Q3 Net Revenue of $3.1 billion
29.2 million Active Customers, up 1.5% 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, 2021.
Third Quarter 2021 Financial
Highlights
- Total net revenue of $3.1 billion decreased $718.5 million,
down 18.7% year over year
- U.S. net revenue of $2.6 billion decreased $679.9 million, down
20.8% year over year
- International net revenue of $0.5 billion decreased $38.6
million, down 6.8% year over year. International Net Revenue
Constant Currency Growth was (12.1)%
- Gross profit was $882.7 million or 28.3% of total net
revenue
- Net loss was $78.0 million and Non-GAAP Adjusted EBITDA was
$101.1 million
- Diluted loss per share was $(0.75)
- Non-GAAP Adjusted Diluted Earnings per Share was $0.14
- Net cash for operating activities was $(130.8) million and
Non-GAAP Free Cash Flow was $(203.2) million
- Cash, cash equivalents and short-term investments totaled $2.4
billion
“Wayfair delivered $3.1 billion in net revenue and over $100
million of adjusted EBITDA in the third quarter. As various
geographies reopened post-pandemic, consumers naturally shifted
some spend towards travel and entertainment and from e-commerce
towards brick and mortar. Demand and interest in the home remains
resilient, but it will take a few more quarters for our growth –
and e-commerce growth in general – to get back to normal,” said
Niraj Shah, CEO, co-founder and co-chairman, Wayfair. “Our
long-term vision is in sharp focus coming out of the pandemic
period. The initiatives required to realize it are in flight, even
as we work through near-term macro challenges like supply chain
congestion and related inflation. We are, as ever, focused on the
long-term, balancing strong growth and profitability over years not
quarters, and solidifying our position as the definitive
destination for the home.”
Other Third Quarter
Highlights
- Active customers reached 29.2 million as of September 30, 2021,
an increase of 1.5% year over year
- LTM net revenue per active customer was $484 as of September
30, 2021, an increase of 7.3% year over year
- Orders per customer, measured as LTM orders divided by active
customers, was 1.92 for the third quarter of 2021, compared to 1.94
for the third quarter of 2020
- Repeat customers placed 76.3% of total orders in the third
quarter of 2021, compared to 71.9% in the third quarter of
2020
- Repeat customers placed 8.4 million orders in the third quarter
of 2021, a decrease of 25.8% year over year
- Orders delivered in the third quarter of 2021 were 11.0
million, a decrease of 30.1% year over year
- Average order value was $283 for the third quarter of 2021,
compared to $243 for the third quarter of 2020
- In the third quarter of 2021, 57.7% of total orders delivered
were placed via a mobile device, compared to 60.0% in the third
quarter of 2020
Key Financial and Operating
Metrics
Three months ended September
30,
Nine months ended September
30,
2021
2020
2021
2020
(in thousands, except LTM Net
Revenue per Active Customer, Average Order Value and per share
data)
Key Financial Statement
Metrics:
Net revenue
$
3,121,083
$
3,839,570
$
10,456,227
$
10,474,305
Gross profit
$
882,728
$
1,147,428
$
3,013,815
$
3,047,581
(Loss) income from operations
$
(69,798)
$
221,854
$
101,751
$
259,784
Net (loss) income
$
(78,021)
$
173,166
$
70,641
$
161,178
(Loss) earnings per share:
Basic
$
(0.75)
$
1.82
$
0.68
$
1.70
Diluted
$
(0.75)
$
1.67
$
0.65
$
1.64
Net cash (for) from operating
activities
$
(130,848)
$
331,027
$
321,187
$
1,209,988
Key Operating Metrics:
Active customers (1)
29,213
28,783
29,213
28,783
LTM net revenue per active customer
(2)
$
484
$
451
$
484
$
451
Orders delivered (3)
11,016
15,758
39,597
44,526
Average order value (4)
$
283
$
243
$
264
$
235
Non-GAAP Financial Measures:
Adjusted EBITDA
$
101,051
$
371,112
$
617,658
$
683,648
Free Cash Flow
$
(203,167)
$
255,028
$
114,960
$
954,007
Adjusted Diluted Earnings per Share
$
0.14
$
2.30
$
3.08
$
3.77
(1)
The number of active customers
represents the total number of individual customers who have
purchased at least once directly from our sites during the
preceding twelve-month period.
(2)
LTM net revenue per active customer
represents our total net revenue in the last twelve months divided
by our total number of active customers for the same preceding
twelve-month period.
(3)
Orders delivered represents the
total orders delivered in any period, inclusive of orders that may
eventually be returned.
(4)
We define average order value as
total net revenue in a given period divided by the orders delivered
in that period.
Webcast and Conference
Call
Wayfair will host a conference call and webcast to discuss its
third quarter 2021 financial results today at 8 a.m. (ET).
