Q1 Net Revenue Growth of 20% Year over Year to
$2.3 billion
21.1 million Active Customers, up 29% Year over
Year
Wayfair Inc. (NYSE: W), one of the world’s largest online
destinations for the home, today reported financial results for its
first quarter ended March 31, 2020.
First Quarter 2020 Financial
Highlights
- Total net revenue increased $385.2 million to $2.3 billion, up
19.8% year over year
- Direct Retail net revenue increased $391.4 million to $2.3
billion, up 20.3% year over year
- U.S. net revenue increased $317.3 million, up 19.1% year over
year
- International net revenue increased $67.9 million, up 23.7%
year over year. International segment Net Revenue Constant Currency
Growth was 25.5%
- Gross profit was $579.1 million or 24.9% of total net
revenue
- GAAP net loss was $285.9 million
- Non-GAAP Adjusted EBITDA and Adjusted EBITDA Margin was
$(127.3) million or (5.5)%, respectively of total net revenue
- GAAP basic and diluted net loss per share was $3.04
- Non-GAAP Diluted Net Loss Per Share was $2.30
- Non-GAAP Free Cash Flow was $(354.6) million
- At the end of the first quarter, cash, cash equivalents, and
short- and long-term investments totaled $891.0 million
"During this unprecedented time, we are working tirelessly to
serve our customers across two continents. We are also working hard
to help our communities with donations, emergency supply of goods,
and logistics support. Both our frontline and corporate employees
have adapted quickly and seamlessly to new processes and protocols
to continue to serve strong demand, while keeping our customers,
employees, and communities safe,” said Niraj Shah, CEO, co-founder
and co-chairman, Wayfair. “The broader market disruption has
highlighted the many differentiated advantages we have built as the
e-commerce leader in Home over the last two decades. Millions of
new shoppers have discovered Wayfair while they shelter in place at
home, and we are seeing strong acceleration in new and repeat
customer orders across almost all classes of goods and across all
regions. In parallel, as we execute on the plans we set in motion
late last year, we are making significant strides toward
profitability by driving gross margin expansion, increasing
marketing efficiencies, and gaining leverage on operating expenses.
Our solid internal progress and healthy balance sheet put us in a
position of strength in a highly dynamic environment. We remain
confident in the success of our business as the shift of our
category online accelerates and we continue to aggressively invest
in our future.”
Other First Quarter
Highlights
- The number of active customers in our Direct Retail business
reached 21.1 million as of March 31, 2020, an increase of 28.6%
year over year
- LTM net revenue per active customer was $449 as of March 31,
2020, an increase of 1.6% year over year
- Orders per customer, measured as LTM orders divided by active
customers, was 1.86 for the first quarter of 2020, compared to 1.85
for the first quarter of 2019
- Repeat customers placed 69.8% of total orders in the first
quarter of 2020, compared to 66.0% in the first quarter of
2019
- Repeat customers placed 6.9 million orders in the first quarter
of 2020, an increase of 27.9% year over year
- Orders delivered in the first quarter of 2020 were 9.9 million,
an increase of 21.0% year over year
- Average order value was $235 for the first quarter of 2020,
compared to $237 for the first quarter of 2019
- In the first quarter of 2020, 54.8% of total orders delivered
for our Direct Retail business were placed via a mobile device,
compared to 53.4% in the first quarter of 2019
Webcast and Conference
Call
Wayfair will host a conference call and webcast to discuss its
first quarter 2020 financial results today at 8 a.m. (ET).
Investors and participants can access the call by dialing (833)
286-5803 in the U.S. and (647) 689-4448 internationally. The
passcode for the conference line is 3044789. The call will also be
available via live webcast at investor.wayfair.com along with
supporting slides. An archive of the webcast conference call will
be available shortly after the call ends. The archived webcast will
be available at investor.wayfair.com.
About Wayfair
Wayfair believes everyone should live in a home they love.
