Wayfair Announces First Quarter 2023 Results, Achieves Considerable Progress on Roadmap Toward Profitability

Q1 Net Revenue of $2.8 billion with 21.7 million Active Customers

Q1 results demonstrate consistent market share gains and improvement in cost structure

BOSTON, May 4, 2023 /PRNewswire/ -- Wayfair Inc. ("Wayfair", "we", or "our") (NYSE: W), one of the world's largest online destinations for the home, today reported financial results for its first quarter ended March 31, 2023.

First Quarter 2023 Financial Highlights

• Total net revenue of $2.8 billion decreased $219 million, down 7.3% year over year
• U.S. net revenue of $2.4 billion decreased $127 million, down 5.0% year over year
• International net revenue of $359 million decreased $92 million, down 20.4% year over year. International Net Revenue Constant Currency Growth was (14.4)%
• Gross profit was $821 million or 29.6% of total net revenue
• Net loss was $355 million and Non-GAAP Adjusted EBITDA was ($14) million
• Diluted loss per share was $3.22 and Non-GAAP Adjusted Diluted Loss Per Share was $1.13
• Net cash used in operating activities was $147 million and Non-GAAP Free Cash Flow was ($234) million
• Cash, cash equivalents and short-term investments totaled $1.0 billion and total liquidity was $1.6 billion including availability under our revolving credit facility

"This was a strong quarter for Wayfair, and we are pleased to be seeing consistent market share gains and a significant improvement in cost structure versus last quarter that gets us to nearly Adjusted EBITDA breakeven in Q1. Most exciting is that we expect to have positive Adjusted EBITDA in the second quarter. We have always known, and now we are clearly demonstrating that the Wayfair model is inherently profitable and that there is considerable opportunity in front of us to rapidly drive further margin expansion."

"Last August, we shared a roadmap laying out our path to profitability and we have been executing against that plan. Through a focus on our three core initiatives of driving customer and supplier loyalty, nailing the basics, and cost efficiency, we have made significant strides in improving our offering and customer experience, simultaneously reducing our cost structure while investing for future growth," said Niraj Shah CEO, co-founder and co-chairman, Wayfair.

Other First Quarter Highlights

• Active customers totaled 21.7 million as of March 31, 2023, a decrease of 14.6% year over year
• LTM net revenue per active customer was $552 as of March 31, 2023, an increase of 6.2% year over year
• Orders per customer, measured as LTM orders divided by active customers, was 1.81 for the first quarter of 2023, compared to 1.87 for the first quarter of 2022
• Orders delivered in the first quarter of 2023 were 9.7 million, a decrease of 6.7% year over year
• Repeat customers placed 79.1% of total orders delivered in the first quarter of 2023, compared to 77.7% in the first quarter of 2022
• Repeat customers placed 7.6 million orders in the first quarter of 2023, a decrease of 6.2% year over year
• Average order value was $287 in both the first quarter of 2023 and the first quarter of 2022
• In the first quarter of 2023, 62.1% of total orders delivered were placed via a mobile device, compared to 59.4% in the first quarter of 2022

Key Financial and Operating Metrics

Webcast and Conference Call

Wayfair will host a conference call and webcast to discuss its first quarter 2023 financial results today at 8 a.m. (ET). Investors and participants should register for the call in advance by visiting http://bit.ly/4304R9d. After registering, instructions will be shared on how to join the call. The call will also be available via live webcast at http://bit.ly/3JYSKk0 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 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 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 $12.0 billion in net revenue for the twelve months ended March 31, 2023 and is headquartered in Boston, Massachusetts with operations throughout North America and Europe.

Media Relations Contact:
Susan Frechette
PR@wayfair.com

Investor Relations Contact:
James Lamb
IR@wayfair.com

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, profitability goals, business strategy, plans and objectives of management for future operations, and, the impact of macroeconomic factors, and our response to such events, are forward-looking statements. In some cases, you can identify forward-looking statements by terms such as "may," "will," "should," "expects," "plans," "anticipates," "continues," "could," "intends," "goals," "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. We believe that these risks and uncertainties include, but are not limited to, adverse macroeconomic conditions, including inflation, slower growth or the potential for recession; the ongoing impacts of the COVID-19 pandemic, including disruptions to the global supply chain; our ability to acquire and retain customers in a cost-effective manner; our ability to increase our net revenue per active customer; our ability to build and maintain strong brands; our ability to manage our growth and expansion initiatives; and our ability to expand our business and compete successfully. A further list and description of risks, uncertainties and other factors that could cause or contribute to differences in our future results include the cautionary statements herein and in our other filings and reports with the Securities and Exchange Commission, including our most recent Annual Report on Form 10-K for the year ended December 31, 2022. We qualify all of our forward-looking statements by these cautionary 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.

Non-GAAP Financial Measures

To supplement our condensed consolidated 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 or 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.

We calculate Adjusted EBITDA as net income or loss before depreciation and amortization, equity-based compensation and related taxes, interest income or expense, net, other income or expense, net, provision or benefit for income taxes, net, non-recurring items and other items not indicative of our ongoing operating performance. We disclose Adjusted EBITDA because it is a key measure used by our management and board of directors to evaluate our operating performance, generate future operating plans and make strategic decisions regarding the allocation of capital. In particular, we believe 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.

We calculate Free Cash Flow as net cash provided by or used in operating activities less net cash used to purchase property and equipment and site and software development costs (collectively, "Capital Expenditures"). We disclose Free Cash Flow because it 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 Adjusted Diluted Earnings or Loss per Share as net income or loss plus equity-based compensation and related taxes, provision or benefit 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 or loss per share. Accordingly, we believe that these adjustments to our adjusted diluted net income or loss before calculating per share amounts for all periods presented provide a more meaningful comparison between our operating results from period to period.

We calculate Net Revenue Constant Currency Growth 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 disclose Net Revenue Constant Currency Growth because it is an important indicator of our operating results. Accordingly, we believe that Net Revenue Constant Currency Growth 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 or loss. We do not attempt to provide a reconciliation of forward-looking non-GAAP Adjusted EBITDA guidance to forward looking GAAP net income or loss 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 financial 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 or loss to Adjusted EBITDA for each of the periods indicated:

The following table presents Adjusted EBITDA attributable to our segments, and the reconciliation of net income or loss to Adjusted EBITDA is presented in the preceding table:

The following table presents a reconciliation of net cash provided by or used in operating activities to Free Cash Flow for each of the periods indicated:

A reconciliation of the numerator and denominator for diluted earnings or loss per share, the most directly comparable GAAP financial measure, to the numerator and denominator for Adjusted Diluted Earnings or Loss per Share, in order to calculate Adjusted Diluted Earnings or Loss per Share is as follows:

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SOURCE Wayfair, LLC