Q1 Direct Retail Revenue Growth of 32% Year over Year to $940 million
Q1 Total Net Revenue Growth of 29% Year over Year to $961 million
8.9 million Active Customers, up 46% Year over Year
BOSTON--(BUSINESS WIRE)--
Wayfair Inc. (NYSE: W), one of the world’s largest online destinations
for the home, today reported financial results for its first quarter
ended March 31, 2017.
First Quarter 2017 Financial Highlights
-
Direct Retail net revenue, consisting of sales generated primarily
through Wayfair’s sites, increased $228.5 million to $940.4 million,
up 32.1% year over year
-
Total net revenue increased $213.5 million to $960.8 million, up 28.6%
year over year
-
Gross profit was $236.9 million or 24.7% of total net revenue
-
GAAP net loss was $56.5 million
-
Adjusted EBITDA was $(20.9) million or (2.2)% of total net revenue
-
GAAP basic and diluted net loss per share was $0.66
-
Non-GAAP diluted net loss per share was $0.48
-
Non-GAAP free cash flow was $(69.0) million
-
At the end of the first quarter, cash, cash equivalents, and
short-term and long-term investments totaled $309.9 million
"We are very pleased to report strong momentum in the first quarter of
2017 as we continue to gain significant traction across our key
strategic initiatives and steadily increase our market share in the $600
billion dollar home category across North America and Europe," said
Niraj Shah, CEO, co-founder and co-chairman, Wayfair. "The home category
is driven by visual imagery and discovery with customers responding most
positively to an inspirational shopping experience that brings product
to life and solves traditional retail challenges in unexpected and
compelling ways. The house brands that we are building are good examples
of our best in class merchandising and technology capabilities that
showcase the vast selection we offer our customers. In addition, our
investment in a proprietary logistics network customized for furniture
and décor is paying off as we continue to increase sales conversion
through faster delivery and greater customer satisfaction. With
technology and innovation as the backbone of our business, we feel
confident that we have built a category-leading retail brand that is
exceptionally well positioned for long term growth and continued
success."
Other First Quarter Highlights
-
The number of active customers in our Direct Retail business reached
8.9 million as of March 31, 2017, an increase of 45.8% year over year
-
LTM net revenue per active customer was $394 as of March 31, 2017, an
increase of 0.5% year over year
-
Orders per customer, measured as LTM orders divided by active
customers, was 1.73 for the first quarter of 2017, compared to 1.71
for the first quarter of 2016
-
Repeat customers placed 60.4% of total orders in the first quarter of
2017, compared to 55.4% in the first quarter of 2016
-
Repeat customers placed 2.5 million orders in the first quarter of
2017, an increase of 53.3% year over year
-
Orders delivered in the first quarter of 2017 were 4.2 million, an
increase of 40.6% year over year
-
Average order value was $223 for the first quarter of 2017, compared
to $238 in the first quarter of 2016
-
In the first quarter of 2017, 44.6% of total orders delivered for our
Direct Retail business were placed via a mobile device, compared to
38.6% in the first quarter of 2016
Webcast and Conference Call
Wayfair will host a conference call and webcast to discuss its first
quarter 2017 financial results today at 8 a.m. ET. Investors and
participants can access the call by dialing (877) 201-0168 in the U.S.
and (647) 788-4901 internationally. The passcode for the conference line
is 4744242. The call will also be available via live webcast at
investor.wayfair.com along with supporting slides. An archive of the
webcast conference call will be available shortly after the call ends.
The archived webcast will be available at investor.wayfair.com.
About Wayfair
Wayfair Inc. offers an extensive selection of home furnishings and décor
across all styles and price points. The Wayfair family of sites includes:
-
Wayfair, an online destination for all things home
-
Joss & Main, where beautiful furniture and finds meet irresistible
savings
-
AllModern, your home for affordable modern design
-
DwellStudio, a design house with a decidedly modern vibe
-
Birch Lane, a collection of classic furnishings and timeless home décor
Wayfair generated $3.59 billion in net revenue for the twelve months
ended March 31, 2017. Headquartered in Boston, Massachusetts with
operations throughout North America and Europe, the company employs more
than 5,700 people.
Forward-Looking Statements
This press release contains forward-looking statements. All statements
other than statements of historical fact contained in this press
release, including statements regarding our future results of operations
and financial position, business strategy and plans and objectives of
management for future operations, 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.
Factors that could cause or contribute to differences in our future
results include, but are not limited to: economic factors, such as
interest rates and currency exchange fluctuations; our ability to
acquire new customers; our ability to sustain and/or manage our growth;
our ability to increase our net revenue per active customer; and our
ability to build and maintain strong brands. A further list and
description of these risks, uncertainties and other factors can be found
under Part I, Item 1A, Risk Factors in our Annual Report on Form 10-K
for the fiscal year ended December 31, 2016 and the Company’s subsequent
filings with the Securities and Exchange Commission. We qualify all of
our forward-looking statements by these cautionary statements.
