W Q3 2023 Earnings

Call Details

• Call Title: Wayfair Q3 2023 Earnings Call
• Date: November 1, 2023 at 12:00 PM UTC
• Management Team:
  • James Lamb (Head of Investor Relations and Treasury)
  • Niraj Shah (Co-founder, Chief Executive Officer and Co-chairman)
  • Steve Conine (Co-founder and Co-chairman)
  • Kate Gulliver (Chief Financial Officer and Chief Administrative Officer)

Call Summary

Financial Performance

• Net revenue for the third quarter was $2.9B, up 3.7% year over year.
• U.S. revenue grew by 5.4% year over year for the quarter.
• Orders were up 14% versus Q3 2022 while average order value declined by about 9% versus the same period.
• Gross margin for the quarter was 31.2% and customer service and merchant fees were 4.4% of net revenue.
• Advertising spend totaled 11.4% of net revenue for the quarter and SOTG&A was $459M excluding equity comp and related taxes.
• Adjusted EBITDA was $100M, representing a 3.4% adjusted EBITDA margin, which is $220M higher and nearly 800 bps better than Q3 2022 on an adjusted basis.

Guidance

• Quarter-to-date gross revenue is trending close to flat year over year and the company expects Q4 net revenue to be flat to positive low single-digit year over year.
• The company expects AOV compression to deepen in Q4 versus 2022 and anticipates that Q4 will likely represent the year-over-year trough for AOV.
• Gross margin is guided to a 30% to 31% range for Q4.
• Customer service and merchant fees are expected to be in the 4% to 5% of net revenue range for Q4.
• Advertising is guided to the 11.5% to 12.5% of net revenue range for Q4.
• SOTG&A excluding stock-based compensation and related taxes is guided to $455M to $465M for Q4, implying low single-digit adjusted EBITDA margins for the quarter.
• Other Q4 financial assumptions include equity-based comp and related taxes of $140M to $160M, D&A of $103M to $108M, net interest expense of $4M to $5M, weighted average shares of ~118M, and capex of $100M to $110M.