Q2 Net Revenue Growth of 84% Year over Year to
$4.3 billion 26.0 million Active Customers, up 46% Year over
Year
Wayfair Inc. (NYSE: W), one of the world’s largest online
destinations for the home, today reported financial results for its
second quarter ended June 30, 2020.
Second Quarter 2020 Financial
Highlights
- Total net revenue increased $2.0 billion to $4.3 billion, up
83.7% year over year
- U.S. net revenue increased $1.7 billion, up 82.5% year over
year
- International net revenue increased $310.2 million, up 90.5%
year over year. International segment Net Revenue Constant Currency
Growth was 96.9%
- Gross profit was $1.3 billion or 30.7% of total net
revenue
- GAAP net income was $273.9 million
- Non-GAAP Adjusted EBITDA and Adjusted EBITDA Margin was $439.8
million or 10.2%, respectively of total net revenue
- GAAP diluted earnings per share was $2.54
- Non-GAAP Diluted Earnings Per Share was $3.13
- Non-GAAP Free Cash Flow was $1.1 billion
- At the end of the second quarter, cash, cash equivalents, and
short- and long-term investments totaled $2.4 billion
“We are all currently living and operating in uncertain times,
which are dominated by the global pandemic as well as pressing
social issues. In this environment, Wayfair remains fully committed
to supporting our customers, our employees, and our broader
communities, while continuing to operate with excellence,” said
Niraj Shah, CEO, co-founder and co-chairman, Wayfair. “The second
quarter was a very strong period for Wayfair. Our strategic long
term investments positioned us well to serve our customers and to
quickly adapt during a challenging time. We experienced
unprecedented demand in Q2 and saw record numbers of new and repeat
customers choose Wayfair. Our proprietary logistics network, strong
supplier partnerships, and nimble and dedicated team of more than
16,000 employees enabled Wayfair to consistently serve our
customers at a time they needed us most, both in North America and
Europe. The plans that we put in place in late 2019, combined with
these factors, translated to a powerful profitability inflection,
and we generated over $1 billion in free cash flow in the quarter.
Our financial performance in Q2 also highlighted the inherent
structural profitability of the business, as we begin to pair our
strong growth characteristics with consistent profit delivery while
continuing to make investments with a long-term orientation.
Looking forward, together with our suppliers, we remain committed
to being the best solution for our customers as they seek comfort
in their homes.”
Other Second Quarter
Highlights
- The number of active customers in our Direct Retail business
reached 26.0 million as of June 30, 2020, an increase of 46.0% year
over year
- LTM net revenue per active customer was $440 as of June 30,
2020, a decrease of 1.6% year over year
- Orders per customer, measured as LTM orders divided by active
customers, was 1.89 for the second quarter of 2020, compared to
1.86 for the second quarter of 2019
- Repeat customers placed 67.4% of total orders in the second
quarter of 2020, compared to 67.8% in the second quarter of
2019
- Repeat customers placed 12.7 million orders in the second
quarter of 2020, an increase of 104.9% year over year
- Orders delivered in the second quarter of 2020 were 18.9
million, an increase of 106.2% year over year
- Average order value was $227 for the second quarter of 2020,
compared to $255 for the second quarter of 2019
- In the second quarter of 2020, 60.6% of total orders delivered
for our Direct Retail business were placed via a mobile device,
compared to 53.5% in the second quarter of 2019
Webcast and Conference
Call
Wayfair will host a conference call and webcast to discuss its
second quarter 2020 financial results today at 8 a.m. (ET).
Investors and participants can register for the call in advance by
visiting http://www.directeventreg.com/registration/event/8686848.
After registering, instructions will be shared on how to join the
call. The call will also be available via live webcast at
https://bit.ly/2C8rbFD and supporting slides will be available at
investor.wayfair.com. An archive of the webcast conference call
will be available shortly after the call ends 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 $11.5 billion in net revenue for the twelve
months ended June 30, 2020. Headquartered in Boston, Massachusetts
with operations throughout North America and Europe, the company
employs more than 16,200 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, e-commerce adoption trends,
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
Earnings (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 net income (loss) before
depreciation and amortization, equity-based compensation and
related taxes, interest (expense), net, other 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 (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 Earnings (Loss) Per Share is a non-GAAP
financial measure that is calculated as GAAP net income (loss) plus
equity-based compensation and related taxes, provision for income
taxes, net, non-recurring items, other items not indicative of our
ongoing operating performance, and, if dilutive, interest expense
associated with convertible debt instruments under the if-converted
method divided by the weighted-average number of shares of common
stock used in the computation of diluted earnings (loss) per share.