Non-GAAP Financial Measures
To supplement Wayfair’s 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, Adjusted EBITDA as a
percentage of total net revenue ("Adjusted EBITDA Margin"), free cash
flow and non-GAAP net loss and diluted net loss per share. Wayfair uses
these non-GAAP financial measures internally in analyzing its financial
results and believes they are useful to investors, as a supplement to
GAAP measures, in evaluating Wayfair’s ongoing operational performance.
Wayfair has provided a reconciliation of these non-GAAP financial
measures to the most directly comparable GAAP financial measure in this
earnings release.
Adjusted EBITDA and Adjusted EBITDA Margin are non-GAAP financial
measures that are calculated as loss before depreciation and
amortization, equity-based compensation and related taxes, interest and
other income and expense, (benefit from) provision for income taxes, and
non-recurring items. Wayfair has included Adjusted EBITDA and Adjusted
EBITDA Margin in this earnings release because they are key measures
used by its management and its board of directors to evaluate its
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 and
Adjusted EBITDA Margin facilitate operating performance comparisons on a
period-to-period basis and, in the case of exclusion of the impact of
equity-based compensation and related taxes, excludes an item that we do
not consider to be indicative of our core operating performance.
Investors should, however, understand that equity-based compensation
will be a significant recurring expense in our business and an important
part of the compensation provided to our employees. Accordingly, Wayfair
believes that Adjusted EBITDA and Adjusted EBITDA Margin provide useful
information to investors and others in understanding and evaluating our
operating results in the same manner as our management and board of
directors.
Free cash flow is a non-GAAP financial measure that is calculated as net
cash (used in) provided by operating activities less net cash used to
purchase property and equipment and site and software development costs.
Wayfair believes free cash flow is an important indicator of Wayfair’s
business performance, as it measures the amount of cash it generates.
Accordingly, Wayfair believes that free cash flow provides useful
information to investors and others in understanding and evaluating its
operating results in the same manner as its management.
Non-GAAP diluted net loss per share is a non-GAAP financial measure that
is calculated as GAAP net loss plus equity-based compensation and
related taxes, (benefit from) provision for income taxes, and
non-recurring items divided by weighted average shares. Wayfair believes
that adding back equity-based compensation expense and related taxes and
(benefit from) provision for income taxes, and non-recurring items as
adjustments to its GAAP diluted net loss before calculating per share
amounts for all periods presented provides a more meaningful comparison
between our operating results from period to period.
Wayfair does not itself, nor does it 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 used by
Wayfair 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 its industry.
The following table reflects the reconciliation of net loss to Adjusted
EBITDA and Adjusted EBITDA Margin for each of the periods indicated (in
thousands):
|
|
|
|
|
|
|
Three months ended March 31,
|
|
|
|
2017
|
|
|
2016
|
Reconciliation of Adjusted EBITDA
|
|
|
|
|
|
|
Net loss
|
|
|
$
|
(56,539
|
)
|
|
|
$
|
(41,205
|
)
|
Depreciation and amortization
|
|
|
20,352
|
|
|
|
10,487
|
|
Equity based compensation and related taxes
|
|
|
14,958
|
|
|
|
10,662
|
|
Interest expense (income), net
|
|
|
299
|
|
|
|
(552
|
)
|
Other (income), net
|
|
|
(176
|
)
|
|
|
(669
|
)
|
Provision for income taxes
|
|
|
210
|
|
|
|
317
|
|
Adjusted EBITDA
|
|
|
$
|
(20,896
|
)
|
|
|
$
|
(20,960
|
)
|
|
|
|
|
|
|
|
Net revenue
|
|
|
$
|
960,825
|
|
|
|
$
|
747,348
|
|
Adjusted EBITDA Margin
|
|
|
(2.2
|
)%
|
|
|
(2.8
|
)%
|
|
|
|
|
|
|
|
|
|
The following table presents Adjusted EBITDA attributable to our
segments, and the reconciliation of net loss to consolidated Adjusted
EBITDA is presented in the preceding table (in thousands):
|
|
|
|
|
|
|
Three months ended March 31,
|
|
|
|
2017
|
|
|
2016
|
Segment Adjusted EBITDA
|
|
|
|
|
|
|
U.S.