Through technology and innovation, Wayfair makes it possible for
shoppers to quickly and easily find exactly what they want from a
selection of more than 18 million items across home furnishings,
décor, home improvement, housewares and more. Committed to
delighting its customers every step of the way, Wayfair is
reinventing the way people shop for their homes - from product
discovery to final delivery.
The Wayfair family of sites includes:
- Wayfair - All things home, all in one place.
- Joss & Main - Stylish designs to discover
daily.
- AllModern - The best of modern, priced for real
life.
- Birch Lane - Classic home. Comfortable cost.
- Perigold - The widest-ever selection of luxury home
furnishings.
Wayfair generated $9.5 billion in net revenue for the twelve
months ended March 31, 2020. Headquartered in Boston, Massachusetts
with operations throughout North America and Europe, the company
employs more than 15,900 people.
Forward-Looking
Statements
This press release contains forward-looking statements within
the meaning of federal and state securities laws. All statements
other than statements of historical fact contained in this press
release, including statements regarding our investment plans and
anticipated returns on those investments, our future customer
growth, our future results of operations and financial position,
available liquidity and access to financing sources, our business
strategy, plans and objectives of management for future operations,
consumer activity and behaviors, developments in our technology and
systems and anticipated results of those developments and the
impact of the recent novel coronavirus (COVID-19) pandemic and our
response to it, , are forward-looking statements. In some cases,
you can identify forward-looking statements by terms such as "may,"
"will," "should," "expects," "plans," "anticipates," "could,"
"intends," "target," "projects," "contemplates," "believes,"
"estimates," "predicts," "potential" or "continue" or the negative
of these terms or other similar expressions.
Forward-looking statements are based on current expectations of
future events. We cannot guarantee that any forward-looking
statement will be accurate, although we believe that we have been
reasonable in our expectations and assumptions. Investors should
realize that if underlying assumptions prove inaccurate or that
known or unknown risks or uncertainties materialize, actual results
could vary materially from our expectations and projections.
Investors are therefore cautioned not to place undue reliance on
any forward-looking statements. These forward-looking statements
speak only as of the date of this press release and, except as
required by applicable law, we undertake no obligation to publicly
update or revise any forward-looking statements contained herein,
whether as a result of any new information, future events or
otherwise.
A list and description of risks, uncertainties and other factors
that could cause or contribute to differences in our results can be
found in our filings with the Securities and Exchange Commission,
including our most recent Annual Report on Form 10-K and subsequent
filings. We qualify all of our forward-looking statements by these
cautionary statements.
Non-GAAP Financial
Measures
To supplement our Unaudited Consolidated and Condensed Financial
Statements presented in accordance with generally accepted
accounting principles ("GAAP"), this earnings release and the
accompanying tables and the related earnings conference call
contain certain non-GAAP financial measures, including Adjusted
EBITDA, Adjusted EBITDA as a percentage of total net revenue
("Adjusted EBITDA Margin"), Free Cash Flow, Non-GAAP Diluted Net
Loss Per Share and Net Revenue Constant Currency Growth. We use
these non-GAAP financial measures internally in analyzing our
financial results and believe they are useful to investors, as a
supplement to GAAP measures, in evaluating our ongoing operational
performance. We have provided a reconciliation of these non-GAAP
financial measures to the most directly comparable GAAP financial
measure in this earnings release.
Adjusted EBITDA and Adjusted EBITDA Margin are non-GAAP
financial measures that are calculated as loss before depreciation
and amortization, equity-based compensation and related taxes,
interest (expense), net, other (expense) income, net, provision for
income taxes, net, non-recurring items, and other items not
indicative of our ongoing operating performance. We have included
Adjusted EBITDA and Adjusted EBITDA Margin in this earnings release
because they are key measures used by our management and our 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 and Adjusted EBITDA Margin
facilitates operating performance comparisons on a period-to-period
basis as these costs may vary independent of business performance.
