W Q3 2021 Earnings

Call Details

• Call Title: Wayfair Q3 2021 Earnings Call
• Date: November 4, 2021 at 12:00 PM UTC
• Management Team:
  • Landry Ngambia (Director of Investor Relations)
  • Niraj Shah (Co-Founder, Chief Executive Officer, and Co-Chairman)
  • Steve Conine (Co-Founder and Co-Chairman)
  • Michael Fleisher (Chief Financial Officer)

Call Summary

Financial Performance

• Q3 total net revenue was $3.1B, representing an 18.7% decline year over year.
• Q3 adjusted EBITDA was $101M on a non-GAAP basis, equal to 3.2% of net revenue.
• Q3 gross margin on a non-GAAP basis was 28.4%, which was slightly ahead of the guided range.
• U.S. net revenue declined 20.8% year over year in Q3 while international net revenue declined 6.8% year over year.
• Trailing 12 months active customers exceeded 29 million, up 1.5% year over year, while LTM order frequency was 1.92 and essentially flat year over year.
• Q3 operating cash flow was negative $131M and free cash flow was negative $203M after $72M of capital expenditures.

Guidance

• Quarter-to-date consolidated orders-placed gross revenue is down approximately 10% year over year for Q4 to date.
• Company expects Q4 net revenue dollars to be above Q3 levels, but cautioned against assuming further improvement in trends through the rest of Q4.
• Wayfair expects gross margin in a sustainable range of 27% to 28% and recommended modeling the low end of that range for Q4.
• Customer service and merchant fees as a percentage of net revenue are expected to be in line with Q3 levels for Q4.
• Advertising as a percent of net revenue is expected in a 10% to 11% range, with quarter-to-quarter variability based on opportunistic spend.
• SOTG&A excluding stock-based compensation and related taxes is expected to be approximately $470M to $480M in Q4, translating to a near break-even adjusted EBITDA assuming current top-line trends continue.