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If you build pet gear for a living (collars, toys, beds, crates, feeders, and the dozens of SKUs that live under that broad category umbrella) you have been watching the same number with the same unease.
Chewy's full-year fiscal 2025 results, reported in March 2026, showed subscription sales at 83.3% of net sales for the year, up from 79.2% twelve months prior, with Q4 alone hitting 84%.
Every founder and brand manager in pet gear has done some version of that math at some point and arrived at the same uncomfortable place.
The logic writes itself.
Subscription revenue is the defining characteristic of the most valuable businesses in this industry, and food ships on a schedule. A crate does not.
According to a Cascadia Capital analysis covered in a recent pet industry M&A outlook, pet hard goods retail sales grew only 3.3% year-over-year in 2024.
Meanwhile, Chewy grew its own hard goods business more than 15% in Q2 2025 using inventory depth and aggressive pricing to consolidate share.
The independent brands supplying that shelf are getting squeezed from above and below simultaneously.
So they started buying food companies, and the ones that were not buying started reformulating into treats.
The brands that have actually cracked the subscription problem in pet gear, notably Tractive, Whisker, and Halo Collar, never touched a kibble bag to do it.
Their story comes later. First, how we got here.
Everybody Wants to Be the Next Farmer's Dog
The Farmer's Dog built the clearest proof of concept, recently crossing the $1B revenue threshold on the back of a subscription model so sticky it became the template every founder in pet wanted to copy.
Revenue at Freshpet grew 27.2% to $975M in fiscal 2024.
Open Farm crossed $250M in annual sales and is reportedly tracking toward a possible 2026 IPO.
Brands like Ollie, Maev, and Spot & Tango spent the last several years proving that direct-to-consumer premium pet food, done right, could build durable subscription relationships and real pricing power.
Nearly half of all pet-sector M&A in the first nine months of 2025 concentrated in food, nutrition, and treats. The early read on 2026 looks similar - according to Capstone Partners' April 2026 pet sector update, 18 transactions had been recorded in pet year-to-date, spread across food, veterinary health, and services.
The products segment had not recorded a single one.
Where investor conviction is sitting right now is not in hard goods, and the brands concentrated there know it.
The most telling data point may not be an acquisition at all.
Central Garden & Pet, one of the largest pet gear companies in the country, reported at its August 2025 investor conference that it had made a strategic decision to exit lower-margin durable products entirely.
By Q4 2025, consumables accounted for 84% of the company's total pet sales, up from roughly 65% four years prior, with pet durables declining double digits and additional consumables acquisitions already confirmed for 2026.
Other gear brands have followed a similar path.
In April 2025, the Hagen Group introduced a cat food line at Pet Supplies Plus, explicitly framing the move as an expansion into feline nutrition.
By August 2025, BARK had moved well beyond treats, launching BARK in the Belly, a premium dog food line that pledges 100% of profits to fighting canine hunger, while its fiscal 2025 annual report showed treats already placed in over 2,400 Target and PetSmart doors nationwide.
A company that started as a subscription toy box is now a food company, and via BARK Air, apparently an airline.
The pattern is consistent enough that Cascadia specifically named gear company diversification into consumables as one of the three forces it expects to drive the next wave of pet M&A.
Each of these moves follows the same logic, and the logic is not wrong. Recurring revenue is real.
The shelf space is real.
But these companies are arriving late to a market that The Farmer's Dog, Freshpet, and a dozen well-capitalized DTC brands have spent years fortifying, and the gear category expertise they are leaving behind is not something they get back.
The Subscription Model Is Already in the Box
What the pet gear category keeps overlooking is that the recurring revenue model already exists inside it.
A connected collar or smart feeder does not just generate a monthly subscription payment, it generates data. Behavioral baselines. Health patterns. Anomaly detection.
And the more devices in the field, the more accurate and valuable that data becomes for every single user on the network.
Michael Hurnaus, the Co-founder and CEO of Tractive, put it plainly in a recent conversation on The Underbite podcast:
"Realistically, we're a data company. That's what most people don't understand. People look at us as a hardware company. We are a data company, but the data is super valuable for you as the individual. The big amount of data that we have is what exactly allows us to put your dog's data points into perspective."
That framing matters for the investment thesis.
A company with 1.4M active paying subscribers is not just collecting monthly fees. It is building a proprietary dataset on pet behavior, health patterns, and activity norms that no food brand, treat company, or traditional gear manufacturer has any equivalent of.
The moat is not the hardware. It is everything the hardware ingests.