We do not consider equity-based compensation and related taxes to
be indicative of our core operating performance, however investors
should understand that equity-based compensation will be a
significant recurring expense in our business and is an important
part of the compensation provided to our employees. Accordingly, we
believe that Adjusted EBITDA and Adjusted EBITDA Margin provide
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 is a non-GAAP financial measure that is
calculated as net cash provided by or used in operating activities
less net cash used to purchase property and equipment and site and
software development costs. We believe Free Cash Flow is an
important indicator of our business performance, 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.
Non-GAAP Diluted Net Loss Per Share is a non-GAAP financial
measure that is calculated as GAAP net loss plus equity-based
compensation and related taxes, provision for income taxes, net,
non-recurring items, and other items not indicative of our ongoing
operating performance divided by weighted average shares. We
believe that adding back equity-based compensation and related
taxes, provision for income taxes, net, non-recurring items, and
other items not indicative of our ongoing operating performance as
adjustments to our GAAP diluted net loss before calculating per
share amounts for all periods presented provides a more meaningful
comparison between our operating results from period to period.
Net Revenue Constant Currency Growth is a non-GAAP financial
measure that is calculated by translating the current period local
currency net revenue by the currency exchange rates used to
translate the financial statements in the comparable prior-year
period. We believe Net Revenue Constant Currency Growth is an
important indicator of our business performance, as it provides
useful information to investors and others in understanding and
evaluating trends in our operating results in the same manner as
our management.
We calculate forward-looking non-GAAP Adjusted EBITDA based on
internal forecasts that omit certain amounts that would be included
in forward-looking GAAP net loss. We do not attempt to provide a
reconciliation of forward-looking non-GAAP Adjusted EBITDA guidance
to forward looking GAAP net loss because forecasting the timing or
amount of items that have not yet occurred and are out of the
Company’s control is inherently uncertain and unavailable without
unreasonable efforts. Further, we believe that such reconciliations
would imply a degree of precision and certainty that could be
confusing to investors. Such items could have a substantial impact
on GAAP measures of financial performance.
The non-GAAP measures have limitations as analytical tools. We
do not, nor do we suggest that investors should, consider such
non-GAAP financial measures in isolation from, or as a substitute
for, financial information prepared in accordance with GAAP.
Investors should also note that the non-GAAP financial measures we
use may not be the same non-GAAP financial measures, and may not be
calculated in the same manner, as that of other companies,
including other companies in our industry.
The following table reflects the reconciliation of net loss to
Adjusted EBITDA and Adjusted EBITDA Margin for each of the periods
indicated:
Three months ended March
31,
2020
2019
(in thousands)
Reconciliation of Adjusted
EBITDA
Net loss
$
(285,865
)
$
(200,389
)
Depreciation and amortization
66,843
39,583
Equity-based compensation and related
taxes
63,992
51,833
Interest expense, net
22,218
9,238
Other expense (income), net
246
(3,078
)
Provision for income taxes, net
1,333
595
Other (1)
3,956
—
Adjusted EBITDA
$
(127,277
)
$
(102,218
)
Net revenue
$
2,330,063
$
1,944,829
Adjusted EBITDA Margin
(5.5
)%
(5.3
)%
(1)
The Company recorded $4.0 million in the
three months ended March 31, 2020 in selling, operations,
technology, general and administrative expenses in the Consolidated
and Condensed Statements of Operations related to severance costs
associated with February 2020 workforce reductions.
The following table presents Adjusted EBITDA attributable to our
segments, and the reconciliation of net loss to consolidated
Adjusted EBITDA is presented in the preceding table:
Three months ended March
31,
2020
2019
(in thousands)
Segment Adjusted EBITDA
U.S.
