Q3 Net Revenue Growth of 67% Year over Year to
$3.8 billion 28.8 million Active Customers, up 51% Year over
Year
Wayfair Inc. (NYSE: W), one of the world’s largest online
destinations for the home, today reported financial results for its
third quarter ended September 30, 2020.
Third Quarter 2020 Financial
Highlights
- Total net revenue increased $1.5 billion to $3.8 billion, up
66.5% year over year
- U.S. net revenue increased $1.3 billion, up 66.5% year over
year
- International net revenue increased $225.9 million, up 66.7%
year over year. International segment Net Revenue Constant Currency
Growth was 63.9%
- Gross profit was $1.1 billion or 29.9% of total net
revenue
- Net income was $173.2 million
- Non-GAAP Adjusted EBITDA and Adjusted EBITDA Margin were $371.1
million and 9.7%, respectively, of total net revenue
- Diluted earnings per share was $1.67
- Non-GAAP Diluted Earnings per Share was $2.30
- Non-GAAP Free Cash Flow was $255.0 million
- Cash, cash equivalents, and short- and long-term investments
totaled $2.6 billion
“In the midst of continued uncertainty about the economy and the
pandemic, Wayfair delivered another quarter of strong operating and
financial results in Q3. Category momentum is vibrant, demand is
moving online at an accelerated pace, and we expect the home to be
even more important than usual when it comes to celebrating the
holidays this year,” said Niraj Shah, CEO, co-founder and
co-chairman, Wayfair. “Our long-term mindset and strategic
investments in merchandising, selection, service and delivery both
in North America and in Europe are translating to share gains,
sustained profitability, and positive free cash flow generation.
While today’s unique environment has accentuated these trends, we
are confident that there is a long runway for continued strong
profitable growth ahead for Wayfair -- well beyond when the current
circumstances have passed.”
Other Third Quarter
Highlights
- The number of active customers in our Direct Retail business
reached 28.8 million as of September 30, 2020, an increase of 50.9%
year over year
- LTM net revenue per active customer was $451 as of September
30, 2020, an increase of 0.4% year over year
- Orders per customer, measured as LTM orders divided by active
customers, was 1.94 for the third quarter of 2020, compared to 1.85
for the third quarter of 2019
- Repeat customers placed 71.9% of total orders in the third
quarter of 2020, compared to 67.3% in the third quarter of
2019
- Repeat customers placed 11.3 million orders in the third
quarter of 2020, an increase of 84.4% year over year
- Orders delivered in the third quarter of 2020 were 15.8
million, an increase of 72.8% year over year
- Average order value was $243 for the third quarter of 2020,
compared to $252 for the third quarter of 2019
- In the third quarter of 2020, 60.0% of total orders delivered
for our Direct Retail business were placed via a mobile device,
compared to 53.8% in the third quarter of 2019
Webcast and Conference
Call
Wayfair will host a conference call and webcast to discuss its
third quarter 2020 financial results today at 8 a.m. (ET).
Investors and participants should register for the call in advance
by visiting https://bit.ly/30mnaqn. 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/3cIdUSt 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 $13.0 billion in net revenue for the twelve
months ended September 30, 2020. Headquartered in Boston,
Massachusetts with operations throughout North America and Europe,
the company employs more than 16,700 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 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 (expense) income,
net, (benefit) 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, (benefit) 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 September
30,
Nine months ended September
30,
2020
2019
2020
2019
(in thousands)
Reconciliation of Adjusted
EBITDA
Net income (loss)
$
173,166
$
(272,035
)
$
161,178
$
(654,362
)
Depreciation and amortization
72,575
50,250
208,532
134,172
Equity-based compensation and related
taxes
76,683
65,275
211,376
173,963
Interest expense, net
36,315
14,432
87,472
33,922
Other expense (income), net
13,584
(2,182
)
10,720
(5,582
)
(Benefit) provision for income taxes,
net
(1,211
)
76
414
1,502
Other (1)
—
—
3,956
—
Adjusted EBITDA
$
371,112
$
(144,184
)
$
683,648
$
(316,385
)
Net revenue
$
3,839,570
$
2,305,487
$
10,474,305
$
6,593,567
Adjusted EBITDA Margin
9.7
%
(6.3
)%
6.5
%
(4.8
)%
(1)
The Company recorded $4.0 million in the
nine months ended September 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 September
30,
Nine months ended September
30,
2020
2019
2020
2019
(in thousands)
Segment Adjusted EBITDA
U.S.
