Q2 Net Revenue of $3.3 billion
23.6 million Active Customers
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, 2022.
Second Quarter 2022 Financial
Highlights
- Total net revenue of $3.3 billion decreased $573 million, down
14.9% year over year
- U.S. net revenue of $2.8 billion decreased $302 million, down
9.7% year over year
- International net revenue of $0.5 billion decreased $271
million, down 35.7% year over year. International Net Revenue
Constant Currency Growth was (34.4)%
- Gross profit was $896 million or 27.3% of total net
revenue
- Net loss was $378 million and Non-GAAP Adjusted EBITDA was
$(108) million
- Diluted loss per share was $3.59
- Non-GAAP Adjusted Diluted Loss per Share was $1.94
- Net cash flows used in operating activities was $115 million
and Non-GAAP Free Cash Flow was $(244) million
- Cash, cash equivalents and short-term investments totaled $1.7
billion
“During a difficult macroeconomic environment, we remain
squarely focused on our customers and our suppliers, and on making
sure Wayfair is their preferred platform for the Home. We are
tightly controlling our many levers and steering Wayfair in a
financially responsible manner through this period,” said Niraj
Shah, CEO, co-founder and co-chairman, Wayfair.
“Consumers remain engaged and responsive to the right
combination of wide selection, great deals, and satisfying service,
while suppliers are leaning in with Wayfair, extending us more
product and better wholesale costs, while using more of our service
offerings. Simultaneously, we are actively maneuvering Wayfair to
generate cash consistently and to control our own destiny.
Underpinning this plan is a broad prioritization exercise intended
to balance continued investment in long-term growth while ensuring
tight day-to-day execution across a range of macro scenarios.”
Other Second Quarter
Highlights
- Active customers reached 23.6 million as of June 30, 2022, a
decrease of 24.1% year over year
- LTM net revenue per active customer was $537 as of June 30,
2022, an increase of 12.3% year over year
- Orders per customer, measured as LTM orders divided by active
customers, was 1.85 for the second quarter of 2022, compared to
1.96 for the second quarter of 2021
- Orders delivered in the second quarter of 2022 were 10.0
million, a decrease of 28.2% year over year
- Repeat customers placed 78.6% of total orders in the second
quarter of 2022, compared to 75.6% in the second quarter of
2021
- Repeat customers placed 7.8 million orders in the second
quarter of 2022, a decrease of 25.7% year over year
- Average order value was $330 for the second quarter of 2022,
compared to $278 for the second quarter of 2021
- In the second quarter of 2022, 59.0% of total orders delivered
were placed via a mobile device, compared to 59.4% in the second
quarter of 2021
Key Financial and Operating
Metrics
Three months ended June
30,
Six months ended June
30,
2022
2021
2022
2021
(in millions, except LTM Net
Revenue per Active Customer, Average Order Value and per share
data)
Key Financial Statement
Metrics:
Net revenue
$
3,284
$
3,857
$
6,277
$
7,335
Gross profit
$
896
$
1,128
$
1,699
$
2,131
(Loss) income from operations
$
(372
)
$
146
$
(682
)
$
172
Net (loss) income
$
(378
)
$
131
$
(697
)
$
149
(Loss) earnings per share:
Basic
$
(3.59
)
$
1.26
$
(6.62
)
$
1.44
Diluted
$
(3.59
)
$
1.14
$
(6.62
)
$
1.33
Net cash (used in) provided by operating
activities
$
(115
)
$
275
$
(341
)
$
452
Key Operating Metrics:
Active customers (1)
24
31
24
31
LTM net revenue per active customer
(2)
$
537
$
478
$
537
$
478
Orders delivered (3)
10
14
20
29
Average order value (4)
$
330
$
278
$
308
$
257
Non-GAAP Financial Measures:
Adjusted EBITDA
$
(108
)
$
311
$
(221
)
$
517
Free Cash Flow
$
(244
)
$
206
$
(575
)
$
319
Adjusted Diluted (Loss) Earnings per
Share
$
(1.94
)
$
1.89
$
(3.90
)
$
2.89
(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. The change in active customers in a reported
period captures both the inflow of new customers as well as the
outflow of existing customers who have not made a purchase in the
last twelve months. We view the number of active customers as a key
indicator of our growth.