$
(45,095
)
$
(27,782
)
International
(82,182
)
(74,436
)
Adjusted EBITDA
$
(127,277
)
$
(102,218
)
A reconciliation of GAAP net loss to non-GAAP diluted net loss,
the most directly comparable GAAP financial measure, in order to
calculate Non-GAAP Diluted Net Loss Per Share, is as follows:
Three months ended March
31,
2020
2019
(in thousands, except per
share data)
Net loss
$
(285,865
)
$
(200,389
)
Equity-based compensation and related
taxes
63,992
51,833
Provision for income taxes, net
1,333
595
Other (1)
3,956
—
Non-GAAP net loss
$
(216,584
)
$
(147,961
)
Non-GAAP net loss per share, basic and
diluted
$
(2.30
)
$
(1.62
)
Weighted average number of common stock
outstanding used in computing per share amounts, basic and
diluted
94,089
91,104
(1)
The Company recorded $4.0 million in the
three months ended March 31, 2020 in selling, operations,
technology, general and administrative expenses in the Consolidated
and Condensed Statements of Operations related to severance costs
associated with February 2020 workforce reductions.
The following table presents net revenues attributable to our
reportable segments for the periods indicated:
Three Months Ended March
31,
2020
2019
(in thousands)
U.S. net revenue
$
1,974,983
$
1,657,698
International net revenue
355,080
287,131
Total net revenue
$
2,330,063
$
1,944,829
The following table presents a reconciliation of net cash used
in operating activities to Free Cash Flow for each of the periods
indicated:
Three months ended March
31,
2020
2019
(in thousands)
Net cash used in operating activities
$
(256,290
)
$
(81,348
)
Purchase of property and equipment
(59,964
)
(60,626
)
Site and software development costs
(38,369
)
(24,843
)
Free Cash Flow
$
(354,623
)
$
(166,817
)
Key Financial and Operating
Metrics
Three months ended March
31,
2020
2019
(in thousands, except LTM Net
Revenue per Active Customer and Average Order Value)
Direct Retail Financial and Operating
Metrics:
Direct Retail Net Revenue (1)
$
2,322,582
$
1,931,181
Active Customers
21,108
16,408
LTM Net Revenue per Active Customer
$
449
$
442
Orders Delivered
9,876
8,163
Average Order Value
$
235
$
237
Non-GAAP Financial Measures:
Adjusted EBITDA
$
(127,277
)
$
(102,218
)
Free Cash Flow
$
(354,623
)
$
(166,817
)
(1)
Direct Retail net revenue is calculated by
taking consolidated net revenue and excluding U.S. net revenue
derived from the websites operated by our retail partners and our
media solutions business, which accounted for $7.5 million and
$13.6 million of net revenue for the three months ended March 31,
2020 and 2019, respectively.
WAYFAIR INC.
CONSOLIDATED AND CONDENSED
BALANCE SHEETS
(Unaudited)
March 31, 2020
December 31, 2019
(in thousands, except share
and per share data)
Assets:
Current assets
Cash and cash equivalents
$
624,481
$
582,753
Short-term investments
266,497
404,252
Accounts receivable, net of allowance for
credit losses of $31,884 and $22,774 at March 31, 2020 and December
31, 2019, respectively
110,259
99,720
Inventories
56,574
61,692
Prepaid expenses and other current
assets
220,400
228,721
Total current assets
1,278,211
1,377,138
Operating lease right-of-use assets
780,118
763,400
Property and equipment, net
661,216
624,544
Goodwill and intangible assets, net
18,408
18,809
Long-term investments
—
155,690
Other noncurrent assets
13,468
13,467
Total assets
$
2,751,421
$
2,953,048
Liabilities and Stockholders'
Deficit:
Current liabilities
Accounts payable
$
838,300
$
908,097
Accrued expenses
255,347
298,918
Unearned revenue
164,122
167,641
Other current liabilities
236,158
236,863
Total current liabilities
1,493,927
1,611,519
Long-term debt
1,577,069
1,456,195
Operating lease liabilities
838,906
822,602
Other liabilities
12,920
6,940
Total liabilities
3,922,822
3,897,256
Commitments and contingencies (Note 8)
Convertible preferred stock, $0.001 par
value per share: 10,000,000 shares authorized and none issued at
March 31, 2020 and December 31, 2019
—
—
Stockholders’ deficit:
Class A common stock, par value $0.001 per
share, 500,000,000 shares authorized, 67,405,521 and 66,642,611
shares issued and outstanding at March 31, 2020 and December 31,
2019, respectively
67
67
Class B common stock, par value $0.001 per
share, 164,000,000 shares authorized, 26,957,041 and 26,957,815
shares issued and outstanding at March 31, 2020 and December 31,
2019, respectively
27
27
Additional paid-in capital
1,184,674
1,122,548
Accumulated deficit
(2,356,811
)
(2,065,423
)
Accumulated other comprehensive income
(loss)
642
(1,427
)
Total stockholders’ deficit
(1,171,401
)
(944,208
)
Total liabilities and stockholders’
deficit
$
2,751,421
$
2,953,048
WAYFAIR INC.
