1,144,841	$	932,321	Total assets	$	1,643,240	$	932,321
Liabilities and stockholders’ deficit	Liabilities and stockholders’ deficit					Liabilities and stockholders’ deficit
Current liabilities:	Current liabilities:					Current liabilities:
Trade accounts payable	Trade accounts payable	$	702,603	$	683,049	Trade accounts payable	$	769,434	$	683,049
Accrued expenses and other current liabilities	Accrued expenses and other current liabilities	506,537		417,489		Accrued expenses and other current liabilities	549,302		417,489
Total current liabilities	Total current liabilities	1,209,140		1,100,538		Total current liabilities	1,318,736		1,100,538
Operating lease liabilities	Operating lease liabilities	261,836		200,439		Operating lease liabilities	323,948		200,439
Other long-term liabilities	Other long-term liabilities	51,477		35,318		Other long-term liabilities	56,977		35,318
Total liabilities	Total liabilities	1,522,453		1,336,295		Total liabilities	1,699,661		1,336,295
Commitments and contingencies (Note 4)	Commitments and contingencies (Note 4)					Commitments and contingencies (Note 4)
Stockholders’ deficit:	Stockholders’ deficit:					Stockholders’ deficit:
Preferred stock, $0.01 par value per share, 5,000,000 shares authorized, 0 shares issued and outstanding as of August 2, 2020 and February 2, 2020		0		0
Class A common stock, $0.01 par value per share, 1,500,000,000 shares authorized, 89,227,335 and 66,445,422 shares issued and outstanding as of August 2, 2020 and February 2, 2020, respectively		893		665
Class B common stock, $0.01 par value per share, 395,000,000 shares authorized, 317,338,356 and 334,922,454 shares issued and outstanding as of August 2, 2020 and February 2, 2020, respectively		3,173		3,349
Preferred stock, $0.01 par value per share, 5,000,000 shares authorized, 0 shares issued and outstanding as of November 1, 2020 and February 2, 2020						Preferred stock, $0.01 par value per share, 5,000,000 shares authorized, 0 shares issued and outstanding as of November 1, 2020 and February 2, 2020	0		0
Class A common stock, $0.01 par value per share, 1,500,000,000 shares authorized, 95,275,138 and 66,445,422 shares issued and outstanding as of November 1, 2020 and February 2, 2020, respectively						Class A common stock, $0.01 par value per share, 1,500,000,000 shares authorized, 95,275,138 and 66,445,422 shares issued and outstanding as of November 1, 2020 and February 2, 2020, respectively	953		665
Class B common stock, $0.01 par value per share, 395,000,000 shares authorized, 317,338,356 and 334,922,454 shares issued and outstanding as of November 1, 2020 and February 2, 2020, respectively						Class B common stock, $0.01 par value per share, 395,000,000 shares authorized, 317,338,356 and 334,922,454 shares issued and outstanding as of November 1, 2020 and February 2, 2020, respectively	3,173		3,349
Additional paid-in capital	Additional paid-in capital	1,543,481		1,436,484		Additional paid-in capital	1,897,459		1,436,484
Accumulated deficit	Accumulated deficit	(1,925,159)		(1,844,472)		Accumulated deficit	(1,958,006)		(1,844,472)
Total stockholders’ deficit	Total stockholders’ deficit	(377,612)		(403,974)		Total stockholders’ deficit	(56,421)		(403,974)
Total liabilities and stockholders’ deficit	Total liabilities and stockholders’ deficit	$	1,144,841	$	932,321	Total liabilities and stockholders’ deficit	$	1,643,240	$	932,321


		13 Weeks Ended						26 Weeks Ended							13 Weeks Ended				39 Weeks Ended
		August 2, 2020		August 4, 2019		August 2, 2020		August 4, 2019			November 1, 2020		November 3, 2019		November 1, 2020		November 3, 2019
Net sales	Net sales	$	1,699,859	$	1,153,545	$	3,321,252	$	2,262,417	Net sales	$	1,782,000	$	1,229,801	$	5,103,252	$	3,492,218
Cost of goods sold	Cost of goods sold	1,266,503		881,310		2,509,187		1,736,292		Cost of goods sold	1,327,442		938,021		3,836,629		2,674,313
Gross profit	Gross profit	433,356		272,235		812,065		526,125		Gross profit	454,558		291,780		1,266,623		817,905
Operating expenses:	Operating expenses:									Operating expenses:
Selling, general and administrative	Selling, general and administrative	343,181		244,563		663,238		426,460		Selling, general and administrative	352,250		258,488		1,015,488		684,948
Advertising and marketing	Advertising and marketing	122,446		110,752		228,584		213,015		Advertising and marketing	134,616		112,071		363,200		325,086
Total operating expenses	Total operating expenses	465,627		355,315		891,822		639,475		Total operating expenses	486,866		370,559		1,378,688		1,010,034
Loss from operations	Loss from operations	(32,271)		(83,080)		(79,757)		(113,350)		Loss from operations	(32,308)		(78,779)		(112,065)		(192,129)
Interest (expense) income, net	Interest (expense) income, net	(546)		204		(930)		920		Interest (expense) income, net	(539)		(221)		(1,469)		699
Loss before income tax provision	Loss before income tax provision	(32,817)		(82,876)		(80,687)		(112,430)		Loss before income tax provision	(32,847)		(79,000)		(113,534)		(191,430)
Income tax provision	Income tax provision	0		0		0		0		Income tax provision	0		0		0		0
Net loss	Net loss	$	(32,817)	$	(82,876)	$	(80,687)	$	(112,430)	Net loss	$	(32,847)	$	(79,000)	$	(113,534)	$	(191,430)

Net loss per share attributable to common Class A and Class B stockholders, basic and diluted	Net loss per share attributable to common Class A and Class B stockholders, basic and diluted	$	(0.08)	$	(0.21)	$	(0.20)	$	(0.28)	Net loss per share attributable to common Class A and Class B stockholders, basic and diluted	$	(0.08)	$	(0.20)	$	(0.28)	$	(0.48)
Weighted average common shares used in computing net loss per share attributable to common Class A and Class B stockholders, basic and diluted	Weighted average common shares used in computing net loss per share attributable to common Class A and Class B stockholders, basic and diluted	404,377		397,387		402,891		395,193		Weighted average common shares used in computing net loss per share attributable to common Class A and Class B stockholders, basic and diluted	409,260		401,317		405,014		397,235


		13 Weeks Ended August 2, 2020																					13 Weeks Ended November 1, 2020
		Class A and Class B Common Stock					Additional Paid-in Capital		Accumulated Deficit				Total Stockholders’ Deficit	Class A and Class B Common Stock						Additional Paid-in Capital			Accumulated Deficit				Total Stockholders’ Deficit
		Shares	Amount													Shares			Amount			Additional Paid-in Capital			Accumulated Deficit			Total Stockholders’ Deficit
Balance as of May 3, 2020		401,461	$	4,015	$	1,491,792	$	(1,892,342)	$	(396,535)
Balance as of August 2, 2020											Balance as of August 2, 2020	406,566		$	4,066		$	1,543,481		$	(1,925,159)				$	(377,612)
Issuance of Class A common stock, net of offering costs											Issuance of Class A common stock, net of offering costs	5,865		59			318,357			—			318,416
Share-based compensation expense	Share-based compensation expense	—	—		33,151		—		33,151		Share-based compensation expense	—		—			24,808			—			24,808
Vesting of share-based compensation awards	Vesting of share-based compensation awards	4,918	49		(49)		—		0		Vesting of share-based compensation awards	182		1			(1)			—			0
Distribution to Parent		187	2		(2)		—		0
Contribution from Parent	Contribution from Parent	—	—		325		—		325		Contribution from Parent	—		—			325			—			325
Tax sharing agreement with Parent	Tax sharing agreement with Parent	—	—		18,264		—		18,264		Tax sharing agreement with Parent	—		—			10,489			—			10,489
Net loss	Net loss	—	—		—		(32,817)		(32,817)		Net loss	—		—			—			(32,847)			(32,847)
Balance as of August 2, 2020		406,566	$	4,066	$	1,543,481	$	(1,925,159)	$	(377,612)
Balance as of November 1, 2020											Balance as of November 1, 2020	412,613		$	4,126		$	1,897,459		$	(1,958,006)		$	(56,421)

		13 Weeks Ended August 4, 2019																					13 Weeks Ended November 3, 2019
		Class A and Class B Common Stock					Additional Paid-in Capital		Accumulated Deficit				Total Stockholders’ Deficit	Class A and Class B Common Stock						Additional Paid-in Capital			Accumulated Deficit				Total Stockholders’ Deficit
		Shares	Amount													Shares			Amount			Additional Paid-in Capital			Accumulated Deficit			Total Stockholders’ Deficit
Balance as of May 5, 2019		0	$	0	$	1,263,715	$	(1,621,656)	$	(357,941)
Balance as of August 4, 2019											Balance as of August 4, 2019	398,600		$	3,986		$	1,338,813		$	(1,704,532)				$	(361,733)
Issuance of common stock upon initial public offering, net of underwriting discounts, commissions and offering costs	Issuance of common stock upon initial public offering, net of underwriting discounts, commissions and offering costs	5,600	56		110,528		—		110,584		Issuance of common stock upon initial public offering, net of underwriting discounts, commissions and offering costs	—		—			(235)			—			(235)
Change in capital structure		393,000	3,930		(3,930)		—		0
Share-based compensation expense	Share-based compensation expense	—	—		43,783		—		43,783		Share-based compensation expense	—		—			39,348			—			39,348
Contribution from Parent	Contribution from Parent	—	—		325		—		325		Contribution from Parent	—		—			325			—			325
Tax sharing agreement with Parent	Tax sharing agreement with Parent	—	—		3,902		—		3,902		Tax sharing agreement with Parent	—		—			11,838			—			11,838
Termination of loan from Parent		—	—		(79,510)		—		(79,510)
Net loss	Net loss	—	—		—		(82,876)		(82,876)		Net loss	—		—			—			(79,000)			(79,000)
Balance as of August 4, 2019		398,600	$	3,986	$	1,338,813	$	(1,704,532)	$	(361,733)
Balance as of November 3, 2019											Balance as of November 3, 2019	398,600		$	3,986		$	1,390,089		$	(1,783,532)		$	(389,457)


