Chewy (CHWY  ) shares were more than 20% higher following the companies better than expected Q1 results. The company posted a surprise profit and issued guidance that was above what Wall Street was forecasting.

Management was also positive that the company's challenges in terms of supply chain issues and bottlenecks were on the mend. Additionally, the company's investments in logistics are also bearing fruit. While all e-commerce stocks have been crushed since their peak in early 2021, Chewy has been an exception in terms of maintaining growth even with the headwind of the economy returning to normal and tough comps due to the pandemic.

Overall, Chewy shares are down 77% from their high in February 2021. From its recent low on May 24, shares are up nearly 25%. Chewy's Q1 earnings report is encouraging for bulls as the company's growth clearly remains on track.

Inside the Numbers

In Q1, Chewy reported a profit of $0.04 per share which was better than analysts' expectations of a loss of $0.11 per share. It was a slight decline from last year's profit of $0.09 per share. Revenue was up 13% to $2.43 billion, topping estimates of $2.41 billion.

The company said that consumer demand remained strong, but the operating environment was challenging due to supply issues and higher costs. It sees inflationary pressures and supply chain disruptions improving in the second-half of the year but also acknowledged that 'ongoing volatility in the macro environment continues to make accurate forecasting difficult'.

Next quarter, it sees revenue between $2.43 billion and $2.46 billion for the second quarter. It also hiked its full-year forecast to between $10.2 billion and $10.4 billion, while analysts were looking for $10.26 billion.

A big part of Chewy's future success will depend on its ability to grow sales of higher-margin products and services like veterinary telehealth services and insurance and wellness plans for Chewy customers. It recently introduced CarePlus which covers annual exams, vaccines, routine lab tests, and other preventative care.

Just like healthcare for people, animal health costs continue to rise and more treatments are constantly being approved. It seems likely that insurance will become a necessity. Chewy seems well-positioned to capture this growth.