Investors and participants should register for the call in advance
by visiting https://bit.ly/39M9PMA and entering the conference ID
number 4187968. 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/3AbyW5Z 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
http://investor.wayfair.com.
About Wayfair
Wayfair is the destination for all things home: helping
everyone, anywhere create their feeling of home. From expert
customer service, to the development of tools that make the
shopping process easier, to carrying one of the widest and deepest
selections of items for every space, style, and budget, Wayfair
gives everyone the power to create spaces that are just right for
them.
The Wayfair family of sites includes:
- Wayfair - Everything home for every budget.
- 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 $14.1 billion in net revenue for the twelve
months ended September 30, 2021. Headquartered in Boston,
Massachusetts with operations throughout North America and Europe,
Wayfair employs approximately 16,000 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, constrained labor
markets, disruptions, capacity constraints or inefficiencies in our
supply chain or logistics network, including increased shipping
costs, our future real estate plans, 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.
WAYFAIR INC. CONSOLIDATED AND
CONDENSED BALANCE SHEETS (Unaudited)
September 30,
2021
December 31,
2020
(in thousands, except share
and per share data)
Assets:
Current assets
Cash and cash equivalents
$
1,864,821
$
2,129,440
Short-term investments
528,392
461,698
Accounts receivable, net
166,497
110,299
Inventories
66,621
52,152
Prepaid expenses and other current
assets
328,862
292,213
Total current assets
2,955,193
3,045,802
Operating lease right-of-use assets
816,951
808,375
Property and equipment, net
653,673
684,306
Other non-current assets
40,400
31,446
Total assets
$
4,466,217
$
4,569,929
Liabilities and Stockholders'
Deficit:
Current liabilities
Accounts payable
$
1,072,529
$
1,156,624
Other current liabilities
957,963
1,008,970
Total current liabilities
2,030,492
2,165,594
Long-term debt
3,049,475
2,659,243
Operating lease liabilities
867,595
869,958
Other non-current liabilities
48,736
67,031
Total liabilities
5,996,298
5,761,826
Stockholders’ deficit:
Convertible preferred stock, $0.001 par
value per share: 10,000,000 shares authorized and none issued at
September 30, 2021 and December 31, 2020
—
—
Class A common stock, par value $0.001 per
share: 500,000,000 shares authorized, 77,666,738 and 72,980,490
shares issued and outstanding at September 30, 2021 and December
31, 2020
78
73
Class B common stock, par value $0.001 per
share: 164,000,000 shares authorized, 26,563,761 and 26,564,234
shares issued and outstanding at September 30, 2021 and December
31, 2020
26
27
Additional paid-in capital
221,733
698,482
Accumulated deficit
(1,747,030)
(1,885,950)
Accumulated other comprehensive loss
(4,888)
(4,529)
Total stockholders’ deficit
(1,530,081)
(1,191,897)
Total liabilities and stockholders’
deficit
$
4,466,217
$
4,569,929
Note: Wayfair adopted a new accounting standards update for debt
effective January 1, 2021. The adoption of this standards update
had no effect on prior periods.
WAYFAIR INC. CONSOLIDATED AND
CONDENSED STATEMENTS OF OPERATIONS (Unaudited)
Three months ended September
30,
Nine months ended September
30,
2021
2020
2021
2020
(in thousands, except per
share data)
Net revenue
$
3,121,083
$
3,839,570
$
10,456,227
$
10,474,305
Cost of goods sold (1)
2,238,355
2,692,142
7,442,412
7,426,724
Gross profit
882,728
1,147,428
3,013,815
3,047,581
Operating expenses:
Customer service and merchant fees (1)
139,931
139,589
431,802
372,825
Advertising
315,024
344,025
1,032,662
1,037,562
Selling, operations, technology, general
and administrative (1)
497,571
441,960
1,435,388
1,377,410
Customer service center impairment and
other charges
—
—
12,212
—
Total operating expenses
952,526
925,574
2,912,064
2,787,797
(Loss) income from operations
(69,798)
221,854
101,751
259,784
Interest expense, net
(8,406)
(36,315)
(23,620)
(87,472)
Other income (expense), net
3,889
(13,584)
(1,657)
(10,720)
(Loss) income before income taxes
(74,315)
171,955
76,474
161,592
Provision (benefit) for income taxes,
net
3,706
(1,211)
5,833
414
Net (loss) income
$
(78,021)
$
173,166
$
70,641
$
161,178
(Loss) earnings per share:
Basic
$
(0.75)
$
1.82
$
0.68
$
1.70
Diluted (2)
$
(0.75)
$
1.67
$
0.65
$
1.64
Weighted-average number of shares of
common stock outstanding used in computing per share amounts:
Basic
104,054
95,373
103,579
94,767
Diluted
104,054
109,200
106,600
98,021
(1)
Includes equity-based compensation and
related taxes as follows:
Cost of goods sold
$
2,853
$
2,845
$
8,944
$
6,926
Customer service and merchant fees
6,879
4,477
18,974
10,909
Selling, operations, technology, general
and administrative
79,200
69,361
235,623
193,541
$
88,932
$
76,683
$
263,541
$
211,376
(2)
Wayfair adopted a new accounting standards
update for debt effective January 1, 2021. If Wayfair had not
adopted the standard January 1, 2021, Wayfair's diluted loss per
share would have been $(1.03) and $(0.36) for the three and nine
months ended September 30, 2021.