		26 Weeks Ended August 2, 2020																					39 Weeks Ended November 1, 2020
		Class A and Class B Common Stock					Additional Paid-in Capital		Accumulated Deficit				Total Stockholders’ Deficit	Class A and Class B Common Stock						Additional Paid-in Capital			Accumulated Deficit			Total Stockholders’ Deficit
		Shares	Amount													Shares			Amount			Additional Paid-in Capital			Accumulated Deficit		Total Stockholders’ Deficit
Balance as of February 2, 2020	Balance as of February 2, 2020	401,368	$	4,014	$	1,436,484	$	(1,844,472)	$	(403,974)	Balance as of February 2, 2020	401,368		$	4,014		$	1,436,484		$	(1,844,472)		$	(403,974)
Issuance of Class A common stock, net of offering costs											Issuance of Class A common stock, net of offering costs	5,865		59			318,357			—			318,416
Share-based compensation expense	Share-based compensation expense	—	—		75,380		—		75,380		Share-based compensation expense	—		—			100,188			—			100,188
Vesting of share-based compensation awards	Vesting of share-based compensation awards	5,011	50		(50)		—		0		Vesting of share-based compensation awards	5,193		51			(51)			—			0
Distribution to Parent	Distribution to Parent	187	2		(2)		—		0		Distribution to Parent	187		2			(2)			—			0
Contribution from Parent	Contribution from Parent	—	—		650		—		650		Contribution from Parent	—		—			975			—			975
Tax sharing agreement with Parent	Tax sharing agreement with Parent	—	—		31,019		—		31,019		Tax sharing agreement with Parent	—		—			41,508			—			41,508
Net loss	Net loss	—	—		—		(80,687)		(80,687)		Net loss	—		—			—			(113,534)			(113,534)
Balance as of August 2, 2020		406,566	$	4,066	$	1,543,481	$	(1,925,159)	$	(377,612)
Balance as of November 1, 2020											Balance as of November 1, 2020	412,613		$	4,126		$	1,897,459		$	(1,958,006)		$	(56,421)

		26 Weeks Ended August 4, 2019																					39 Weeks Ended November 3, 2019
		Class A and Class B Common Stock					Additional Paid-in Capital		Accumulated Deficit				Total Stockholders’ Deficit	Class A and Class B Common Stock						Additional Paid-in Capital			Accumulated Deficit			Total Stockholders’ Deficit
		Shares	Amount													Shares			Amount			Additional Paid-in Capital			Accumulated Deficit		Total Stockholders’ Deficit
Balance as of February 3, 2019	Balance as of February 3, 2019	0	$	0	$	1,256,160	$	(1,592,102)	$	(335,942)	Balance as of February 3, 2019	0		$	0		$	1,256,160		$	(1,592,102)		$	(335,942)
Issuance of common stock upon initial public offering, net of underwriting discounts, commissions and offering costs	Issuance of common stock upon initial public offering, net of underwriting discounts, commissions and offering costs	5,600	56		110,528		—		110,584		Issuance of common stock upon initial public offering, net of underwriting discounts, commissions and offering costs	5,600		56			110,293			—			110,349
Change in capital structure	Change in capital structure	393,000	3,930		(3,930)		—		0		Change in capital structure	393,000		3,930			(3,930)			—			0
Share-based compensation expense	Share-based compensation expense	—	—		51,013		—		51,013		Share-based compensation expense	—		—			90,361			—			90,361
Contribution from Parent	Contribution from Parent	—	—		650		—		650		Contribution from Parent	—		—			975			—			975
Tax sharing agreement with Parent	Tax sharing agreement with Parent	—	—		3,902		—		3,902		Tax sharing agreement with Parent	—		—			15,740			—			15,740
Termination of loan from Parent	Termination of loan from Parent	—	—		(79,510)		—		(79,510)		Termination of loan from Parent	—		—			(79,510)			—			(79,510)
Net loss	Net loss	—	—		—		(112,430)		(112,430)		Net loss	—		—			—			(191,430)			(191,430)
Balance as of August 4, 2019		398,600	$	3,986	$	1,338,813	$	(1,704,532)	$	(361,733)
Balance as of November 3, 2019											Balance as of November 3, 2019	398,600		$	3,986		$	1,390,089		$	(1,783,532)		$	(389,457)


		26 Weeks Ended							39 Weeks Ended
		August 2, 2020		August 4, 2019			November 1, 2020		November 3, 2019
Cash flows from operating activities	Cash flows from operating activities					Cash flows from operating activities
Net loss	Net loss	$	(80,687)	$	(112,430)	Net loss	$	(113,534)	$	(191,430)
Adjustments to reconcile net loss to net cash used in operating activities:
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:						Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization	Depreciation and amortization	15,336		14,579		Depreciation and amortization	24,598		22,716
Share-based compensation expense	Share-based compensation expense	75,380		51,013		Share-based compensation expense	100,188		90,361
Non-cash lease expense	Non-cash lease expense	11,082		8,964		Non-cash lease expense	18,020		13,571
Other	Other	216		2,002		Other	223		2,075
Net change in operating assets and liabilities:	Net change in operating assets and liabilities:					Net change in operating assets and liabilities:
Accounts receivable	Accounts receivable	(13,298)		(11,257)		Accounts receivable	(17,442)		(45,348)
Inventories	Inventories	(135,232)		(67,300)		Inventories	(164,841)		(69,081)
Prepaid expenses and other current assets	Prepaid expenses and other current assets	(2,010)		(20,439)		Prepaid expenses and other current assets	(11,581)		(25,619)
Other non-current assets	Other non-current assets	(99)		(2,002)		Other non-current assets	(204)		(2,397)
Trade accounts payable	Trade accounts payable	19,554		54,027		Trade accounts payable	86,385		134,807
Accrued expenses and other current liabilities	Accrued expenses and other current liabilities	92,650		55,536		Accrued expenses and other current liabilities	123,232		46,899
Operating lease liabilities	Operating lease liabilities	(7,196)		(3,488)		Operating lease liabilities	(11,415)		(6,006)
Other long-term liabilities	Other long-term liabilities	16,159		1,461		Other long-term liabilities	21,659		1,699
Net cash used in operating activities		(8,145)		(29,334)
Net cash provided by (used in) operating activities						Net cash provided by (used in) operating activities	55,288		(27,753)
Cash flows from investing activities	Cash flows from investing activities					Cash flows from investing activities
Capital expenditures	Capital expenditures	(69,723)		(24,163)		Capital expenditures	(100,258)		(38,539)
Cash advances provided to Parent, net of reimbursements	Cash advances provided to Parent, net of reimbursements	(3,918)		1,018		Cash advances provided to Parent, net of reimbursements	(1,767)		(11,320)
Other						Other	(2,000)		0
Net cash used in investing activities	Net cash used in investing activities	(73,641)		(23,145)		Net cash used in investing activities	(104,025)		(49,859)
Cash flows from financing activities	Cash flows from financing activities					Cash flows from financing activities
Proceeds from issuance of common stock, net of offering costs						Proceeds from issuance of common stock, net of offering costs	318,775		0
Proceeds from initial public offering, net of underwriting discounts, commissions and offering costs						Proceeds from initial public offering, net of underwriting discounts, commissions and offering costs	0		110,576
Proceeds from tax sharing agreement with Parent	Proceeds from tax sharing agreement with Parent	23,213		0		Proceeds from tax sharing agreement with Parent	23,213		14,500
Proceeds from initial public offering, net of underwriting discounts, commissions and offering costs		0		115,228
Payment of debt issuance costs	Payment of debt issuance costs	0		(781)		Payment of debt issuance costs	0		(781)
Contribution from Parent	Contribution from Parent	650		650		Contribution from Parent	975		975
Principal repayments of finance lease obligations	Principal repayments of finance lease obligations	(323)		(105)		Principal repayments of finance lease obligations	(486)		(118)
Net cash provided by financing activities	Net cash provided by financing activities	23,540		114,992		Net cash provided by financing activities	342,477		125,152
Net (decrease) increase in cash and cash equivalents		(58,246)		62,513
Net increase in cash and cash equivalents						Net increase in cash and cash equivalents	293,740		47,540
Cash and cash equivalents, as of beginning of period	Cash and cash equivalents, as of beginning of period	212,088		88,331		Cash and cash equivalents, as of beginning of period	212,088		88,331
Cash and cash equivalents, as of end of period	Cash and cash equivalents, as of end of period	$	153,842	$	150,844	Cash and cash equivalents, as of end of period	$	505,828	$	135,871

Supplemental disclosures on non-cash investing and financing activities:
Offering costs included in accrued expenses and other current liabilities		$	0	$	4,644

Chewy, Inc. and its wholly-owned subsidiaries (collectively “Chewy” or the “Company”) is a pure play e-commerce business geared toward pet products for dogs, cats, fish, birds, small pets, horses, and reptiles. Chewy serves its customers through its retail website, www.chewy.com, and its mobile applications and focuses on delivering exceptional customer service, competitive prices, outstanding convenience (including Chewy’s Autoship subscription program, fast shipping, and hassle-free returns), and a large selection of high-quality pet food, treats and supplies, and pet healthcare products.

The Company is controlled by PetSmart, Inc. (“PetSmart” or the “Parent”). PetSmart is wholly-owned by a consortium including private investment funds advised by BC Partners, La Caisse de dépôt et placement du Québec, affiliates of GIC Special Investments Pte Ltd, affiliates of StepStone Group LP and funds advised by Longview Asset Management, LLC (collectively, the “Sponsors”), and controlled by affiliates of BC Partners.

On June 18, 2019, the Company closed its initial public offering (“IPO”), in which it issued and sold 5.6 million shares of its Class A common stock. The price at IPO was $22.00 per share. The Company received net proceeds of approximately $110.3 million from the IPO after deducting underwriting discounts and commissions of $6.2 million and offering costs.

Prior to the completion of the IPO, the Company amended and restated its certificate of incorporation to authorize Class A and Class B common stock and reclassify the 100 outstanding shares of common stock into 393,000,000 shares of Class B common stock. In connection with the IPO, 47,875,000 shares of the Company’s Class B common stock were reclassified into shares of Class A common stock on a one-to-one basis. Upon completion of the IPO, 53,475,000 shares of the Company’s Class A common stock and 345,125,000 shares of Class B common stock were outstanding. The Class A common stock outstanding includes the shares issued in the IPO.

On September 21, 2020, the Company issued and sold 5,100,000 shares of Class A common stock in an underwritten public offering at a price of $54.40 per share to Morgan Stanley & Co. LLC, who acted as sole underwriter in the offering. The Company had granted the underwriter an option to purchase up to an additional 765,000 shares of Class A common stock at a price of $54.40 per share (“Option Shares”), which was exercised on September 30, 2020. The Company raised $318.4 million in net proceeds through the equity offering (including proceeds from the sale of the Option Shares) after deducting offering costs of approximately $0.6 million.