We believe that these adjustments to our non-GAAP diluted net
income (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 income (loss). We do not attempt to
provide a reconciliation of forward-looking non-GAAP Adjusted
EBITDA guidance to forward looking GAAP net income (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.
These 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 income
(loss) to Adjusted EBITDA and Adjusted EBITDA Margin for each of
the periods indicated:
Three months ended June
30,
Six months ended June
30,
2020
2019
2020
2019
(in thousands)
Reconciliation of Adjusted
EBITDA
Net income (loss)
$
273,877
$
(181,938
)
$
(11,988
)
$
(382,327
)
Depreciation and amortization
69,114
44,339
135,957
83,922
Equity-based compensation and related
taxes
70,701
56,855
134,693
108,688
Interest expense, net
28,939
10,252
51,157
19,490
Other (income), net
(3,110
)
(322
)
(2,864
)
(3,400
)
Provision for income taxes, net
292
831
1,625
1,426
Other (1)
—
—
3,956
—
Adjusted EBITDA
$
439,813
$
(69,983
)
$
312,536
$
(172,201
)
Net revenue
$
4,304,672
$
2,343,251
$
6,634,735
$
4,288,080
Adjusted EBITDA Margin
10.2
%
(3.0
)
%
4.7
%
(4.0
)
%
(1)
The Company recorded $4.0 million
in the six months ended June 30, 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 income (loss) to
consolidated Adjusted EBITDA is presented in the preceding
table:
Three months ended June
30,
Six months ended June
30,
2020
2019
2020
2019
(in thousands)
Segment Adjusted EBITDA
U.S.
$
434,574
$
(342
)
$
389,479
$
(28,124
)
International
5,239
(69,641
)
(76,943
)
(144,077
)
Adjusted EBITDA
$
439,813
$
(69,983
)
$
312,536
$
(172,201
)
A reconciliation of GAAP net income (loss) to non-GAAP diluted
net income (loss), the most directly comparable GAAP financial
measure, in order to calculate Non-GAAP Diluted Earnings (Loss) Per
Share, is as follows:
Three months ended June
30,
Six months ended June
30,
2020
2019
2020
2019
(in thousands, except per
share data)
Numerator:
Net income (loss)
$
273,877
$
(181,938
)
$
(11,988
)
$
(382,327
)
Effect of dilutive securities:
Interest expense associated with
convertible debt instruments
30,195
—
—
—
Numerator for diluted EPS - net income
(loss) available to common stockholders after the effect of
dilutive securities
304,072
(181,938
)
(11,988
)
(382,327
)
Non-GAAP adjustments to net income
(loss)
Equity-based compensation and related
taxes
70,701
56,855
134,693
108,688
Provision for income taxes, net
292
831
1,625
1,426
Other
—
—
3,956
—
Numerator for Non-GAAP Diluted EPS -
Non-GAAP net income (loss)
$
375,065
$
(124,252
)
$
128,286
$
(272,213
)
Denominator:
Denominator for basic EPS -
weighted-average number of shares of common stock outstanding
94,834
91,802
94,461
91,455
Effect of dilutive securities:
Employee stock options
31
—
—
—
Restricted stock units
2,788
—
—
—
Convertible debt instruments
22,279
—
—
—
Dilutive potential common shares
25,098
—
—
—
Denominator for diluted EPS - adjusted
weighted-average number of shares of common stock outstanding after
the effect of dilutive securities
119,932
91,802
94,461
91,455
Non-GAAP adjustments to effect of dilutive
securities:
Employee stock options
—
—
36
—
Restricted stock units
—
—
2,078
—
Convertible debt instruments
—
—
—
—
Denominator for Non-GAAP Diluted EPS -
non-GAAP adjusted weighted-average number of shares of common stock
outstanding after the effect of dilutive securities
119,932
91,802
96,575
91,455
Non-GAAP Earnings (Loss) per Share,
Diluted
$
3.13
$
(1.35
)
$
1.33
$
(2.98
)
The following table presents net revenues attributable to our
reportable segments for the periods indicated:
Three Months Ended June
30,
Six Months Ended June