WAYFAIR INC. CONSOLIDATED AND
CONDENSED STATEMENTS OF CASH FLOWS (Unaudited)
Nine months ended September
30,
2021
2020
(in thousands)
Cash flows from operating
activities:
Net income
$
70,641
$
161,178
Adjustments to reconcile net income to net
cash from operating activities:
Depreciation and amortization
240,154
208,532
Equity-based compensation
237,073
197,199
Amortization of discount and issuance
costs on convertible notes
5,873
78,225
Loss on impairment
12,212
—
Other non-cash adjustments
2,483
12,065
Changes in operating assets and
liabilities:
Accounts receivable, net
(57,568)
(14,891)
Inventories
(14,823)
7,602
Prepaid expenses and other current
assets
(37,982)
(93,055)
Other assets
833
612
Accounts payable and other current
liabilities
(133,234)
597,173
Other liabilities
(4,475)
55,348
Cash flows from operating activities
321,187
1,209,988
Cash flows from investing
activities:
Purchase of short- and long-term
investments
(774,708)
(19,994)
Sale and maturities of short- and
long-term investments
701,091
466,310
Purchase of property and equipment
(77,593)
(146,303)
Site and software development costs
(128,634)
(109,678)
Other investing activities, net
5,200
(124)
Net cash (for) from investing
activities
(274,644)
190,211
Cash flows from financing
activities:
Repurchase of common stock
(300,208)
(280,236)
Proceeds from borrowings
—
200,000
Repayment of borrowings
—
(200,000)
Proceeds from issuance of convertible
notes, net of issuance costs
—
2,027,758
Premiums paid for capped call
confirmations
—
(255,024)
Payments to extinguish convertible
debt
—
(1,040,349)
Other financing activities, net
(2,448)
380
Net cash (for) from financing
activities
(302,656)
452,529
Effect of exchange rate changes on cash
and cash equivalents
(8,506)
7,458
Net (decrease) increase in cash and cash
equivalents
(264,619)
1,860,186
Cash and cash equivalents:
Beginning of period
2,129,440
582,753
End of period
$
1,864,821
$
2,442,939
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, Free Cash Flow, Adjusted Diluted Earnings 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.
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.
Adjusted EBITDA is a non-GAAP financial measure that is
calculated as net (loss) income before depreciation and
amortization, equity-based compensation and related taxes, interest
expense, net, other income (expense), net, provision (benefit) for
income taxes, net, non-recurring items and other items not
indicative of our ongoing operating performance. We have included
Adjusted EBITDA in this earnings release because it is a key
measure 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 facilitates operating performance comparisons on a
period-to-period basis as these costs may vary independent of
business performance. For instance, we exclude the impact of
equity-based compensation and related taxes as we do not consider
this item to be indicative of our core operating performance.
Investors should, however, understand that equity-based
compensation and related taxes will be a significant recurring
expense in our business and an important part of the compensation
provided to our employees. Accordingly, we believe that Adjusted
EBITDA provides useful information to investors and others in
understanding and evaluating our operating results in the same
manner as our management and board of directors.
Adjusted Diluted Earnings per Share is a non-GAAP financial
measure that is calculated as net (loss) income plus equity-based
compensation and related taxes, provision (benefit) for income
taxes, net, non-recurring items and 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 (loss)
earnings per share. We believe that these adjustments to our
adjusted diluted net income before calculating per share amounts
for all periods presented provides a more meaningful comparison
between our operating results from period to period.
Free Cash Flow is a non-GAAP financial measure that is
calculated as net cash from or for operating activities less net
cash used to purchase property and equipment and site and software
development costs (collectively, "Capital Expenditures"). 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.