The accompanying unaudited condensed consolidated financial statements and related notes include the accounts of Chewy, Inc. and its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated. The unaudited condensed consolidated financial statements and notes thereto of Chewy, Inc. have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (the “SEC”) for interim financial reporting and, therefore, omit or condense certain footnotes and other information normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) as set forth in the Financial Accounting Standards Board’s (“FASB”) accounting standards codification. In the opinion of management, all adjustments necessary for a fair statement of the financial information, which are of a normal and recurring nature, have been made for the interim periods reported. Results of operations for the quarterly period ended ~~August 2,~~November 1, 2020 are not necessarily indicative of the results for the entire fiscal year. The unaudited condensed consolidated financial statements and notes thereto included in this Quarterly Report on Form 10-Q for the quarterly period ended ~~August 2,~~November 1, 2020 (“10-Q Report”) should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended February 2, 2020 (“10-K Report”).

GAAP requires management to make certain estimates, judgments, and assumptions that affect reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. On an ongoing basis, management evaluates these estimates and judgments. Actual results could differ from those estimates.

Key estimates relate primarily to determining the net realizable value and demand for inventory, useful lives associated with property and equipment, valuation allowances with respect to deferred tax assets, contingencies, evaluation of sales tax positions, and the valuation and assumptions underlying share-based compensation. On an ongoing basis, management evaluates its estimates compared to historical experience and trends, which form the basis for making judgments about the carrying value of assets and liabilities.


		As of							As of
		August 2, 2020		February 2, 2020			November 1, 2020		February 2, 2020
Outbound fulfillment	Outbound fulfillment	$	273,236	$	182,589	Outbound fulfillment	$	281,297	$	182,589
Advertising and marketing	Advertising and marketing	82,194		96,836		Advertising and marketing	92,408		96,836
Accrued expenses and other	Accrued expenses and other	151,107		138,064		Accrued expenses and other	175,597		138,064
Total accrued expenses and other current liabilities	Total accrued expenses and other current liabilities	$	506,537	$	417,489	Total accrued expenses and other current liabilities	$	549,302	$	417,489

ASU 2018-15, Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement. In August 2018, the FASB issued this Accounting Standards Update (“ASU”) to align the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. This update became effective at the beginning of the Company’s 2020 fiscal year. The adoption of this ASU did not have a material impact on the Company’s condensed consolidated financial statements and disclosures.

ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. In June 2016, the FASB issued this ASU to amend the current accounting guidance which requires the measurement of all expected losses to be based on historical experience, current conditions and reasonable and supportable forecasts. For trade receivables, loans, and other financial instruments, the Company will be required to use a forward-looking expected loss model that reflects probable losses rather than the incurred loss model for recognizing credit losses. This update became effective at the beginning of the Company’s 2020 fiscal year. The adoption of this ASU did not have a material impact on the Company’s condensed consolidated financial statements and disclosures.

ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. In December 2019, the FASB issued this ASU to simplify the accounting for income taxes by eliminating certain exceptions related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period, and the recognition of deferred tax liabilities for outside basis differences. This ASU also clarifies and simplifies other aspects of the accounting for income taxes. This update is effective at the beginning of the Company’s 2021 fiscal year, with early adoption permitted. The Company is currently evaluating the impact that the adoption of this standard will have on its consolidated financial statements.


		As of							As of
		August 2, 2020		February 2, 2020			November 1, 2020		February 2, 2020
Furniture, fixtures and equipment	Furniture, fixtures and equipment	$	80,126	$	65,329	Furniture, fixtures and equipment	$	85,558	$	65,329
Computer equipment	Computer equipment	37,245		32,259		Computer equipment	42,099		32,259
Internal-use software	Internal-use software	42,352		30,222		Internal-use software	50,272		30,222
Leasehold improvements	Leasehold improvements	41,039		39,447		Leasehold improvements	77,684		39,447
Finance lease assets	Finance lease assets	3,067		2,565		Finance lease assets	3,102		2,565
Construction in progress	Construction in progress	50,580		18,927		Construction in progress	37,344		18,927
		254,409		188,749			296,059		188,749
Less: accumulated depreciation and amortization	Less: accumulated depreciation and amortization	84,773		70,018		Less: accumulated depreciation and amortization	93,969		70,018
Property and equipment, net	Property and equipment, net	$	169,636	$	118,731	Property and equipment, net	$	202,090	$	118,731

For the thirteen weeks ended ~~August 2,~~November 1, 2020 and ~~August 4,~~November 3, 2019, the Company recorded depreciation expense on property and equipment of ~~$6.6~~$7.5 million, and ~~$5.2~~$5.6 million, respectively, and amortization expense related to internal-use software costs of ~~$1.4~~$1.8 million, and $2.5 million, respectively. For the ~~twenty-six~~thirty-nine weeks ended ~~August 2,~~November 1, 2020 and ~~August 4,~~November 3, 2019, the Company recorded depreciation expense on property and equipment of ~~$12.7~~$20.2 million, and ~~$10.2~~$15.8 million, respectively, and amortization expense related to internal-use software costs of ~~$2.6~~$4.4 million, and ~~$4.4~~$6.9 million, respectively. The aforementioned depreciation and amortization expenses were included within selling, general and administrative expenses in the condensed consolidated statements of operations.

~~The~~On June 18, 2019, the Company ~~has~~entered into a five-year senior secured asset-backed credit facility (the “ABL Credit Facility”) which provides for non-amortizing revolving loans in an aggregate principal amount of up to $300 million, subject to a borrowing base comprised of, among other things, inventory and sales receivables (subject to certain reserves). The ABL Credit Facility provides the right to request incremental commitments and add incremental asset-based revolving loan facilities in an aggregate principal amount of up to $100 million, subject to customary conditions. The Company is required to pay a ~~pay~~ commitment fee of between 0.25% and 0.375% with respect to the undrawn portion of the commitments, which is generally based on average daily usage of the facility. As of ~~August 2,~~November 1, 2020, the Company had 0 outstanding borrowings under the ABL Credit Facility.

The Company leases all of its fulfillment and customer service centers and corporate offices under non-cancelable operating lease agreements. The terms of the Company’s real estate leases generally range from 5 to 15 years and typically allow for the leases to be renewed for up to 3 additional five-year terms. Fulfillment and customer service centers and corporate office leases ~~including exercised renewal options,~~ expire at various dates through ~~2037.~~2034, excluding renewal options. The Company also leases certain equipment under operating and finance leases. The terms of equipment leases generally range from 3 to 5 years and do not contain renewal options. These leases expire at various dates through ~~2024.~~2025.


			As of								As of
Leases	Leases	Balance Sheet Classification	August 2, 2020		February 2, 2020		Leases	Balance Sheet Classification	November 1, 2020		February 2, 2020
Assets	Assets						Assets
Operating	Operating	Operating lease right-of-use assets	$	237,191	$	179,052	Operating	Operating lease right-of-use assets	$	297,871	$	179,052
Total operating lease assets	Total operating lease assets		$	237,191	$	179,052	Total operating lease assets		$	297,871	$	179,052

Liabilities	Liabilities						Liabilities
Current	Current						Current
Operating	Operating	Accrued expenses and other current liabilities	$	15,737	$	15,491	Operating	Accrued expenses and other current liabilities	$	16,927	$	15,491
Non-current	Non-current						Non-current
Operating	Operating	Operating lease liabilities	261,836		200,439		Operating	Operating lease liabilities	323,948		200,439
Total operating lease liabilities	Total operating lease liabilities		$	277,573	$	215,930	Total operating lease liabilities		$	340,875	$	215,930

For the ~~twenty-six~~thirty-nine weeks ended ~~August 2,~~November 1, 2020 and ~~August 4,~~November 3, 2019, assets acquired in exchange for new operating lease liabilities were ~~$67.6~~$118.3 million and ~~$26.8~~$29.4 million, respectively. Lease expense primarily related to operating lease costs. Lease expense for the thirteen weeks ended ~~August 2,~~November 1, 2020 and ~~August 4,~~November 3, 2019 was ~~$14.9~~$16.9 million and ~~$11.9~~$12.3 million, respectively. Lease expense for the ~~twenty-six~~thirty-nine weeks ended ~~August 2,~~November 1, 2020 and ~~August 4,~~November 3, 2019 was ~~$28.3~~$45.2 million and ~~$22.9~~$35.2 million, respectively. The aforementioned lease expense was included within selling, general and administrative expenses in the condensed consolidated statements of operations.

On August 12, 2020, the Company finalized agreements with a local government agency for certain ad valorem tax benefits provided to the Company in connection with a maximum capital investment of $70 million in property, plant, and equipment purchases for a new ~~fullfillment~~fulfillment center over a three-year timeframe. To facilitate the incentives, the government agency will issue its Taxable Industrial Development Revenue Bonds, Series 2020 (the “Bonds”), in a maximum aggregate principal amount of $70 million. In exchange for the Bonds, the Company will convey the purchased equipment to the local government agency and will lease the equipment from this agency. The Company will not pay any cash for the Bonds nor receive any cash for the conveyance of the equipment. Upon termination of the lease, including early termination, the equipment will be conveyed to the Company for a nominal fee.

The 2019 Plan provides for the grant of stock options, including incentive stock options, non-qualified stock options, restricted stock, dividend equivalents, stock payments, restricted stock units, performance shares, other incentive awards, stock appreciation rights, and cash awards (collectively “awards”). The awards may be granted to the Company’s employees, consultants, and directors, and the employees and consultants of the Company’s affiliates and subsidiaries.

The service-based vesting condition was or will be satisfied with respect to 25% of an employee’s PRSUs on either (i) the first anniversary of the registration date (as defined in the 2019 Plan) or (ii) the first anniversary of the vesting commencement date, and will then be satisfied with respect to 12.5% of an employee’s PRSUs at the end of each six month period thereafter, subject to the employee’s continued employment with the Company through the applicable vesting date.

The performance-based vesting condition shall be satisfied with respect to a percentage of an employee’s PRSUs, as and when the price per share of Class A common stock specified is achieved, on a volume adjusted weighted-average basis, on every trading day during a consecutive 45-trading day period completed prior to the fifth anniversary of the 2019 Plan’s effective date subject to the employee’s continued employment with the Company through the applicable vesting date. As of June 13, 2020, the performance-based vesting condition was fully satisfied.