30,
2020
2019
2020
2019
(in thousands)
U.S. net revenue
$
3,651,704
$
2,000,518
$
5,626,687
$
3,658,216
International net revenue
652,968
342,733
1,008,048
629,864
Total net revenue
$
4,304,672
$
2,343,251
$
6,634,735
$
4,288,080
The following table presents a reconciliation of net cash
provided by (used in) operating activities to Free Cash Flow for
each of the periods indicated:
Three months ended June
30,
Six months ended June
30,
2020
2019
2020
2019
(in thousands)
Net cash provided by (used in) operating
activities
$
1,135,251
$
(2,734
)
$
878,961
$
(84,082
)
Purchase of property and equipment
(44,846
)
(54,714
)
(104,810
)
(115,340
)
Site and software development costs
(36,803
)
(34,023
)
(75,172
)
(58,866
)
Free Cash Flow
$
1,053,602
$
(91,471
)
$
698,979
$
(258,288
)
Key Financial and Operating Metrics
Three months ended June
30,
Six months ended June
30,
2020
2019
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)
$
4,294,236
$
2,331,759
$
6,616,818
$
4,262,940
Active Customers
25,979
17,799
25,979
17,799
LTM Net Revenue per Active Customer
$
440
$
447
$
440
$
447
Orders Delivered
18,892
9,162
28,768
17,325
Average Order Value
$
227
$
255
$
230
$
246
Non-GAAP Financial Measures:
Adjusted EBITDA
$
439,813
$
(69,983
)
$
312,536
$
(172,201
)
Free Cash Flow
$
1,053,602
$
(91,471
)
$
698,979
$
(258,288
)
(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
$10.4 million and $17.9 million of net revenue for the three and
six months ended June 30, 2020, respectively, and $11.5 million and
$25.1 million of net revenue for the three and six months ended
June 30, 2019, respectively.
WAYFAIR INC.
CONSOLIDATED AND CONDENSED
BALANCE SHEETS
(Unaudited)
June 30, 2020
December 31,
2019
(in thousands, except share
and per share data)
Assets:
Current assets
Cash and cash equivalents
$
2,181,471
$
582,753
Short-term investments
192,746
404,252
Accounts receivable, net of allowance for
credit losses of $28,155 and $22,774 at June 30, 2020 and December
31, 2019, respectively
118,984
99,720
Inventories
42,841
61,692
Prepaid expenses and other current
assets
342,985
228,721
Total current assets
2,879,027
1,377,138
Operating lease right-of-use assets
802,456
763,400
Property and equipment, net
667,456
624,544
Goodwill and intangible assets, net
18,007
18,809
Long-term investments
—
155,690
Other noncurrent assets
12,550
13,467
Total assets
$
4,379,496
$
2,953,048
Liabilities and Stockholders'
Deficit:
Current liabilities
Accounts payable
$
1,270,495
$
908,097
Accrued expenses
299,714
298,918
Unearned revenue
333,781
167,641
Other current liabilities
379,431
236,863
Total current liabilities
2,283,421
1,611,519
Long-term debt
1,988,213
1,456,195
Operating lease liabilities
863,135
822,602
Other liabilities
32,119
6,940
Total liabilities
5,166,888
3,897,256
Commitments and contingencies (Note 8)
Stockholders’ deficit:
Undesignated preferred stock, $0.001 par
value per share: 10,000,000 shares authorized and none issued at
June 30, 2020 and December 31, 2019
—
—
Class A common stock, par value $0.001 per
share, 500,000,000 shares authorized, 68,108,216 and 66,642,611
shares issued and outstanding at June 30, 2020 and December 31,
2019, respectively
68
67
Class B common stock, par value $0.001 per
share, 164,000,000 shares authorized, 26,956,796 and 26,957,815
shares issued and outstanding at June 30, 2020 and December 31,
2019, respectively
27
27
Additional paid-in capital
1,295,971
1,122,548
Accumulated deficit
(2,082,934
)
(2,065,423
)
Accumulated other comprehensive loss
(524
)
(1,427
)
Total stockholders’ deficit
(787,392
)
(944,208
)
Total liabilities and stockholders’
deficit
$
4,379,496
$
2,953,048
WAYFAIR INC.