CONSOLIDATED AND CONDENSED
STATEMENTS OF OPERATIONS
(Unaudited)
Three months ended March
31,
2020
2019
(in thousands, except per
share data)
Net revenue
$
2,330,063
$
1,944,829
Cost of goods sold (1)
1,750,940
1,474,373
Gross profit
579,123
470,456
Operating expenses:
Customer service and merchant fees (1)
89,463
76,473
Advertising
275,760
243,969
Selling, operations, technology, general
and administrative (1)
475,968
343,648
Total operating expenses
841,191
664,090
Loss from operations
(262,068
)
(193,634
)
Interest (expense), net
(22,218
)
(9,238
)
Other (expense) income, net
(246
)
3,078
Loss before income taxes
(284,532
)
(199,794
)
Provision for income taxes, net
1,333
595
Net loss
$
(285,865
)
$
(200,389
)
Net loss per share, basic and diluted
$
(3.04
)
$
(2.20
)
Weighted average number of common stock
outstanding used in computing per share amounts, basic and
diluted
94,089
91,104
(1) Includes equity-based compensation and related taxes as
follows:
Cost of goods sold
$
1,728
$
992
Customer service and merchant fees
2,118
1,976
Selling, operations, technology, general
and administrative
60,146
48,865
$
63,992
$
51,833
WAYFAIR INC.
CONSOLIDATED AND CONDENSED
STATEMENTS OF CASH FLOWS
(Unaudited)
Three months ended March
31,
2020
2019
(in thousands)
Cash flows from operating
activities:
Net loss
$
(285,865
)
$
(200,389
)
Adjustments to reconcile net loss to net
cash used in operating activities
Depreciation and amortization
66,843
39,583
Equity-based compensation
59,449
47,060
Amortization of discount and issuance
costs on convertible notes
19,527
12,456
Other non-cash adjustments
(633
)
(1,374
)
Changes in operating assets and
liabilities:
Accounts receivable, net
(16,216
)
(11,570
)
Inventories
5,023
2,427
Prepaid expenses and other current
assets
7,802
(10,535
)
Accounts payable and accrued expenses
(114,623
)
46,631
Unearned revenue and other liabilities
2,379
(4,933
)
Other assets
24
(704
)
Net cash used in operating activities
(256,290
)
(81,348
)
Cash flows from investing
activities:
Sale and maturities of short- and
long-term investments
294,810
37,936
Purchase of property and equipment
(59,964
)
(60,626
)
Site and software development costs
(38,369
)
(24,843
)
Other investing activities, net
(124
)
2,838
Net cash provided by (used in) investing
activities
196,353
(44,695
)
Cash flows from financing
activities:
Proceeds from borrowings
100,000
—
Taxes paid related to net share settlement
of equity awards
—
(165
)
Deferred financing costs
—
(791
)
Net proceeds from exercise of stock
options
125
67
Net cash provided by (used in) financing
activities
100,125
(889
)
Effect of exchange rate changes on cash
and cash equivalents
1,540
(169
)
Net increase (decrease) in cash and cash
equivalents
41,728
(127,101
)
Cash and cash equivalents:
Beginning of period
582,753
849,461
End of period
$
624,481
$
722,360
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200505005264/en/
Media Relations Contact: Jane Carpenter, 617-502-7595
PR@wayfair.com
Investor Relations Contact: Jane Gelfand, 857-315-3270
IR@wayfair.com
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