During the ~~twenty-six~~thirty-nine weeks ended ~~August 2,~~November 1, 2020, the Company granted restricted stock units with a service-based vesting condition (“RSUs”). The service-based vesting condition for employees will be satisfied with respect to 25% of an employee’s RSUs on the one-year anniversary of the vesting commencement date and 12.5% of an employee’s RSUs at the end of each six month period thereafter, subject to the employee’s continued employment with the Company through the applicable vesting date. The Company records share-based compensation expense for RSUs on a straight-line basis over the requisite service period. The Company accounts for forfeitures as they occur.


		Number of PRSUs	Weighted Average Grant Date Fair Value			Number of PRSUs	Weighted Average Grant Date Fair Value
Outstanding as of February 2, 2020	Outstanding as of February 2, 2020	21,284	$	36.20	Outstanding as of February 2, 2020	21,284	$	36.20
Granted	Granted	805	$	32.30	Granted	805	$	32.30
Vested	Vested	(5,207)	$	36.69	Vested	(5,389)	$	36.37
Forfeited	Forfeited	(714)	$	34.91	Forfeited	(959)	$	34.86
Unvested and outstanding as of August 2, 2020		16,168	$	35.90
Unvested and outstanding as of November 1, 2020					Unvested and outstanding as of November 1, 2020	15,741	$	36.03

The total fair value of PRSUs that vested during the ~~twenty-six~~thirty-nine weeks ended ~~August 2,~~November 1, 2020 was ~~$254.0~~$577.3 million. As of ~~August 2,~~November 1, 2020, total unrecognized compensation expense related to unvested PRSUs was ~~$132.1~~$104.9 million and is expected to be recognized over a weighted-average expected performance period of ~~1.9~~1.8 years.

During the ~~twenty-six~~thirty-nine weeks ended ~~August 2,~~November 1, 2020, vesting occurred for 186,617 PRSUs previously granted to a director of the Company. For accounting purposes, the issuance of Class A common stock upon vesting of these PRSUs is treated as a distribution to the Parent because such director is an employee of the Parent.


		Number of RSUs	Weighted Average Grant Date Fair Value			Number of RSUs	Weighted Average Grant Date Fair Value
Outstanding as of February 2, 2020	Outstanding as of February 2, 2020	0	$	0	Outstanding as of February 2, 2020	0	$	0
Granted	Granted	464	$	37.76	Granted	674	$	42.85
Forfeited	Forfeited	(12)	$	33.31	Forfeited	(25)	$	39.20
Unvested and outstanding as of August 2, 2020		452	$	37.88
Unvested and outstanding as of November 1, 2020					Unvested and outstanding as of November 1, 2020	649	$	42.85

Subsequent to PetSmart’s acquisition of the ~~PetSmart Acquisition,~~Company in 2017, the Company’s share-based compensation included profits interests units (“PIUs”) granted by Citrus Intermediate Holdings L.P. (the “Citrus Partnership”), a Delaware limited partnership (the “Citrus Profits Interest Plan”). The Citrus Partnership is a parent company of PetSmart and a wholly-owned subsidiary of the Sponsors. The Company recognizes share-based compensation as equity contributions from the Citrus Partnership in its condensed consolidated financial statements for awards granted under the Citrus Profits Interest Plan as it relates to grantees’ services as employees of the Company.


		13 Weeks Ended						26 Weeks Ended							13 Weeks Ended				39 Weeks Ended
		August 2, 2020		August 4, 2019		August 2, 2020		August 4, 2019			November 1, 2020		November 3, 2019		November 1, 2020		November 3, 2019
PRSUs	PRSUs	$	32,138	$	40,848	$	74,148	$	40,848	PRSUs	$	22,463	$	39,348	$	96,611	$	80,196
RSUs	RSUs	1,013		0		1,232		0		RSUs	2,345		0		3,577		0
PIUs	PIUs	0		2,935		0		10,165		PIUs	0		0		0		10,165
Total share-based compensation expense	Total share-based compensation expense	$	33,151	$	43,783	$	75,380	$	51,013	Total share-based compensation expense	$	24,808	$	39,348	$	100,188	$	90,361

~~Subsequent to the PetSmart Acquisition, the Company’s losses were included with PetSmart’s consolidated U.S. federal and state income tax returns.~~ Income taxes asare presented in the Company’s condensed consolidated financial statements ~~have been prepared on~~using the separate return ~~method as if the Company were a taxpayer separate from PetSmart.~~

method. The Company did 0t ~~have~~maintain a net current or deferred provision for income taxes for any taxing jurisdiction during the thirteen and ~~twenty-six~~thirty-nine weeks ended ~~August 2,~~November 1, 2020, and ~~August 4,~~November 3, 2019. Additionally, the Company maintained a full valuation allowance on its net deferred tax assets.

Concurrent with the IPO, the Company and PetSmart entered into a tax sharing agreement which governs the respective rights, responsibilities, and obligations of the Company and PetSmart with respect to tax matters, including taxes attributable to PetSmart, entitlement to refunds, allocation of tax attributes, preparation of tax returns, certain tax elections, control of tax contests and other tax matters regarding U.S. federal, state, local, and foreign income taxes. During the ~~thirteen and twenty-six~~thirty-nine weeks ended ~~August 2,~~November 1, 2020 and November 3, 2019, the Company ~~recorded a $18.3~~collected $23.2 million and ~~$31.0~~$14.5 million, ~~due from Parent~~respectively, pursuant to the tax sharing agreement. However, in connection with the Forward Purchase Agreement (as defined below), it was determined that the Company will no longer be included in PetSmart’s consolidated federal tax return and as such the Company anticipates that future cash receipts pursuant to the tax sharing agreement, ~~respectively.~~

The Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”), which was enacted on March 27, 2020, made tax law changes to provide financial relief to companies as a result of the business impacts of COVID-19. Key income tax provisions of the CARES Act include changes in net operating loss carryback and carryforward rules, acceleration of alternative minimum tax credit recovery, increase in the net interest expense deduction limit and charitable contribution limit, and immediate write-off of qualified improvement property. The changes areif any, will not ~~expected to have a significant impact on the Company.~~be significant.

Basic and diluted net loss per share attributable to common stockholders is presented using the two class method required for participating securities. Under the two class method, net loss attributable to common stockholders is determined by allocating undistributed earnings between common stock and participating securities. Undistributed earnings for the periods presented are calculated as net loss less distributed earnings.

Basic and diluted net loss per share is calculated by dividing net loss attributable to common stockholders by the weighted-average shares outstanding during the period. The weighted-average shares outstanding during the periods presented reflects the reclassification of the 100 outstanding shares of pre-IPO common stock into 393,000,000 shares of Class B common stock.

For the thirteen and ~~twenty-six~~thirty-nine weeks ended ~~August 2,~~November 1, 2020 and ~~August 4,~~November 3, 2019, the Company’s basic and diluted net loss per share attributable to common Class A and Class B stockholders are the same because the Company has generated a net loss to common stockholders and common stock equivalents are excluded from diluted net loss per share as they have an antidilutive impact. The computation of diluted net loss per share attributable to common stockholders does not include ~~16.6 million and 21.2~~16.4 million potential common shares for the thirteen and ~~twenty-six~~thirty-nine weeks ended ~~August 2,~~November 1, 2020 and ~~August 4,~~20.9 million potential common shares for the thirteen and thirty-nine weeks ended November 3, 2019, ~~respectively,~~ as the effect of their inclusion would have been antidilutive.

On May 8, 2020, Buddy Chester Sub LLC, a wholly-owned subsidiary of PetSmart, converted 17,584,098 shares of the Company’s Class B common stock into Class A common stock. On May 11, 2020, Buddy Chester Sub LLC entered into a variable forward purchase agreement (the “Forward Purchase Agreement”) to deliver up to 17,584,098 shares of the Company’s Class A common stock at the exchange date, which is expected to be May 16, 2023, determined by reference to the trading price of the common stock at that time.

The Company’s condensed consolidated financial statements include management fee expenses of $0.3 million and ~~$0.7~~$1.0 million allocated to the Company by the Parent for organizational oversight and certain limited corporate functions provided by its sponsors for the thirteen and ~~twenty-six~~thirty-nine weeks ended ~~August 2,~~November 1, 2020 and ~~August 4,~~November 3, 2019, respectively. Allocated costs are included within selling, general and administrative expenses in the condensed consolidated statements of operations.

Certain of the Company’s pharmacy operations are currently, and have been since launch on July 2, 2018, conducted through a wholly-owned subsidiary of PetSmart. The Company has entered into a services agreement with PetSmart that provides for the payment of a management fee due from PetSmart with respect to this arrangement. The Company recognized ~~$9.9~~$8.6 million and ~~$21.6~~$30.2 million during the thirteen and ~~twenty-six~~thirty-nine weeks ended ~~August 2,~~November 1, 2020 within net sales in the condensed consolidated statements of operations for the services provided compared to ~~$10.9~~$9.9 million and ~~$21.5~~$31.4 million during the thirteen and ~~twenty-six~~thirty-nine weeks ended ~~August 4,~~November 3, 2019.

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the Unaudited Condensed Consolidated Financial Statements and related notes thereto included in this Quarterly Report on Form 10-Q for the quarterly period ended ~~August 2,~~November 1, 2020 (“10-Q Report”) and our audited consolidated financial statements and related notes thereto included in our Annual Report on Form 10-K for fiscal year ended February 2, 2020 (“10-K Report”). This discussion contains forward-looking statements that involve risks and uncertainties. As a result of many factors, such as those set forth under the “Risk Factors” and “Cautionary Note Regarding Forward-Looking Statements” sections herein and in our 10-K Report, our actual results may differ materially from those anticipated in these forward-looking statements. Unless the context requires otherwise, references in this Quarterly Report on Form 10-Q to “Chewy,” “the Company,” “we,” “our,” or “us” refer to Chewy, Inc. and its consolidated subsidiaries.

Investors and others should note that we may announce material information to our investors using our investor relations website (https://investor.chewy.com/), Securities and Exchange Commission (the “SEC”) filings, press releases, public conference calls and webcasts. We use these channels, as well as social media, to communicate with our investors and the public about our company, our business and other issues. It is possible that the information that we post on social media could be deemed to be material information. We therefore encourage investors to visit these websites from time to time. The information contained on such websites and social media posts is not incorporated by reference into this filing. Further, our references to website URLs in this filing are intended to be inactive textual references only.