(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. We view LTM net revenue per active customer as
a key indicator of our customers' purchasing patterns, including
their initial and repeat purchase behavior
(3)
Orders delivered represents the total
orders delivered in that period, inclusive of orders that may
eventually be returned. As we ship a large volume of packages
through multiple carriers, actual delivery dates may not always be
available, and as such we estimate delivery dates based on
historical data. We recognize net revenue when an order is
delivered, and therefore orders delivered, together with average
order value, is an indicator of the net revenue we expect to
recognize in a given period. We view orders delivered as a key
indicator of our growth.
(4)
We define average order value as total net
revenue in a given period divided by the orders delivered in that
period. We view average order value as a key indicator of the mix
of products on our sites, the mix of offers and promotions and the
purchasing behavior of our customers.
Webcast and Conference
Call
Wayfair will host a conference call and webcast to discuss its
second quarter 2022 financial results today at 8 a.m. (ET).
Investors and participants should register for the call in advance
by visiting https://bit.ly/3qOzwoJ. 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/3AMkeXh 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 brands includes:
- Wayfair - Everything home — for a space that's all you.
- Joss & Main - The ultimate style edit for home.
- AllModern - All of modern, made simple.
- Birch Lane - A fresh take on the classics.
- Perigold - An undiscovered world of luxury design.
- Wayfair Professional - Just right for Pros.
Wayfair generated $12.6 billion in net revenue for the twelve
months ended June 30, 2022. Headquartered in Boston, Massachusetts
with operations throughout North America and Europe, Wayfair
employs approximately 18,000 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,
including our financial outlook and profitability goals, available
liquidity and access to financing sources, our business strategy,
plans and objectives of management for future operations, including
our growth and expansion initiatives, consumer activity and
behaviors, including seasonal trends, e-commerce adoption trends,
developments in our technology and systems and anticipated results
of those developments, the impact of macroeconomic factors,
including the novel coronavirus (COVID-19) pandemic and the rise in
inflation and interest rates, and our response to such events and ,
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)
June 30, 2022
December 31,
2021
(in millions, except share and
per share data)
Assets:
Current assets
Cash and cash equivalents
$
1,094
$
1,706
Short-term investments
644
693
Accounts receivable, net
308
226
Inventories
98
69
Prepaid expenses and other current
assets
316
318
Total current assets
2,460
3,012
Operating lease right-of-use assets
876
849
Property and equipment, net
730
674
Other non-current assets
32
35
Total assets
$
4,098
$
4,570
Liabilities and Stockholders'
Deficit:
Current liabilities
Accounts payable
$
1,234
$
1,166
Other current liabilities
984
1,051
Total current liabilities
2,218
2,217
Long-term debt
3,054
3,052
Operating lease liabilities, net of
current
939
892
Other non-current liabilities
32
28
Total liabilities
6,243
6,189
Stockholders’ deficit:
Convertible preferred stock, $0.001 par
value per share: 10,000,000 shares authorized and none issued at
June 30, 2022 and December 31, 2021
—
—
Class A common stock, par value $0.001 per
share: 500,000,000 shares authorized, 79,850,878 and 79,150,937
shares issued and outstanding at June 30, 2022 and December 31,
2021
—
—
Class B common stock, par value $0.001 per
share: 164,000,000 shares authorized, 25,691,397 and 25,691,761
shares issued and outstanding at June 30, 2022 and December 31,
2021
—
—
Additional paid-in capital
513
337
Accumulated deficit
(2,646
)
(1,949
)
Accumulated other comprehensive loss
(12
)
(7
)
Total stockholders’ deficit
(2,145
)
(1,619
)
Total liabilities and stockholders’
deficit
$
4,098
$
4,570
WAYFAIR INC.