$
377,007
$
(62,878
)
$
766,486
$
(91,002
)
International
(5,895
)
(81,306
)
(82,838
)
(225,383
)
Adjusted EBITDA
$
371,112
$
(144,184
)
$
683,648
$
(316,385
)
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 September
30,
Nine months ended September
30,
2020
2019
2020
2019
(in thousands, except per
share data)
Numerator:
Net income (loss)
$
173,166
$
(272,035
)
$
161,178
$
(654,362
)
Effect of dilutive securities:
Interest expense associated with
convertible debt instruments
9,136
—
—
—
Numerator for diluted EPS - net income
(loss) available to common stockholders after the effect of
dilutive securities
182,302
(272,035
)
161,178
(654,362
)
Non-GAAP adjustments to net income
(loss)
Interest expense associated with
convertible debt instruments
19,919
—
10,819
—
Equity-based compensation and related
taxes
76,683
65,275
211,376
173,963
(Benefit) provision for income taxes,
net
(1,211
)
76
414
1,502
Other
—
—
3,956
—
Numerator for Non-GAAP Diluted EPS -
Non-GAAP net income (loss)
$
277,693
$
(206,684
)
$
387,743
$
(478,897
)
Denominator:
Denominator for basic EPS -
weighted-average number of shares of common stock outstanding
95,373
92,540
94,767
91,820
Effect of dilutive securities:
Employee stock options
24
—
32
—
Restricted stock units
4,123
—
3,222
—
Convertible debt instruments
9,680
—
—
—
Dilutive potential common shares
13,827
—
3,254
—
Denominator for diluted EPS - adjusted
weighted-average number of shares of common stock outstanding after
the effect of dilutive securities
109,200
92,540
98,021
91,820
Non-GAAP adjustments to effect of dilutive
securities:
Employee stock options
—
—
—
—
Restricted stock units
—
—
—
—
Convertible debt instruments
11,330
—
4,740
—
Denominator for Non-GAAP Diluted EPS -
non-GAAP adjusted weighted-average number of shares of common stock
outstanding after the effect of dilutive securities
120,530
92,540
102,761
91,820
Non-GAAP Earnings (Loss) per Share,
Diluted
$
2.30
$
(2.23
)
$
3.77
$
(5.22
)
The following table presents net revenues attributable to our
reportable segments for the periods indicated:
Three Months Ended September
30,
Nine Months Ended September
30,
2020
2019
2020
2019
(in thousands)
U.S. net revenue
$
3,274,872
$
1,966,654
$
8,901,559
$
5,624,870
International net revenue
564,698
338,833
1,572,746
968,697
Total net revenue
$
3,839,570
$
2,305,487
$
10,474,305
$
6,593,567
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 September
30,
Nine months ended September
30,
2020
2019
2020
2019
(in thousands)
Net cash provided by (used in) operating
activities
$
331,027
$
(76,441
)
$
1,209,988
$
(160,523
)
Purchase of property and equipment
(41,493
)
(68,628
)
(146,303
)
(183,968
)
Site and software development costs
(34,506
)
(35,831
)
(109,678
)
(94,697
)
Free Cash Flow
$
255,028
$
(180,900
)
$
954,007
$
(439,188
)
Key Financial and Operating Metrics
Three months ended September
30,
Nine months ended September
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)
$
3,827,265
$
2,299,680
$
10,444,083
$
6,562,620
Active Customers
28,783
19,071
28,783
19,071
LTM Net Revenue per Active Customer
$
451
$
449
$
451
$
449
Orders Delivered
15,758
9,121
44,526
26,446
Average Order Value
$
243
$
252
$
235
$
248
Non-GAAP Financial Measures:
Adjusted EBITDA
$
371,112
$
(144,184
)
$
683,648
$
(316,385
)
Free Cash Flow
$
255,028
$
(180,900
)
$
954,007
$
(439,188
)
(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 $12.3 million and
$30.2 million of net revenue for the three and nine months ended
September 30, 2020, respectively, and $5.8 million and $30.9
million of net revenue for the three and nine months ended
September 30, 2019, respectively.
WAYFAIR INC.
CONSOLIDATED AND CONDENSED
BALANCE SHEETS
(Unaudited)
September 30,
2020
December 31,
2019
(in thousands, except share
and per share data)
Assets:
Current assets
Cash and cash equivalents
$
2,442,939
$
582,753
Short-term investments
113,985
404,252
Accounts receivable, net of allowance for
credit losses of $26,884 and $22,774 at September 30, 2020 and
December 31, 2019, respectively
109,652
99,720
Inventories
54,241
61,692
Prepaid expenses and other current
assets
322,649
228,721
Total current assets
3,043,466
1,377,138
Operating lease right-of-use assets
802,369
763,400
Property and equipment, net
682,057
624,544
Goodwill and intangible assets, net
17,605
18,809
Long-term investments
—
155,690
Other noncurrent assets
12,943
13,467
Total assets
$
4,558,440
$
2,953,048
Liabilities and Stockholders'
Deficit:
Current liabilities
Accounts payable
$
1,236,895
$
908,097
Accrued expenses
328,694
298,918
Unearned revenue
318,175
167,641
Other current liabilities
333,589
236,863
Total current liabilities
2,217,353
1,611,519
Long-term debt
2,862,135
1,456,195
Operating lease liabilities
867,711
822,602
Other liabilities
70,827
6,940
Total liabilities
6,018,026
3,897,256
Stockholders’ deficit:
Undesignated preferred stock, $0.001 par
value per share: 10,000,000 shares authorized and none issued at
September 30, 2020 and December 31, 2019
—
—
Class A common stock, par value $0.001 per
share: 500,000,000 shares authorized, 68,959,957 and 66,642,611
shares issued and outstanding at September 30, 2020 and December
31, 2019, respectively
69
67
Class B common stock, par value $0.001 per
share: 164,000,000 shares authorized, 26,636,721 and 26,957,815
shares issued and outstanding at September 30, 2020 and December
31, 2019, respectively
27
27
Additional paid-in capital
452,111
1,122,548
Accumulated deficit
(1,909,768
)
(2,065,423
)
Accumulated other comprehensive loss
(2,025
)
(1,427
)
Total stockholders’ deficit
(1,459,586
)
(944,208
)
Total liabilities and stockholders’
deficit
$
4,558,440
$
2,953,048
WAYFAIR INC.