We are the largest pure-play pet e-tailer in the United States, offering virtually every product a pet needs. We launched Chewy in 2011 to bring the best of the neighborhood pet store shopping experience to a larger audience, enhanced by the depth and wide selection of products and around-the-clock convenience that only e-commerce can offer. We believe that we are the preeminent online destination for pet parents as a result of our broad selection of high-quality products, which we offer at great prices and deliver with an exceptional level of care and a personal touch. We are the trusted source for pet parents and continually develop innovative ways for our customers to engage with us. We partner with more than 2,000 of the best and most trusted brands in the pet industry, and we create and offer our own outstanding private brands. Through our website and mobile applications, we offer our customers more than 60,000 products, compelling merchandising, an easy and enjoyable shopping experience, and exceptional customer service.

The coronavirus (also known as COVID-19) pandemic has been a highly disruptive economic and societal event that has affected our business and has had a significant impact on consumer shopping behavior. To serve our pet parents while also providing for the safety and well-being of our team members, we have adapted aspects of our logistics, transportation, supply chain and purchasing processes accordingly. As reflected in the discussion below, ~~early in the outbreak,~~ we ~~saw an acceleration in sales as concerned pet parents stocked up on necessities such as food and other essentials. Later, as shelter-in-place orders expanded and social distancing protocols took hold,~~have seen customers ~~began to~~ shift more of their total shopping spend to online ~~channels. More recently, shelter-in-place orders~~channels since the COVID-19 outbreak, which has led to increased sales and order activity for our business. While the COVID-19 outbreak has not had a material adverse impact on our operations to date, it is difficult to predict all of the positive or negative impacts the COVID-19 outbreak will ultimately have ~~been lifted in most areas, however, the migration of consumer spending towards e-commerce channels continues.~~on our business.

As this crisis has unfolded, we have continued to monitor conditions and adapt our operations to meet federal, state and local standards. We have done so to continue meeting the needs of our rapidly growing community of pets and pet parents and to ensure the safety and well-being of our team members. We cannot predict the duration or severity of COVID-19 or its ultimate impact on the broader economy or our operations and liquidity. As such, the situation remains unpredictable and risks still remain. Please refer to the “Cautionary Note Regarding Forward-Looking Statements” in this 10-Q Report and the “Risk Factors” disclosed in our Annual Report on Form 10-K for the fiscal year ended February 2, 2020.


		13 Weeks Ended											26 Weeks Ended												13 Weeks Ended								39 Weeks Ended
(in thousands, except net sales per active customer and percentages)	(in thousands, except net sales per active customer and percentages)	August 2, 2020			August 4, 2019			% Change		August 2, 2020			August 4, 2019			% Change		(in thousands, except net sales per active customer and percentages)	November 1, 2020			November 3, 2019			% Change		November 1, 2020			November 3, 2019			% Change
Financial and Operating Data	Financial and Operating Data																	Financial and Operating Data
Net sales	Net sales	$	1,699,859		$	1,153,545		47.4	%	$	3,321,252		$	2,262,417		46.8	%	Net sales	$	1,782,000		$	1,229,801		44.9	%	$	5,103,252		$	3,492,218		46.1		%
Net loss ⁽¹⁾	Net loss ⁽¹⁾	$	(32,817)		$	(82,876)		60.4	%	$	(80,687)		$	(112,430)		28.2	%	Net loss (1)	$	(32,847)		$	(79,000)		58.4	%	$	(113,534)		$	(191,430)		40.7		%
Net margin ⁽¹⁾	Net margin ⁽¹⁾	(1.9)		%	(7.2)		%			(2.4)		%	(5.0)		%			Net margin (1)	(1.8)		%	(6.4)		%			(2.2)		%	(5.5)		%
Adjusted EBITDA⁽²⁾	Adjusted EBITDA⁽²⁾	$	15,458		$	(29,183)		153.0	%	$	18,901		$	(44,949)		142.0	%	Adjusted EBITDA(2)	$	5,502		$	(30,228)		118.2	%	$	24,403		$	(75,177)		132.5		%
Adjusted EBITDA margin⁽²⁾	Adjusted EBITDA margin⁽²⁾	0.9		%	(2.5)		%			0.6		%	(2.0)		%			Adjusted EBITDA margin(2)	0.3		%	(2.5)		%			0.5		%	(2.2)		%
Net cash provided by (used in) operating activities	Net cash provided by (used in) operating activities	$	(28,890)		$	21,807		(232.5)	%	$	(8,145)		$	(29,334)		72.2	%	Net cash provided by (used in) operating activities	$	63,433		$	1,581		n/m		$	55,288		$	(27,753)		299.2		%
Free cash flow⁽²⁾	Free cash flow⁽²⁾	$	(56,035)		$	9,866		(668.0)	%	$	(77,868)		$	(53,497)		(45.6)	%	Free cash flow(2)	$	32,898		$	(12,794)		n/m		$	(44,970)		$	(66,292)		32.2		%
Active customers	Active customers	16,579			12,021			37.9	%	16,579			$	12,021		37.9	%	Active customers	17,788			12,723			39.8	%	17,788			$	12,723		39.8		%
Net sales per active customer	Net sales per active customer	$	356		$	352		1.1	%	$	356		$	352		1.1	%	Net sales per active customer	$	363		$	360		0.8	%	$	363		$	360		0.8		%
Autoship customer sales	Autoship customer sales	$	1,161,603		$	799,618		45.3	%	$	2,262,792		$	1,543,471		46.6	%	Autoship customer sales	$	1,232,743		$	865,190		42.5	%	$	3,495,535		$	2,408,661		45.1		%
Autoship customer sales as a percentage of net sales	Autoship customer sales as a percentage of net sales	68.3		%	69.3		%			68.1		%	68.2		%			Autoship customer sales as a percentage of net sales	69.2		%	70.4		%			68.5		%	69.0		%

⁽¹⁾Includes share-based compensation expense, including related taxes, of $37.8 million and $80.1 million for the thirteen and twenty-six weeks ended August 2, 2020 compared to $43.8 million and $51.0 million for the thirteen and twenty-six weeks ended August 4, 2019.
n/m - not meaningful																		n/m - not meaningful
(1) Includes share-based compensation expense, including related taxes, of $25.1 million and $105.2 million for the thirteen and thirty-nine weeks ended November 1, 2020 compared to $39.3 million and $90.4 million for the thirteen and thirty-nine weeks ended November 3, 2019.																		(1) Includes share-based compensation expense, including related taxes, of $25.1 million and $105.2 million for the thirteen and thirty-nine weeks ended November 1, 2020 compared to $39.3 million and $90.4 million for the thirteen and thirty-nine weeks ended November 3, 2019.
⁽²⁾ Adjusted EBITDA, adjusted EBITDA margin and free cash flow are non-GAAP financial measures.	⁽²⁾ Adjusted EBITDA, adjusted EBITDA margin and free cash flow are non-GAAP financial measures.																																	(2) Adjusted EBITDA, adjusted EBITDA margin and free cash flow are non-GAAP financial measures.

10-Q Report adjusted EBITDA, a non-GAAP financial measure that we calculate as net loss excluding depreciation and amortization; share-based compensation expense and related taxes; income tax provision; interest income (expense), net; management fee expense; transaction costs and other ~~costs.~~items that we do not consider representative of our underlying operations. We have provided a reconciliation below of adjusted EBITDA to net loss, the most directly comparable GAAP financial measure.

We have included adjusted EBITDA in this 10-Q Report because it is a key measure used by our management and board of directors to evaluate our operating performance, generate future operating plans and make strategic decisions regarding the allocation of capital. In particular, the exclusion of certain expenses in calculating adjusted EBITDA facilitates operating performance comparability across reporting periods by removing the effect of non-cash expenses and certain variable charges. Accordingly, we believe that adjusted EBITDA provides useful information to investors and others in understanding and evaluating our operating results in the same manner as our management and board of directors.

We believe it is useful to exclude non-cash charges, such as depreciation and amortization, share-based compensation expense and management fee expense from our adjusted EBITDA because the amount of such expenses in any specific period may not directly correlate to the underlying performance of our business operations. We believe it is useful to exclude income tax provision; interest income (expense), net; and transaction and other costs as these items are not components of our core business operations. Adjusted EBITDA has limitations as a financial measure and you should not consider it in isolation or as a substitute for analysis of our results as reported under GAAP. Some of these limitations are:

•adjusted EBITDA does not reflect transaction and other costs which are generally incremental costs that result from an actual or planned transaction and include transaction costs (i.e. IPO costs), integration consulting fees, internal salaries and wages (to the extent the individuals are assigned full-time to integration and transformation activities) and certain costs related to integrating and converging IT systems; and


($ in thousands, except percentages)	($ in thousands, except percentages)	13 Weeks Ended									26 Weeks Ended										($ in thousands, except percentages)	13 Weeks Ended						39 Weeks Ended
Reconciliation of Net Loss to Adjusted EBITDA	Reconciliation of Net Loss to Adjusted EBITDA	August 2, 2020			August 4, 2019			August 2, 2020			August 4, 2019			Reconciliation of Net Loss to Adjusted EBITDA	November 1, 2020			November 3, 2019				November 1, 2020			November 3, 2019
Net loss	Net loss	$	(32,817)		$	(82,876)		$	(80,687)		$	(112,430)		Net loss	$	(32,847)		$	(79,000)			$	(113,534)		$	(191,430)
Add (deduct):	Add (deduct):													Add (deduct):
Depreciation and amortization	Depreciation and amortization	8,083			7,630			15,336			14,579			Depreciation and amortization	9,262			8,137				24,598			22,716
Share-based compensation expense and related taxes	Share-based compensation expense and related taxes	37,797			43,783			80,138			51,013			Share-based compensation expense and related taxes	25,090			39,348				105,228			90,361
Interest expense (income), net	Interest expense (income), net	546			(204)			930			(920)			Interest expense (income), net	539			221				1,469			(699)
Management fee expense⁽¹⁾	Management fee expense⁽¹⁾	325			325			650			650			Management fee expense(1)	325			325				975			975
Transaction related costs	Transaction related costs	—			1,396			—			1,396			Transaction related costs	—			—				—			1,396
Other	Other	1,524			763			2,534			763			Other	3,133			741				5,667			1,504
Adjusted EBITDA	Adjusted EBITDA	$	15,458		$	(29,183)		$	18,901		$	(44,949)		Adjusted EBITDA	$	5,502		$	(30,228)			$	24,403		$	(75,177)
Net sales	Net sales	$	1,699,859		$	1,153,545		$	3,321,252		$	2,262,417		Net sales	$	1,782,000		$	1,229,801			$	5,103,252		$	3,492,218
Net margin	Net margin	(1.9)		%	(7.2)		%	(2.4)		%	(5.0)		%	Net margin	(1.8)		%	(6.4)		%		(2.2)		%	(5.5)		%
Adjusted EBITDA margin	Adjusted EBITDA margin	0.9		%	(2.5)		%	0.6		%	(2.0)		%	Adjusted EBITDA margin	0.3		%	(2.5)		%		0.5		%	(2.2)		%
⁽¹⁾ Management fee expense allocated to us by PetSmart for organizational oversight and certain limited corporate functions provided by its sponsors. Although we are not a party to the agreement governing the management fee, this management fee is reflected as an expense in our condensed consolidated financial statements.
(1) Management fee expense allocated to us by PetSmart, Inc. (“PetSmart”) for organizational oversight and certain limited corporate functions provided by its sponsors. Although we are not a party to the agreement governing the management fee, this management fee is reflected as an expense in our condensed consolidated financial statements.														(1) Management fee expense allocated to us by PetSmart, Inc. (“PetSmart”) for organizational oversight and certain limited corporate functions provided by its sponsors. Although we are not a party to the agreement governing the management fee, this management fee is reflected as an expense in our condensed consolidated financial statements.