CONSOLIDATED AND CONDENSED
STATEMENTS OF OPERATIONS
(Unaudited)
Three months ended June
30,
Six months ended June
30,
2022
2021
2022
2021
(in millions, except per share
data)
Net revenue
$
3,284
$
3,857
$
6,277
$
7,335
Cost of goods sold (1)
2,388
2,729
4,578
5,204
Gross profit
896
1,128
1,699
2,131
Operating expenses:
Customer service and merchant fees (1)
162
145
313
292
Advertising
378
352
714
718
Selling, operations, technology, general
and administrative (1)
688
485
1,314
937
Impairment and other charges
40
—
40
12
Total operating expenses
1,268
982
2,381
1,959
(Loss) income from operations
(372
)
146
(682
)
172
Interest expense, net
(6
)
(9
)
(14
)
(16
)
Other income (expense), net
1
(2
)
1
(5
)
(Loss) income before income taxes
(377
)
135
(695
)
151
Provision for income taxes, net
1
4
2
2
Net (loss) income
$
(378
)
$
131
$
(697
)
$
149
(Loss) earnings per share:
Basic
$
(3.59
)
$
1.26
$
(6.62
)
$
1.44
Diluted
$
(3.59
)
$
1.14
$
(6.62
)
$
1.33
Weighted-average number of shares of
common stock outstanding used in computing per share amounts:
Basic
105
104
105
103
Diluted
105
122
105
119
(1) Includes equity-based compensation and related taxes as
follows:
Cost of goods sold
$
3
$
3
$
6
$
6
Customer service and merchant fees
9
6
17
12
Selling, operations, technology, general
and administrative
121
78
222
156
$
133
$
87
$
245
$
174
WAYFAIR INC.
CONSOLIDATED AND CONDENSED
STATEMENTS OF CASH FLOWS
(Unaudited)
Six months ended June
30,
2022
2021
(in millions)
Cash flows from operating
activities:
Net (loss) income
$
(697
)
$
149
Adjustments used to reconcile net (loss)
income to net cash (used in) provided by operating activities:
Depreciation and amortization
176
158
Equity-based compensation
233
154
Amortization of discount and issuance
costs on convertible notes
4
4
Impairment and other charges
40
12
Other non-cash adjustments
32
—
Changes in operating assets and
liabilities:
Accounts receivable, net
(86
)
(20
)
Inventories
(29
)
(7
)
Prepaid expenses and other current
assets
4
(52
)
Other assets
—
(4
)
Accounts payable and other current
liabilities
(18
)
57
Other liabilities
—
1
Net cash (used in) provided by operating
activities
(341
)
452
Cash flows from investing
activities:
Purchase of short- and long-term
investments
(402
)
(613
)
Sale and maturities of short- and
long-term investments
447
550
Purchase of property and equipment
(93
)
(49
)
Site and software development costs
(141
)
(84
)
Net cash used in investing activities
(189
)
(196
)
Cash flows from financing
activities:
Repurchase of common stock
(75
)
(300
)
Net cash used in financing activities
(75
)
(300
)
Effect of exchange rate changes on cash
and cash equivalents
(7
)
(7
)
Net decrease in cash and cash
equivalents
(612
)
(51
)
Cash and cash equivalents:
Beginning of period
1,706
2,129
End of period
$
1,094
$
2,078
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 (Loss) 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 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 (Loss) Earnings per Share is a non-GAAP
financial measure that is calculated as net (loss) income 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, 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 flows from or for operating activities less
net cash flows 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 June
30,
Six Months Ended June
30,
2022
2021
2022
2021
(in millions)
U.S. net revenue
$
2,796
$
3,098
$
5,338
$
5,919
International net revenue
488
759
939
1,416
Total net revenue
$
3,284
$
3,857
$
6,277
$
7,335
The following table reflects the reconciliation of net (loss)
income to Adjusted EBITDA for each of the periods indicated:
Three months ended June
30,
Six months ended June
30,
2022
2021
2022
2021
(in millions)
Reconciliation of Adjusted
EBITDA
Net (loss) income
$
(378
)
$
131
$
(697
)
$
149
Depreciation and amortization
91
77
176
158
Equity-based compensation and related
taxes
133
88
245
175
Interest expense, net
6
9
14
16
Other (income) expense, net
(1
)
2
(1
)
5
Provision for income taxes, net
1
4
2
2
Other (1)
40
—
40
12
Adjusted EBITDA
$
(108
)
$
311
$
(221
)
$
517
(1)
In the second quarter of 2022, we recorded
$40 million of lease impairment and other charges related to
changes in market conditions around future sublease income for one
of our office locations in the U.S. In the six months ended June
30, 2021, we recorded $12 million of customer service center
impairment and other charges related to our plan to consolidate
customer service centers.
