Douglas Anmuth
JPMorgan Chase & Co, Research Division

All right. We are going to get started. I'm Doug Anmuth, JPMorgan Internet analyst. We're pleased to have with us Chewy's CEO, Sumit Singh. Chewy is the largest pure-play online pet retailer in the U.S. The company has more than 21 million active customers. We estimate Chewy will generate about $13.7 billion in net sales this year, including around 85% of which come from Autoship customers. Chewy is guiding to 6.7% EBITDA margins at the midpoint this year, and we project about $750 million in free cash flow. Sumit became Chewy's CEO in March of 2018 after previously serving as Chief Operating Officer, and he previously held senior management positions at both Amazon and Dell. So welcome, Sumit.

Sumit Singh
CEO & Director

Thank you. Good morning.

Douglas Anmuth
JPMorgan Chase & Co, Research Division

All right. So kicking off, maybe you can just help us understand kind of the overall state of online pet spending. Third-party data estimates that more than 40% of pet food and treat spend in the U.S. occurs online. What drives this next leg of digital penetration gains? And do you need secular pet household formation to reaccelerate?

Sumit Singh
CEO & Director

So there's a lot there in that question. Let's unpack it. So overall, we interpret the pet industry to be now $160 billion in TAM, of which roughly $15 billion is non-health care services. So these would be grooming, boarding, lodging, et cetera. So if you take that out, what is digitally propensed at this particular point is roughly $150 billion of TAM. We interpret that