To provide investors with additional information regarding our financial results, we have also disclosed here and elsewhere in this 10-Q Report free cash flow, a non-GAAP financial measure that we calculate as net cash provided by (used in) operating activities less capital expenditures (which consist of purchases of property and equipment, including servers and networking equipment, capitalization of labor related to our website, mobile applications, and software development, and leasehold improvements). We have provided a reconciliation below of free cash flow to net cash provided by (used in) operating activities, the most directly comparable GAAP financial measure.

We have included free cash flow in this 10-Q Report because it is an important indicator of our liquidity as it measures the amount of cash we generate. Accordingly, we believe that free cash flow provides useful information to investors and others in understanding and evaluating our operating results in the same manner as our management and board of directors.

Free cash flow has limitations as a financial measure and you should not consider it in isolation or as a substitute for analysis of our results as reported under GAAP. There are limitations to using non-GAAP financial measures, including that other companies, including companies in our industry, may calculate free cash flow differently. Because of these limitations, you should consider free cash flow alongside other financial performance measures, including net cash provided by (used in) operating activities, capital expenditures and our other GAAP results.


($ in thousands)	($ in thousands)	13 Weeks Ended						26 Weeks Ended							($ in thousands)	13 Weeks Ended				39 Weeks Ended
Reconciliation of Net Cash Provided by (Used in) Operating Activities to Free Cash Flow	Reconciliation of Net Cash Provided by (Used in) Operating Activities to Free Cash Flow	August 2, 2020		August 4, 2019		August 2, 2020		August 4, 2019		Reconciliation of Net Cash Provided by (Used in) Operating Activities to Free Cash Flow	November 1, 2020		November 3, 2019			November 1, 2020		November 3, 2019
Net cash provided by (used in) operating activities	Net cash provided by (used in) operating activities	$	(28,890)	$	21,807	$	(8,145)	$	(29,334)	Net cash provided by (used in) operating activities	$	63,433	$	1,581		$	55,288	$	(27,753)
Deduct:	Deduct:									Deduct:
Capital expenditures	Capital expenditures	(27,145)		(11,941)		(69,723)		(24,163)		Capital expenditures	(30,535)		(14,375)			(100,258)		(38,539)
Free Cash Flow	Free Cash Flow	$	(56,035)	$	9,866	$	(77,868)	$	(53,497)	Free Cash Flow	$	32,898	$	(12,794)		$	(44,970)	$	(66,292)

Free cash flow may be affected in the near to medium term by the timing of capital investments (such as the launch of new fulfillment centers, customer service centers, and corporate offices and purchases of IT and other equipment), fluctuations in our growth and the effect of such fluctuations on working capital, and changes in our cash conversion cycle due to increases or decreases of vendor payment terms as well as inventory turnover.

As of the last date of each reporting period, we determine our number of active customers by counting the total number of individual customers who have ordered, and for whom an order has shipped, at least once during the preceding 364-day period. The change in active customers in a reporting period captures both the inflow of new customers as well as the outflow of customers who have not made a purchase in the last 364 days. We view the number of active customers as a key indicator of our growth—acquisition and retention of customers—as a result of our marketing efforts and the value we provide to our customers. The number of active customers has grown over time as we acquired new customers and retained previously acquired customers.

We define Autoship customers as customers in a given fiscal quarter for whom an order has shipped through our Autoship subscription program during the preceding 364-day period. We define Autoship as our subscription program, which provides automatic ordering, payment, and delivery of products to our customers. We view our Autoship subscription program as a key driver of recurring net sales and customer retention. For a given fiscal quarter, Autoship customer sales consist of sales and shipping revenues from all Autoship subscription program purchases and purchases outside of the Autoship subscription program by Autoship customers, excluding taxes collected from customers, excluding any refund allowance, and net of any promotional offers (such as percentage discounts off current purchases and other similar offers), for that quarter. For a given fiscal year, Autoship customer sales equal the sum of the Autoship customer sales for each of the fiscal quarters in that fiscal year.

We derive net sales primarily from sales of both third-party brand and private brand pet food, pet products, pet medications and other pet health products, and related shipping fees. Sales of third-party brand and private brand pet food, pet products and shipping revenues are recorded when products are shipped, net of promotional discounts and refund allowances. Taxes collected from customers are excluded from net sales. Net sales is primarily driven by growth of new customers and active customers, and the frequency with which customers purchase and subscribe to our Autoship subscription program.

Cost of goods sold consists of the cost of third-party brand and private brand products sold to customers, inventory freight, shipping supply costs, inventory shrinkage costs, and inventory valuation adjustments, offset by reductions for promotions and percentage or volume rebates offered by our vendors, which may depend on reaching minimum purchase thresholds. Generally, amounts received from vendors are considered a reduction of the carrying value of inventory and are ultimately reflected as a reduction of cost of goods sold.

Selling, general and administrative expenses consist of payroll and related expenses for employees involved in general corporate functions, including accounting, finance, tax, legal and human resources; costs associated with use by these functions, such as depreciation expense and rent relating to facilities and equipment; professional fees and other general corporate costs; share-based compensation; and fulfillment costs.

Fulfillment costs represent costs incurred in operating and staffing fulfillment and customer service centers, including costs attributable to buying, receiving, inspecting and warehousing inventories, picking, packaging and preparing customer orders for shipment, payment processing and related transaction costs and responding to inquiries from customers. Included within fulfillment costs are merchant processing fees charged by third parties that provide merchant processing services for credit cards.


		13 Weeks Ended																26 Weeks Ended																			13 Weeks Ended								39 Weeks Ended
								% of net sales												% of net sales													% of net sales											% of net sales
($ in thousands)	($ in thousands)	August 2, 2020		August 4, 2019		% Change		August 2, 2020		August 4, 2019		August 2, 2020		August 4, 2019		% Change		August 2, 2020		August 4, 2019		($ in thousands)	November 1, 2020		November 3, 2019		% Change		November 1, 2020		November 3, 2019		November 1, 2020		November 3, 2019			% Change		November 1, 2020		November 3, 2019
Consolidated Statements of Operations	Consolidated Statements of Operations																					Consolidated Statements of Operations
Net sales	Net sales	$	1,699,859	$	1,153,545	47.4	%	100.0	%	100.0	%	$	3,321,252	$	2,262,417	46.8	%	100.0	%	100.0	%	Net sales	$	1,782,000	$	1,229,801	44.9	%	100.0	%	100.0	%	$	5,103,252	$	3,492,218		46.1	%	100.0	%	100.0	%
Cost of goods sold	Cost of goods sold	1,266,503		881,310		43.7	%	74.5	%	76.4	%	2,509,187		1,736,292		44.5	%	75.5	%	76.7	%	Cost of goods sold	1,327,442		938,021		41.5	%	74.5	%	76.3	%	3,836,629		2,674,313			43.5	%	75.2	%	76.6	%
Gross profit	Gross profit	433,356		272,235		59.2	%	25.5	%	23.6	%	812,065		526,125		54.3	%	24.5	%	23.3	%	Gross profit	454,558		291,780		55.8	%	25.5	%	23.7	%	1,266,623		817,905			54.9	%	24.8	%	23.4	%
Operating expenses:	Operating expenses:																					Operating expenses:
Selling, general and administrative	Selling, general and administrative	343,181		244,563		40.3	%	20.2	%	21.2	%	663,238		426,460		55.5	%	20.0	%	18.8	%	Selling, general and administrative	352,250		258,488		36.3	%	19.8	%	21.0	%	1,015,488		684,948			48.3	%	19.9	%	19.6	%
Advertising and marketing	Advertising and marketing	122,446		110,752		10.6	%	7.2	%	9.6	%	228,584		213,015		7.3	%	6.9	%	9.4	%	Advertising and marketing	134,616		112,071		20.1	%	7.6	%	9.1	%	363,200		325,086			11.7	%	7.1	%	9.3	%
Total operating expenses	Total operating expenses	465,627		355,315		31.0	%	27.4	%	30.8	%	891,822		639,475		39.5	%	26.9	%	28.3	%	Total operating expenses	486,866		370,559		31.4	%	27.3	%	30.1	%	1,378,688		1,010,034			36.5	%	27.0	%	28.9	%
Loss from operations	Loss from operations	(32,271)		(83,080)		61.2	%	(1.9)	%	(7.2)	%	(79,757)		(113,350)		29.6	%	(2.4)	%	(5.0)	%	Loss from operations	(32,308)		(78,779)		59.0	%	(1.8)	%	(6.4)	%	(112,065)		(192,129)			41.7	%	(2.2)	%	(5.5)	%
Interest (expense) income, net	Interest (expense) income, net	(546)		204		(367.6)	%	—	%	—	%	(930)		920		(201.1)	%	—	%	—	%	Interest (expense) income, net	(539)		(221)		143.9	%	—	%	—	%	(1,469)		699			n/m		—	%	—	%
Loss before income tax provision	Loss before income tax provision	(32,817)		(82,876)		60.4	%	(1.9)	%	(7.2)	%	(80,687)		(112,430)		28.2	%	(2.4)	%	(5.0)	%	Loss before income tax provision	(32,847)		(79,000)		58.4	%	(1.8)	%	(6.4)	%	(113,534)		(191,430)			40.7	%	(2.2)	%	(5.5)	%
Income tax provision	Income tax provision	—		—		—	%	—	%	—	%	—		—		—	%	—	%	—	%	Income tax provision	—		—		—	%	—	%	—	%	—		—			—	%	—	%	—	%
Net loss	Net loss	$	(32,817)	$	(82,876)	60.4	%	(1.9)	%	(7.2)	%	$	(80,687)	$	(112,430)	28.2	%	(2.4)	%	(5.0)	%	Net loss	$	(32,847)	$	(79,000)	58.4	%	(1.8)	%	(6.4)	%	$	(113,534)	$	(191,430)		40.7	%	(2.2)	%	(5.5)	%