The infrastructure a gear brand already has, retail distribution, category credibility, manufacturing relationships, brand recognition, covers most of what is needed to build this kind of business.
What it does not cover is the software layer and the organizational capability to run a subscription operation, which is exactly where most attempts in this category have broken down, and why the ones that pulled it off are commanding the multiples they are.
Food requires new formulation. New manufacturing. New regulatory navigation. New shelf placement fights in an aisle that is already contested.
A connected collar or a smart feeder leverages everything a gear company already knows how to do and adds a compounding data asset on top of it.
The tariff environment makes this case more directly than any competitive analysis could.
More than 75% of pet toys sold in the United States are imported from China, and APPA has been telling members to plan for a 10 to 20% new normal tariff environment on those goods.
The brands that survive margin compression will be the ones with pricing power. Subscription hardware has it.
Commodity soft goods do not.
Woof Didn't Become a Pet Treat Company. It Engineered One.
The clearest proof of concept showed up at Global Pet Expo 2026 in a way that was hard to miss. The escalator takeover. The door branding. The product giveaways, branded totes, coffee cup sleeves, major booth presence.
The brand that made the loudest statement at the industry's biggest show this year was Woof, and it runs on a model the gear category keeps walking past.
Woof is the clearest example in pet of a company that engineered consumable demand through hardware.
The Pupsicle device creates the installed base.
The Pupsicle Pops refills are the business. The treats are proprietary to the form factor, which means every device sold is essentially a locked refill relationship.
That makes it structurally closer to the Litter-Robot model than the Tractive model. The device does not just enable the subscription.
It manufactures the demand.
Tractive is the category's benchmark for what a pure software and data layer looks like at scale.
A GPS tracking device priced at $50 to $200 at retail, paired with a monthly subscription running $5 to $15, carried the company past €100M in annual recurring revenue in 2024 with 35 to 40% growth projected for 2025.
That trajectory drew a strategic acquirer, and an agreement to be acquired by Bending Spoons was announced in March 2026 at an estimated €300M to €500M.
The full arc is hardware into subscription into category leadership into strategic exit. No food pivot required.
Whisker built the same structure around a litter box.
According to Reuters reporting from July 2024, Pondera Holdings was exploring a sale of its controlling stake at a valuation approaching $1B, with Bank of America and Houlihan Lokey engaged to run the process.
The company had crossed one million customers on the back of a connected smart litter box that layers health monitoring data on top of a physical product.
That is a litter box with software on top of it at a near-billion-dollar valuation.
Halo Collar ran from $50M in revenue in 2022 to $75M in 2024 to a projected $100M-plus in 2025, funded through revenue-based financing and without a single SKU of food or treats in the mix.
The growth lever was a GPS and training system that generates a subscription relationship with every device sold.
The math underneath this model deserves a direct look.
A company with 100,000 active subscribers at $10 per month generates $12M in annual recurring revenue on top of whatever hardware it sells, and that number grows with every new device that ships.
A consumables brand generating $10M in product reorders annually has no installed base, no switching costs, and no compounding dynamic underneath it.
Why the Exit Math Keeps Pointing at the Same Answer
The valuation argument for subscription hardware does not require a published industry benchmark. The proof is in the deals that have already closed.
Tractive's estimated €300M to €500M acquisition against €100M-plus in ARR implies a revenue multiple that traditional hard goods transactions do not produce.
GPS collar. Monthly subscription. No food. Exit at a number that most pet gear companies will never see regardless of how long they operate.
The adjacent data point is Whoop, which raised at a $10.1B valuation in March 2026 on approximately $1.1B in bookings, roughly 9.2 times revenue.
Subscription wearable hardware gets valued like a software business. A collar brand does not.
The reason no clean published comparison exists between connected pet hardware multiples and traditional pet hard goods multiples is that the category is genuinely early.
The software quality underneath these products is only now starting to match the premium the model theoretically commands, and AI is accelerating that gap closing faster than most operators realize. The gear companies that build a connected layer now are positioning for a valuation environment that is still taking shape.
That is not a reason to wait. It is a reason to move.
The cautionary tale lives on the same axis.
Peloton traded at roughly 12 to 13 times revenue at its peak before collapsing to around 1.5 times today. The subscription hardware premium is real but execution-dependent.
It rewards the model when retention numbers support it and does not forgive when they do not.
The Reason the Shelf Is Still Full of Dumb Collars
If the model is this clearly superior, why isn't every gear company building it?
The execution history provides a sobering answer.
Petmate, one of the largest gear brands in the category, currently sells no connected products at all.