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) income. We do not attempt to
provide a reconciliation of forward-looking non-GAAP Adjusted
EBITDA guidance to forward looking GAAP net (loss) income because
forecasting the timing or amount of items that have not yet
occurred and are out of our 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 tables present net revenues attributable to our
reportable segments for the periods indicated:
Three Months Ended September
30,
Nine Months Ended September
30,
2021
2020
2021
2020
(in thousands)
U.S. net revenue
$
2,594,964
$
3,274,872
$
8,513,807
$
8,901,559
International net revenue
526,119
564,698
1,942,420
1,572,746
Total net revenue
$
3,121,083
$
3,839,570
$
10,456,227
$
10,474,305
The following table reflects the reconciliation of net (loss)
income to Adjusted EBITDA for each of the periods indicated:
Three months ended September
30,
Nine months ended September
30,
2021
2020
2021
2020
(in thousands)
Reconciliation of Adjusted
EBITDA
Net (loss) income
$
(78,021)
$
173,166
$
70,641
$
161,178
Depreciation and amortization
81,917
72,575
240,154
208,532
Equity-based compensation and related
taxes
88,932
76,683
263,541
211,376
Interest expense, net
8,406
36,315
23,620
87,472
Other (income) expense, net
(3,889)
13,584
1,657
10,720
Provision (benefit) for income taxes,
net
3,706
(1,211)
5,833
414
Other (1)
—
—
12,212
3,956
Adjusted EBITDA
$
101,051
$
371,112
$
617,658
$
683,648
(1)
In the nine months ended September
30, 2021, we recorded $12.2 million of customer service center
impairment and other charges related to our plan to consolidate
customer service centers. During the nine months ended September
30, 2020, we recorded $4.0 million in selling, operations,
technology, general and administrative expenses for severance costs
associated with February 2020 workforce reductions.
The following table presents Adjusted EBITDA attributable to our
segments, and the reconciliation of net (loss) income to Adjusted
EBITDA is presented in the preceding table:
Three months ended September
30,
Nine months ended September
30,
2021
2020
2021
2020
(in thousands)
Segment Adjusted EBITDA
U.S.
$
167,091
$
377,007
$
716,887
$
766,486
International
(66,040)
(5,895)
(99,229)
(82,838)
Adjusted EBITDA
$
101,051
$
371,112
$
617,658
$
683,648
A reconciliation of the numerator and denominator for diluted
(loss) earnings per share, the most directly comparable GAAP
financial measure, to the numerator and denominator for Adjusted
Diluted Earnings per Share, in order to calculate Adjusted Diluted
Earnings per Share is as follows:
Three months ended September
30,
Nine months ended September
30,
2021
2020
2021
2020
(in thousands, except per
share data)
Numerator:
Net (loss) income
$
(78,021)
$
173,166
$
70,641
$
161,178
Effect of dilutive securities:
Interest expense (income) associated with
convertible debt instruments
—
9,136
(1,568)
—
Numerator for diluted EPS - net (loss)
income available to common stockholders after the effect of
dilutive securities
(78,021)
182,302
69,073
161,178
Adjustments to net (loss) income:
Interest expense associated with
convertible debt instruments
—
19,919
25,483
10,819
Equity-based compensation and related
taxes
88,932
76,683
263,541
211,376
Provision (benefit) for income taxes,
net
3,706
(1,211)
5,833
414
Other
—
—
12,212
3,956
Numerator for Adjusted Diluted EPS -
Adjusted net income
$
14,617
$
277,693
$
376,142
$
387,743
Denominator:
Denominator for basic EPS -
weighted-average number of shares of common stock outstanding
104,054
95,373
103,579
94,767
Effect of dilutive securities:
Employee stock options
—
24
6
32
Restricted stock units
—
4,123
2,785
3,222
Convertible debt instruments
—
9,680
230
—
Dilutive potential common shares
—
13,827
3,021
3,254
Denominator for diluted EPS - adjusted
weighted-average number of shares of common stock outstanding after
the effect of dilutive securities
104,054
109,200
106,600
98,021
Adjustments to effect of dilutive
securities:
Restricted stock units
2,011
—
—
—
Convertible debt instruments
—
11,330
15,551
4,740
Denominator for Adjusted Diluted EPS -
adjusted weighted-average number of shares of common stock
outstanding after the effect of dilutive securities
106,065
120,530
122,151
102,761
Diluted (Loss) Earnings per Share
$
(0.75)
$
1.67
$
0.65
$
1.64
Adjusted Diluted Earnings per Share
$
0.14
$
2.30
$
3.08
$
3.77
The following table presents a reconciliation of net cash from
or for operating activities to Free Cash Flow for each of the
periods indicated:
Three months ended September
30,
Nine months ended September
30,
2021
2020
2021
2020
(in thousands)
Net cash (for) from operating
activities
$
(130,848)
$
331,027
$
321,187
$
1,209,988
Purchase of property and equipment
(28,521)
(41,493)
(77,593)
(146,303)
Site and software development costs
(43,798)
(34,506)
(128,634)
(109,678)
Free Cash Flow
$
(203,167)
$
255,028
$
114,960
$
954,007
View source
version on businesswire.com: https://www.businesswire.com/news/home/20211104005164/en/
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