n/m - not meaningful																			n/m - not meaningful


		13 Weeks Ended ⁽¹⁾										26 Weeks Ended ⁽¹⁾											13 Weeks Ended (1)								39 Weeks Ended (1)
($ in thousands)	($ in thousands)	August 2, 2020		August 4, 2019		$ Change		% Change		August 2, 2020		August 4, 2019		$ Change		% Change		($ in thousands)	November 1, 2020		November 3, 2019		$ Change		% Change		November 1, 2020		November 3, 2019		$ Change		% Change
Consumables	Consumables	$	1,159,094	$	855,571	$	303,523	35.5	%	$	2,332,643	$	1,689,516	$	643,127	38.1	%	Consumables	$	1,236,291	$	910,893	$	325,398	35.7	%	$	3,568,934	$	2,600,410	$	968,524	37.2		%
Hardgoods	Hardgoods	296,666		172,300		124,366		72.2	%	539,504		340,747		198,757		58.3	%	Hardgoods	283,717		172,022		111,695		64.9	%	823,221		512,769		310,452		60.5		%
Other	Other	244,099		125,674		118,425		94.2	%	449,105		232,154		216,951		93.5	%	Other	261,992		146,886		115,106		78.4	%	711,097		379,039		332,058		87.6		%
Net sales	Net sales	$	1,699,859	$	1,153,545	$	546,314	47.4	%	$	3,321,252	$	2,262,417	$	1,058,835	46.8	%	Net sales	$	1,782,000	$	1,229,801	$	552,199	44.9	%	$	5,103,252	$	3,492,218	$	1,611,034	46.1		%

⁽¹⁾Prior periods have been reclassified to conform with current presentation.	⁽¹⁾Prior periods have been reclassified to conform with current presentation.																																	(1) Prior periods have been reclassified to conform with current presentation.

Net sales for the thirteen weeks ended ~~August 2,~~November 1, 2020 increased by ~~$546.3~~$552.2 million, or ~~47.4%~~44.9%, to ~~$1.7~~$1.8 billion compared to $1.2 billion for the thirteen weeks ended August 4, 2019. This increase was primarily due to growth in our customer base, including a meaningful increase in organic customer growth in the thirteen weeks ended August 2, 2020, with the number of active customers increasing by 4.6 million, or 37.9% year-over-year. Spending among our active customers increased with net sales per active customer increasing $4, or 1.1%, in the thirteen weeks ended August 2, 2020 compared to the thirteen weeks ended August 4, 2019, driven by continued catalog expansion and growth in our hardgoods, healthcare and private brand businesses.

~~Net sales for the twenty-six weeks ended August 2, 2020 increased by $1.1 billion, or 46.8%, to $3.3 billion compared to $2.3 billion for the twenty-six weeks ended August 4,~~November 3, 2019. This increase was primarily due to growth in our customer base, with the number of active customers increasing by ~~4.6~~5.1 million, or ~~37.9%~~39.8% year-over-year. Spending among our active customers increased with net sales per active customer increasing ~~$4,~~$3, or ~~1.1%~~0.8%, in the ~~twenty-six~~thirteen weeks ended ~~August 2,~~November 1, 2020 compared to the ~~twenty-six~~thirteen weeks ended ~~August 4,~~November 3, 2019, driven by continued catalog expansion and growth ~~in our hardgoods, healthcare and private brand businesses.~~across all verticals.

Net sales for the thirty-nine weeks ended November 1, 2020 increased by $1.6 billion, or 46.1%, to $5.1 billion compared to $3.5 billion for the thirty-nine weeks ended November 3, 2019. This increase was primarily due to growth in our customer base, with the number of active customers increasing by 5.1 million, or 39.8% year-over-year. Spending among our active customers increased with net sales per active customer increasing $3, or 0.8%, in the thirty-nine weeks ended November 1, 2020 compared to the thirty-nine weeks ended November 3, 2019, driven by continued catalog expansion and growth across all verticals.

Cost of goods sold for the thirteen weeks ended ~~August 2,~~November 1, 2020 increased by ~~$385.2~~$389.4 million, or ~~43.7%~~41.5%, to $1.3 billion compared to ~~$881.3~~$938.0 million in the thirteen weeks ended ~~August 4,~~November 3, 2019. This increase was primarily due to a ~~48.7%~~46.4% increase in orders shipped and associated product costs, outbound freight, and shipping supply costs. The increase in cost of goods sold was lower than the increase in net sales on a percentage basis, primarily as a result of realized supply chain efficiencies and change in mix of sales as hardgoods, healthcare, and private brand businesses continue to grow faster than the overall business.

Cost of goods sold for the ~~twenty-six~~thirty-nine weeks ended ~~August 2,~~November 1, 2020 increased by ~~$772.9 million,~~$1.2 billion, or ~~44.5%~~43.5%, to ~~$2.5~~$3.8 billion compared to ~~$1.7~~$2.7 billion in the ~~twenty-six~~thirty-nine weeks ended ~~August 4,~~November 3, 2019. This increase was primarily due to a ~~51.0%~~49.4% increase in orders shipped and associated product costs, outbound freight, and shipping supply costs, including incremental costs attributable to COVID-19. The increase in cost of goods sold was lower than the increase in ~~orders~~net sales on a percentage basis, primarily as a result of realized supply chain efficiencies and change in mix of sales as hardgoods, healthcare, and private brand businesses continue to grow faster than the overall business.

Gross profit for the thirteen weeks ended ~~August 2,~~November 1, 2020 increased by ~~$161.1~~$162.8 million, or ~~59.2%~~55.8%, to ~~$433.4~~$454.6 million compared to ~~$272.2~~$291.8 million in the thirteen weeks ended ~~August 4,~~November 3, 2019. This increase was primarily due to the year-over-year increase in net sales as described above. Gross profit as a percentage of net sales for the thirteen weeks ended ~~August 2,~~November 1, 2020 increased by ~~190~~180 basis points compared to the thirteen weeks ended ~~August 4,~~November 3, 2019, primarily due to margin expansion across all ~~verticals, including improvements in margin profile of hardgoods, pharmacy and private brands.~~verticals.

Gross profit for the ~~twenty-six~~thirty-nine weeks ended ~~August 2,~~November 1, 2020 increased by ~~$285.9~~$448.7 million, or ~~54.3%~~54.9%, to ~~$812.1 million~~$1.3 billion compared to ~~$526.1~~$817.9 million in the ~~twenty-six~~thirty-nine weeks ended ~~August 4,~~November 3, 2019. This increase was primarily due to the year-over-year increase in net sales as described above. Gross profit as a percentage of net sales for the ~~twenty-six~~thirty-nine weeks ended ~~August 2,~~November 1, 2020 increased by ~~120~~140 basis points compared to the ~~twenty-six~~thirty-nine weeks ended ~~August 4,~~November 3, 2019, primarily due to margin expansion across ~~all verticals, including improvements in margin profile of~~ hardgoods, pharmacy and private brands.

Selling, general and administrative expenses for the thirteen weeks ended ~~August 2,~~November 1, 2020 increased by ~~$98.6~~$93.8 million, or ~~40.3%~~36.3%, to ~~$343.2~~$352.3 million compared to ~~$244.6~~$258.5 million in the thirteen weeks ended ~~August 4,~~November 3, 2019. This increase was primarily due to an increase of ~~$75.5~~$78.4 million in fulfillment costs largely attributable to increased investments to support overall growth of our business including the opening of new fulfillment centers in Archbald, Pennsylvania and Salisbury, North Carolina, a ~~new~~limited catalog fulfillment center in ~~Salisbury, North Carolina and~~Kansas City, Missouri, a customer service center in Dallas, Texas, growth of fulfillment and customer service headcount, and temporary incentive wages and bonuses as well as incremental cleaning and sanitation spend attributable to COVID-19. Facilities expenses and other general and administrative expenses increased by ~~$33.8~~$29.9 million, primarily due to increased headcount as a result of business growth as well as expenses incurred as a result of IT initiatives and operating as a public company. These increases were partially offset by a ~~$10.6~~$14.5 million reduction in non-cash share-based compensation expense.

Selling, general and administrative expenses for the ~~twenty-six~~thirty-nine weeks ended ~~August 2,~~November 1, 2020 increased by ~~$236.8~~$330.5 million, or ~~55.5%~~48.3%, to ~~$663.2 million~~$1.0 billion compared to ~~$426.5~~$684.9 million in the ~~twenty-six~~thirty-nine weeks ended ~~August 4,~~November 3, 2019. This increase was primarily due to an increase of ~~$144.6~~$223.0 million in fulfillment costs largely attributable to increased investments to support overall growth of our business including the opening of new fulfillment centers in ~~Dayton, Ohio, and~~Archbald, Pennsylvania, Salisbury, North Carolina, and Dayton, Ohio, a limited catalog fulfillment center in Kansas City, Missouri, a pharmacy fulfillment center in Louisville, Kentucky, and a customer service center in Dallas, Texas, growth of fulfillment and customer service headcount, and temporary incentive wages and bonuses as well as incremental cleaning and sanitation spend attributable to COVID-19. We recognized an increase of ~~$24.4~~$9.8 million in non-cash share-based compensation expense. Facilities expenses and other general and administrative expenses increased by ~~$67.8~~$97.7 million, primarily due to expanding our corporate office and increased headcount as a result of business growth as well as an increase in expenses incurred due to operating as a public company.

Advertising and marketing expenses for the thirteen weeks ended August 2, 2020 increased by $11.7 million, or 10.6%, to $122.4 million compared to $110.8 million in the thirteen weeks ended August 4, 2019, but declined as a percentage of net sales to 7.2% from 9.6% in the thirteen weeks ended August 4, 2019. This increase in advertising and marketing spend, combined with a meaningful increase in organic customer growth in the thirteen weeks ended August 2, 2020, contributed to the 4.6 million increase in active customers.