Its feeder lineup is programmable and timer-based. There is no app layer, no cloud connection, no subscription.
A company with that kind of retail scale and category trust has left the entire connected opportunity on the table.
The graveyard of attempts is well-populated.
Whistle, owned by Mars Petcare and one of the most resourced operations in the category, shut down permanently on August 31, 2025, after nearly a decade. Link AKC pulled from major retail.
Petcube moved from an optional subscription to a mandatory 12-month commitment with early cancellation penalties, a defensive pricing move that tends to reflect churn pressure rather than confidence.
The failure pattern is consistent. Running a subscription business requires organizational capabilities that do not exist inside a traditional wholesale gear operation.
CRM infrastructure. App development. Recurring billing. Churn management. Customer success.
These are not adjacent competencies to what gear companies do, they are entirely different muscles.
There is also a structural channel conflict most gear companies have never resolved.
A connected product with a DTC subscription layer requires the brand to own the end-customer relationship directly, while the entire gear company operating model is optimized for Petco and PetSmart velocity.
Those two motions are not compatible, and the brands that have tried to run both simultaneously have mostly ended up with a DTC operation the retail team deprioritizes and a subscription product the retail partner does not know how to sell.
The Playbook Is Already Written
The tariff cycle compressing margins on imported accessories is not just an operational headache.
It is a forcing function.
The brands that use this moment to shift product mix toward connected, higher-margin hardware will come out of the compression cycle with a fundamentally different business underneath them.
The ones that double down on cheap imported soft goods while simultaneously entering a crowded food market are placing two bad bets at the same time.
The smartest connected pet brands are not waiting for customers to find them on a retail shelf.
Fi has embedded its hardware across a remarkably broad set of partner relationships, offering a free collar plus six-month membership alongside subscriptions from Ollie, The Farmer's Dog, and BarkBox, as well as spending thresholds at boutique pet retailers, grooming chains, and dog training studios.
The collar is the loss leader. The subscription is the business.
Every partnership is an installed base acquisition, and the model is scaling across categories in ways that traditional gear distribution has not attempted.
It does not even require connectivity to work at every price point. Impact Dog Crates runs a genuine hardware rental program starting at $49 per month, where customers pay for access to the crate and return it when they cancel, which is not a payment plan in disguise.
The model works specifically because Impact crates are high-ticket gear where a monthly rental is a meaningful fraction of the purchase price.
Impact’s High Anxiety Crate
The public numbers are not there yet, but the structure is sound and the logic holds.
There is also an underappreciated advantage sitting inside some of the most trusted gear brands in the category.
A company that has spent a decade earning trust on crash-tested car harnesses, working dog collars, or performance hiking gear has already solved the hardest part of the connected product problem: customer acquisition and brand credibility.
If the hardware is right, the software layer is less of a barrier than it used to be.
AI has lowered the cost and complexity of building meaningful intelligence on top of connected devices, and the brands that already own the trust relationship with serious pet owners are better positioned to build it than a tech startup with no category presence.
The moat is not just the software. It is the decade of earned credibility that makes a pet owner willing to trust a new product from a brand they already rely on.
The cat opportunity deserves specific attention for anyone mapping this.
Cat ownership grew 5% year-over-year in 2025 to 39% of U.S. households, led by Gen Z and Millennial renters in urban markets.
But the connected cat product opportunity is more concentrated than the dog analog suggests. The litter box is where the actionable data lives, not the collar.
Bathroom visit frequency, duration, and pattern changes are among the earliest detectable signals of illness in cats, and Whisker built its entire valuation case around exactly that insight.
The category is not broadly open.
It is specifically open around health monitoring in the places cats actually live and behave.
For investors, late-stage capital in pet tech has become scarce in a way that does not match the underlying growth.
Fi has not raised since 2021. Petlibro has not raised since December 2023. Halo has not raised since 2021.
These businesses are scaling without capital to reflect it, which means there is a valuation gap to close in a category where the exit thesis has been validated twice in the last twelve months.
The gear companies moving toward food are not wrong about what they need. They need recurring revenue.
They need switching costs. They need a compounding installed base.
They are just trying to build those things in a market where the defensive positions are already occupied.
The collar in your product line already has a strap around millions of dogs' necks. The feeder is already in millions of kitchens.
The litter box is already in millions of bathrooms. None of those customers are going anywhere, but right now, you are not charging them for staying.
Tractive figured that out. Whisker figured that out. Woof figured out its own version of it. The question for the rest of the gear category is whether they get there before Chewy's private label does it for them.