CONSOLIDATED AND CONDENSED
STATEMENTS OF OPERATIONS
(Unaudited)
Three months ended September
30,
Nine months ended September
30,
2020
2019
2020
2019
(in thousands, except per
share data)
Net revenue
$
3,839,570
$
2,305,487
$
10,474,305
$
6,593,567
Cost of goods sold (1)
2,692,142
1,765,566
7,426,724
5,023,590
Gross profit
1,147,428
539,921
3,047,581
1,569,977
Operating expenses:
Customer service and merchant fees (1)
139,589
91,255
372,825
256,230
Advertising
344,025
281,846
1,037,562
784,981
Selling, operations, technology, general
and administrative (1)
441,960
426,529
1,377,410
1,153,286
Total operating expenses
925,574
799,630
2,787,797
2,194,497
Income (loss) from operations
221,854
(259,709
)
259,784
(624,520
)
Interest (expense), net
(36,315
)
(14,432
)
(87,472
)
(33,922
)
Other (expense) income, net
(13,584
)
2,182
(10,720
)
5,582
Income (loss) before income taxes
171,955
(271,959
)
161,592
(652,860
)
(Benefit) provision for income taxes,
net
(1,211
)
76
414
1,502
Net income (loss)
$
173,166
$
(272,035
)
$
161,178
$
(654,362
)
Basic earnings (loss) per share
$
1.82
$
(2.94
)
$
1.70
$
(7.13
)
Diluted earnings (loss) per share
$
1.67
$
(2.94
)
$
1.64
$
(7.13
)
Weighted-average number of shares of
common stock outstanding used in computing per share amounts:
Basic
95,373
92,540
94,767
91,820
Diluted
109,200
92,540
98,021
91,820
(1) Includes equity-based compensation and
related taxes as follows:
Cost of goods sold
$
2,845
$
1,450
$
6,926
$
3,759
Customer service and merchant fees
4,477
2,374
10,909
6,619
Selling, operations, technology, general
and administrative
69,361
61,451
193,541
163,585
$
76,683
$
65,275
$
211,376
$
173,963
WAYFAIR INC.
CONSOLIDATED AND CONDENSED
STATEMENTS OF CASH FLOWS
(Unaudited)
Nine months ended September
30,
2020
2019
(in thousands)
Cash flows from operating
activities:
Net income (loss)
$
161,178
$
(654,362
)
Adjustments used to reconcile net income
(loss) to net cash used in operating activities
Depreciation and amortization
208,532
134,172
Equity-based compensation
197,199
162,014
Amortization of discount and issuance
costs on convertible notes
78,225
40,737
Other non-cash adjustments
12,065
(1,659
)
Changes in operating assets and
liabilities:
Accounts receivable, net
(14,891
)
(25,309
)
Inventories
7,602
(22,716
)
Prepaid expenses and other current
assets
(93,055
)
(29,648
)
Accounts payable and accrued expenses
356,215
215,786
Unearned revenue and other liabilities
296,306
22,382
Other assets
612
(1,920
)
Net cash provided by (used in) operating
activities
1,209,988
(160,523
)
Cash flows from investing
activities:
Purchase of short- and long-term
investments
(19,994
)
—
Sale and maturities of short- and
long-term investments
466,310
115,468
Purchase of property and equipment
(146,303
)
(183,968
)
Site and software development costs
(109,678
)
(94,697
)
Other investing activities, net
(124
)
(15,977
)
Net cash provided by (used in) investing
activities
190,211
(179,174
)
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
2,027,758
935,146
Premiums paid for capped call
confirmations
(255,024
)
(145,728
)
Payments to extinguish convertible
debt
(1,040,349
)
—
Repurchase of common stock
(280,236
)
—
Other financing activities, net
380
(2,211
)
Net cash provided by financing
activities
452,529
787,207
Effect of exchange rate changes on cash
and cash equivalents
7,458
(1,586
)
Net increase in cash and cash
equivalents
1,860,186
445,924
Cash and cash equivalents:
Beginning of period
582,753
849,461
End of period
$
2,442,939
$
1,295,385
View source
version on businesswire.com: https://www.businesswire.com/news/home/20201103005128/en/
Media Relations Contact: Jane Carpenter, 617-502-7595
PR@wayfair.com
Investor Relations Contact: Jane Gelfand
IR@wayfair.com
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Wayfair (NYSE:W)
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