Advertising and marketing expenses for the ~~twenty-six~~thirteen weeks ended ~~August 2,~~November 1, 2020 increased by ~~$15.6~~$22.5 million, or ~~7.3%~~20.1%, to ~~$228.6~~$134.6 million compared to ~~$213.0~~$112.1 million in the ~~twenty-six~~thirteen weeks ended ~~August 4,~~November 3, 2019, but overall spend declined as a percentage of net sales to ~~6.9%~~7.6% from ~~9.4%~~9.1% in the ~~twenty-six~~thirteen weeks ended ~~August 4,~~November 3, 2019. This increase in advertising and marketing spend through existing channels ~~contributed~~continues to contribute to an increase in the number of active ~~customers~~customers.

Advertising and marketing expenses for the thirty-nine weeks ended November 1, 2020 increased by $38.1 million, or 11.7%, to $363.2 million compared to $325.1 million in the thirty-nine weeks ended November 3, 2019, but overall spend declined as a percentage of ~~4.6 million.~~net sales to 7.1% from 9.3% in the thirty-nine weeks ended November 3, 2019. This increase in advertising and marketing spend through existing channels continues to contribute to an increase in the number of active customers.

Since our inception, we have financed our operations and capital expenditures primarily through sales of convertible redeemable preferred stock, equity offerings, and cash flows generated by operations. Our principal source of liquidity is our cash and cash equivalents. Cash and cash equivalents consist primarily of cash on deposit with banks and investments in money market funds. Cash and cash equivalents totaled ~~$153.8~~$505.8 million as of ~~August 2,~~November 1, 2020, ~~a decrease~~an increase of ~~$58.2~~$293.7 million from February 2, 2020.

We believe that our cash and cash equivalents and availability under our revolving credit facility will be sufficient to fund our working capital and capital expenditure requirements for at least the next twelve months. In addition, we may choose to raise additional funds at any time through equity or debt financing arrangements, which may or may not be needed for additional working capital, capital expenditures or other strategic investments. Our opinions concerning liquidity are based on currently available information. To the extent this information proves to be inaccurate, or if circumstances change, future availability of trade credit or other sources of financing may be reduced and our liquidity could be adversely affected. Our future capital requirements and the adequacy of available funds will depend on many factors, including those described in the section titled “Risk Factors” in Item 1A of our ~~Form~~ 10-K Report. Depending on the severity and direct impact of these factors on us, we may be unable to secure additional financing to meet our operating requirements on terms favorable to us, or at all.

During the thirteen weeks ended November 1, 2020, we issued and sold 5,865,000 shares of Class A common stock at a public offering price of $54.40 per share, raising $318.4 million in net proceeds after deducting offering costs of approximately $0.6 million. For additional information, see Note 1 in the “Notes to Condensed Consolidated Financial Statements” of this 10-Q Report.


		26 Weeks Ended							39 Weeks Ended
		August 2, 2020		August 4, 2019			November 1, 2020		November 3, 2019
Net cash used in operating activities		$	(8,145)	$	(29,334)
Net cash provided by (used in) operating activities						Net cash provided by (used in) operating activities	$	55,288	$	(27,753)
Net cash used in investing activities	Net cash used in investing activities	$	(73,641)	$	(23,145)	Net cash used in investing activities	$	(104,025)	$	(49,859)
Net cash provided by financing activities	Net cash provided by financing activities	$	23,540	$	114,992	Net cash provided by financing activities	$	342,477	$	125,152

Net cash ~~used in~~provided by operating activities was ~~$8.1~~$55.3 million for the ~~twenty-six~~thirty-nine weeks ended ~~August 2,~~November 1, 2020, primarily consisting of ~~$80.7~~$113.5 million of net loss, adjusted for certain non-cash items, which ~~primarily~~ included depreciation and amortization expense of ~~$15.3~~$24.6 million, ~~and $75.4 million of~~ share-based compensation expense ~~partially offset by a $38.3~~of $100.2 million, ~~decrease due to unfavorable~~and favorable working capital ~~changes. Unfavorable~~changes of $15.7 million. Favorable working capital changes included an increase in current liabilities of $209.6 million, partially offset by an increase in current assets of ~~$150.5 million due~~$193.9 million. The increase in current liabilities was primarily attributable to the timing of payments for inventory purchases and accrued expenses. The increase in current assets was primarily attributable to an increase in inventory and receivables associated with net sales ~~partially offset by an increase in~~as well as other current ~~liabilities of $112.2 million, primarily due to timing of payments for inventory purchases.~~assets.

Net cash used in operating activities was ~~$29.3~~$27.8 million for the ~~twenty-six~~thirty-nine weeks ended ~~August 4,~~November 3, 2019, primarily consisting of ~~$112.4~~$191.4 million of net loss, adjusted for certain non-cash items, which ~~primarily~~ included depreciation and amortization expense of ~~$14.6~~$22.7 million, ~~and $51.0 million of~~ share-based compensation expense ~~partially offset by a $10.6~~of $90.4 million, ~~increase due to~~and favorable working ~~capital.~~capital changes of $41.7 million. Favorable working capital changes included an increase in current liabilities of ~~$109.6~~$181.7 million offset by an increase in current assets of $140.0 million. The increase in current liabilities was primarily ~~driven by~~attributable to the timing of payments for inventory purchases and ~~an increase in~~ accrued ~~expenses, partially offset by an~~expenses. The increase in current assets ~~of $99.0 million due~~was primarily attributable to an increase in inventory and receivables associated with net sales as well as other current assets.

Net cash used in investing activities was ~~$73.6~~$104.0 million for the ~~twenty-six~~thirty-nine weeks ended ~~August 2,~~November 1, 2020, primarily consisting of ~~$69.7~~$100.3 million of capital expenditures related to the launch of new fulfillment centers and a customer service ~~center, and additional investments in IT hardware and software, as well as $3.9 million of cash advances provided to PetSmart, net of reimbursements.~~center.

Net cash used in investing activities was ~~$23.1~~$49.9 million for the ~~twenty-six~~thirty-nine weeks ended ~~August 4,~~November 3, 2019, primarily consisting of ~~$24.2~~$38.5 million of capital expenditures related to the launch of new fulfillment centers, the expansion of the corporate office and customer service centers, and additional investments in IT hardware and software, ~~partially offset by $1.0~~and $11.3 million of cash advances, net of reimbursements from ~~PetSmart, net of advances.~~PetSmart.

Net cash provided by financing activities was ~~$23.5~~$342.5 million for the ~~twenty-six~~thirty-nine weeks ended ~~August 2,~~November 1, 2020 and consisted of $318.8 million in proceeds from our equity offering in September 2020, net of offering costs, $23.2 million received pursuant to the tax sharing agreement with PetSmart as well as a management fee expense allocated to us by PetSmart for organizational oversight and certain limited corporate functions provided by its sponsors, partially offset by principal repayments of finance lease obligations.

Net cash provided by financing activities was ~~$115.0~~$125.2 million for the ~~twenty-six~~thirty-nine weeks ended ~~August 4,~~November 3, 2019, primarily consisting of ~~$115.2~~$110.6 million of proceeds from our IPO, net of underwriting discounts, commissions and offering ~~costs.~~costs, and $14.5 million of proceeds from the tax sharing agreement with PetSmart.

~~We have~~On June 18, 2019, we entered into a five year senior secured asset backed credit facility (the “ABL Credit Facility”) which provides for non-amortizing revolving loans in an aggregate principal amount of up to $300 million, subject to a borrowing base comprised of, among other things, inventory and sales receivables (subject to certain reserves). The ABL Credit Facility provides the right to request incremental commitments and add incremental asset-based revolving loan facilities in an aggregate principal amount of up to $100 million, subject to customary conditions. We are required to pay a ~~pay~~ commitment fee of between 0.25% and 0.375% with respect to the undrawn portion of the commitments, which is generally based on average daily usage of the facility. As of ~~August 2,~~November 1, 2020, we had no outstanding borrowings under the ABL Credit Facility.

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in the reports that we file or submit under the Securities Exchange Act of 1934, as amended, (the “Exchange Act”) is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required financial disclosure.

As of the end of the period covered by this 10-Q Report, our management, under the supervision and with the participation of our principal executive officer and principal financial officer, evaluated the effectiveness of our disclosure controls and procedures pursuant to Exchange Act Rule 13a-15(e) and 15d-15(e). Based upon this evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were effective at a reasonable assurance level as of ~~August 2,~~November 1, 2020.

There were no changes in our internal control over financial reporting that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting during the thirteen weeks ended ~~August 2,~~November 1, 2020. We have not experienced any material impact to our internal controls over financial reporting despite the fact that many of our employees are working remotely due to the COVID-19 pandemic. We are continually monitoring and assessing the impact of COVID-19 on our internal controls.

From time to time, we are involved in various legal proceedings arising from the normal course of business activities. We are not presently a party to any litigation the outcome of which, we believe, if determined adversely to us, would individually or taken together have a material adverse effect on our business, operating results, cash flows or financial condition.


Delaware						90-1020167
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)
1855 Griffin Road, Suite B-428, Dania Beach, Florida						33004
(Address of principal executive offices)						(Zip Code)


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Class A Common Stock, par value $0.01 per share	CHWY	New York Stock Exchange


Class						Outstanding as of ~~September 3,~~December 1, 2020
Class A Common Stock, $0.01 par value per share						~~89,291,476~~95,308,313
Class B Common Stock, $0.01 par value per share						317,338,356


		Page
	PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited)	2
	Condensed Consolidated Balance Sheets as of ~~August 2,~~November 1 , 2020 and February 2, 2020	2
	Condensed Consolidated Statements of Operations for the Thirteen and ~~Twenty-Six~~Thir ty -Nine Weeks Ended ~~August 2,~~November 1 , 2020 and ~~August 4,~~November 3 , 2019	3
	Condensed Consolidated Statements of Stockholders’ Deficit for the Thirteen and ~~Twenty-Six~~T hi rty-Nine Weeks Ended ~~August 2,~~November 1 , 2020 and ~~August 4,~~November 3 , 2019	4
	Condensed Consolidated Statements of Cash Flows for the ~~Twenty-Six~~T hirty-Nine Weeks Ended ~~August 2,~~ November 1 , 2020 and ~~August 4,~~Novem ber 3 , 2019	6
	Notes to Condensed Consolidated Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	15
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	2324
Item 4.	Controls and Procedures	24
	PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	24
Item 1A.	Risk Factors	24

Item 6.	Exhibits	25
	SIGNATURES	26


Performance period			5 years
Weighted-average risk-free interest rate			1.8%
Weighted-average volatility			49.7%
Weighted-average dividend yield			0%


Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☐
		Emerging growth company	☐


			CHEWY, INC.





Date:	~~September 10,~~December 8, 2020	By:	/s/ Mario Marte
			Mario Marte
			Chief Financial Officer
			(Principal Financial Officer)