CONSOLIDATED AND CONDENSED
STATEMENTS OF OPERATIONS
(Unaudited)
Three months ended June
30,
Six months ended June
30,
2020
2019
2020
2019
(in thousands, except per
share data)
Net revenue
$
4,304,672
$
2,343,251
$
6,634,735
$
4,288,080
Cost of goods sold (1)
2,983,642
1,783,651
4,734,582
3,258,024
Gross profit
1,321,030
559,600
1,900,153
1,030,056
Operating expenses:
Customer service and merchant fees (1)
143,773
88,502
233,236
164,975
Advertising
417,777
259,166
693,537
503,135
Selling, operations, technology, general
and administrative (1)
459,482
383,109
935,450
726,757
Total operating expenses
1,021,032
730,777
1,862,223
1,394,867
Income (loss) from operations
299,998
(171,177
)
37,930
(364,811
)
Interest (expense), net
(28,939
)
(10,252
)
(51,157
)
(19,490
)
Other income, net
3,110
322
2,864
3,400
Income (loss) before income taxes
274,169
(181,107
)
(10,363
)
(380,901
)
Provision for income taxes, net
292
831
1,625
1,426
Net income (loss)
$
273,877
$
(181,938
)
$
(11,988
)
$
(382,327
)
Basic earnings (loss) per share
$
2.89
$
(1.98
)
$
(0.13
)
$
(4.18
)
Diluted earnings (loss) per share
$
2.54
$
(1.98
)
$
(0.13
)
$
(4.18
)
Weighted-average number of shares of
common stock outstanding used in computing per share amounts:
Basic
94,834
91,802
94,461
91,455
Diluted
119,932
91,802
94,461
91,455
(1) Includes equity-based compensation and related taxes as
follows:
Cost of goods sold
$
2,353
$
1,317
$
4,081
$
2,309
Customer service and merchant fees
4,313
2,269
6,432
4,245
Selling, operations, technology, general
and administrative
64,035
53,269
124,180
102,134
$
70,701
$
56,855
$
134,693
$
108,688
WAYFAIR INC.
CONSOLIDATED AND CONDENSED
STATEMENTS OF CASH FLOWS
(Unaudited)
Six months ended June
30,
2020
2019
(in thousands)
Cash flows from operating
activities:
Net loss
$
(11,988
)
$
(382,327
)
Adjustments to reconcile net loss to net
cash provided by (used in) operating activities
Depreciation and amortization
135,957
83,922
Equity-based compensation
127,081
100,247
Amortization of discount and issuance
costs on convertible notes
46,488
23,015
Other non-cash adjustments
(531
)
(1,595
)
Changes in operating assets and
liabilities:
Accounts receivable, net
(24,693
)
(27,653
)
Inventories
18,828
540
Prepaid expenses and other current
assets
(114,296
)
(22,432
)
Accounts payable and accrued expenses
369,666
128,611
Unearned revenue and other liabilities
331,511
14,914
Other assets
938
(1,324
)
Net cash provided by (used in) operating
activities
878,961
(84,082
)
Cash flows from investing
activities:
Sale and maturities of short- and
long-term investments
368,310
82,164
Purchase of property and equipment
(104,810
)
(115,340
)
Site and software development costs
(75,172
)
(58,866
)
Other investing activities, net
(124
)
2,773
Net cash provided by (used in) investing
activities
188,204
(89,269
)
Cash flows from financing
activities:
Proceeds from borrowings
200,000
—
Repayment of borrowings
(200,000
)
—
Proceeds from issuance of convertible
notes, net of issuance costs
527,423
—
Taxes paid related to net share settlement
of equity awards
—
(424
)
Deferred financing costs
—
(791
)
Net proceeds from exercise of stock
options
220
80
Net cash provided by (used in) financing
activities
527,643
(1,135
)
Effect of exchange rate changes on cash
and cash equivalents
3,910
136
Net increase (decrease) in cash and cash
equivalents
1,598,718
(174,350
)
Cash and cash equivalents:
Beginning of period
582,753
849,461
End of period
$
2,181,471
$
675,111
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200805005247/en/
Media Relations Contact: Jane Carpenter, 617-502-7595
PR@wayfair.com
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