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 June
30,
Six months ended June
30,
2022
2021
2022
2021
(in millions)
Segment Adjusted EBITDA:
U.S.
$
(28
)
$
323
$
(58
)
$
550
International
(80
)
(12
)
(163
)
(33
)
Adjusted EBITDA
$
(108
)
$
311
$
(221
)
$
517
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 (Loss) Earnings per Share, in order to calculate Adjusted
Diluted (Loss) Earnings per Share is as follows:
Three months ended June
30,
Six months ended June
30,
2022
2021
2022
2021
(in millions, except per share
data)
Numerator:
Net (loss) income
$
(378
)
$
131
$
(697
)
$
149
Effect of dilutive securities:
Interest expense associated with
convertible debt instruments
—
9
—
9
Numerator for diluted EPS - net (loss)
income available to common stockholders after the effect of
dilutive securities
(378
)
140
(697
)
158
Adjustments to net (loss) income:
Interest expense associated with
convertible debt instruments
—
—
—
6
Equity-based compensation and related
taxes
133
88
245
175
Provision for income taxes, net
1
4
2
2
Other
40
—
40
12
Numerator for Adjusted Diluted EPS -
Adjusted net income
$
(204
)
$
232
$
(410
)
$
353
Denominator:
Denominator for basic EPS -
weighted-average number of shares of common stock outstanding
105
104
105
103
Effect of dilutive securities:
Restricted stock units
—
3
—
4
Convertible debt instruments
—
15
—
12
Dilutive potential common shares
—
18
—
16
Denominator for diluted EPS - adjusted
weighted-average number of shares of common stock outstanding after
the effect of dilutive securities
105
122
105
119
Adjustments to effect of dilutive
securities:
Convertible debt instruments
—
—
—
3
Denominator for Adjusted Diluted EPS -
adjusted weighted-average number of shares of common stock
outstanding after the effect of dilutive securities
105
122
105
122
Diluted (Loss) Earnings per Share
$
(3.59
)
$
1.14
$
(6.62
)
$
1.33
Adjusted Diluted (Loss) Earnings per
Share
$
(1.94
)
$
1.89
$
(3.90
)
$
2.89
The following table presents a reconciliation of net cash (used
in) provided by operating activities to Free Cash Flow for each of
the periods indicated:
Three months ended June
30,
Six months ended June
30,
2022
2021
2022
2021
(in millions)
Net cash (used in) provided by operating
activities
$
(115
)
$
275
$
(341
)
$
452
Purchase of property and equipment
(53
)
(25
)
(93
)
(49
)
Site and software development costs
(76
)
(44
)
(141
)
(84
)
Free Cash Flow
$
(244
)
$
206
$
(575
)
$
319
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220804005147/en/
Media Relations: Jane Carpenter PR@wayfair.com
Investor Relations: Jane Gelfand IR@wayfair.com
Wayfair (NYSE:W)
Historical Stock Chart
From Jun 2024 to Jul 2024
Wayfair (NYSE:W)
Historical Stock Chart
From Jul 2023 to Jul 2024