Dive Brief:

• Chewy on Thursday reported first quarter sales rose 45.2% to $1.1 billion from $763.5 million in the year-ago quarter.

• The company narrowed its net loss by 50.6% to $29.6 million from $59.8 million a year ago, according to a company press release. Gross margin rate increased 330 basis points to 22.9%.

• On an earnings call with analysts on Thursday, CFO Mario Marte said the company expects second quarter net sales to be between $1.12 billion and $1.14 billion, which would be a growth of 39% to 42% year over year. This is slightly above Wall Street estimates, according to MarketWatch.

Dive Insight:

The pet e-tailer showed strong growth with its first earnings release since it made its IPO debut nearly one month ago, though results were slightly lower than earnings expectations which drove shares down a touch, according to MarketWatch.

The proceeds generated from the Chewy IPO allowed former owner PetSmart, which acquired the pet e-tailer in 2017, to repay some of its debt, resulting in both S&P Global and Moody’s Investor Service upgrading the retailer this month.

While Chewy's results were mostly favorable, William Blair analyst Dylan Carden said that because of the proximity of the earnings release to the recent IPO debut, "it is unsurprising to see performance in line with to slightly better than expectations," according to comments emailed to Retail Dive.

The bump in net sales was due in part to active customers growing to 11.3 million, an increase of 3.5 million users from the prior year, CEO Sumit Singh said on a call with analysts. Net sales per active customer also grew 9% to $343 from $315.

For the full fiscal year, the company expects net sales to be between $4.68 billion and $4.75 billion, a growth of 32% to 34% year over year.

"While multiple expansion could be limited in the near term until profitability improvement is more established, we continue to see room in the valuation considering that the broader universe of consumer-facing online marketplaces and subscription services average valuation is closer to 4 times sales," Carden added.

Chewy noted that the pet industry is a growing market citing nearly $70 billion in annual spend in 2017, a number that is projected to reach $75.38 billion this year, according to data from the American Pet Products Association.

The company also highlighted the one year anniversary of its Chewy Pharmacy arm, something that may set it apart from Amazon, which has been ramping up its own pet product offerings through its Wag private label brand.