|
|
|
$
|
3,728
|
|
|
|
$
|
(1,039
|
)
|
International
|
|
|
(24,624
|
)
|
|
|
(19,921
|
)
|
Adjusted EBITDA
|
|
|
$
|
(20,896
|
)
|
|
|
$
|
(20,960
|
)
|
|
|
|
|
|
|
|
|
|
|
|
A reconciliation of GAAP net loss to non-GAAP diluted net loss, the most
directly comparable GAAP financial measure, in order to calculate
non-GAAP diluted net loss per share, is as follows (in thousands, except
per share data):
|
|
|
Three months ended March 31,
|
|
|
|
2017
|
|
|
2016
|
Net loss
|
|
|
$
|
(56,539
|
)
|
|
|
$
|
(41,205
|
)
|
Equity based compensation and related taxes
|
|
|
14,958
|
|
|
|
10,662
|
|
Provision for income taxes
|
|
|
210
|
|
|
|
317
|
|
Non-GAAP net loss
|
|
|
$
|
(41,371
|
)
|
|
|
$
|
(30,226
|
)
|
Non-GAAP net loss per share, basic and diluted
|
|
|
$
|
(0.48
|
)
|
|
|
$
|
(0.36
|
)
|
Weighted average common shares outstanding, basic and diluted
|
|
|
86,036
|
|
|
|
84,445
|
|
The following table presents a reconciliation of free cash flow to net
cash used in operating activities for each of the periods indicated (in
thousands):
|
|
|
|
|
|
|
Three months ended March 31,
|
|
|
|
2017
|
|
|
2016
|
Net cash used in operating activities
|
|
|
$
|
(46,098
|
)
|
|
|
$
|
(51,204
|
)
|
Purchase of property and equipment
|
|
|
(11,952
|
)
|
|
|
(23,927
|
)
|
Site and software development costs
|
|
|
(10,920
|
)
|
|
|
(5,451
|
)
|
Free cash flow
|
|
|
$
|
(68,970
|
)
|
|
|
$
|
(80,582
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Key Financial and Operating Metrics (in thousands, except LTM Net
Revenue per Active Customer and Average Order Value)
|
|
|
|
|
|
|
Three months ended March 31,
|
|
|
|
2017
|
|
|
2016
|
Consolidated Financial Metrics
|
|
|
|
|
|
|
Net Revenue
|
|
|
$
|
960,825
|
|
|
|
$
|
747,348
|
|
Adjusted EBITDA
|
|
|
$
|
(20,896
|
)
|
|
|
$
|
(20,960
|
)
|
Free cash flow
|
|
|
$
|
(68,970
|
)
|
|
|
$
|
(80,582
|
)
|
Direct Retail Financial and Operating Metrics
|
|
|
|
|
|
|
Direct Retail Net Revenue
|
|
|
$
|
940,352
|
|
|
|
$
|
711,846
|
|
Active Customers
|
|
|
8,855
|
|
|
|
6,074
|
|
LTM Net Revenue per Active Customer
|
|
|
$
|
394
|
|
|
|
$
|
392
|
|
Orders Delivered
|
|
|
4,213
|
|
|
|
2,996
|
|
Average Order Value
|
|
|
$
|
223
|
|
|
|
$
|
238
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
WAYFAIR INC.
|
CONSOLIDATED AND CONDENSED BALANCE SHEETS
|
(In thousands, except share and per share data)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
March 31, 2017
|
|
|
December 31, 2016
|
Assets
|
|
|
|
|
|
|
Current assets
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
$
|
212,408
|
|
|
|
$
|
279,840
|
|
Short-term investments
|
|
|
64,277
|
|
|
|
68,743
|
|
Accounts receivable, net of allowance of $2,857 and $3,115 at
March 31, 2017 and
|
|
|
21,770
|
|
|
|
19,113
|
|
December 31, 2016, respectively
|
|
|
|
|
|
|
|
|
Inventories
|
|
|
14,457
|
|
|
|
18,550
|
|
Prepaid expenses and other current assets
|
|
|
119,450
|
|
|
|
90,845
|
|
Total current assets
|
|
|
432,362
|
|
|
|
477,091
|
|
Property and equipment, net
|
|
|
263,315
|
|
|
|
239,354
|
|
Goodwill and intangible assets, net
|
|
|
3,949
|
|
|
|
4,230
|
|
Long-term investments
|
|
|
33,242
|
|
|
|
30,967
|
|
Other noncurrent assets
|
|
|
9,255
|
|
|
|
10,041
|
|
Total assets
|
|
|
$
|
742,123
|
|
|
|
$
|
761,683
|
|
Liabilities and Stockholders' Equity
|
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
|
|
Accounts payable
|
|
|
$
|
362,719
|
|
|
|
$
|
379,493
|
|
Accrued expenses
|
|
|
70,629
|
|
|
|
67,807
|
|
Deferred revenue
|
|
|
88,325
|
|
|
|
65,892
|
|
Other current liabilities
|
|
|
44,911
|
|
|
|
44,028
|
|
Total current liabilities
|
|
|
566,584
|
|
|
|
557,220
|
|
Lease financing obligation
|
|
|
41,542
|
|
|
|
28,900
|
|
Other liabilities
|
|
|
97,535
|
|
|
|
96,179
|
|
Total liabilities
|
|
|
705,661
|
|
|
|
682,299
|
|
|
|
|
|
|
|
|
Convertible preferred stock, $0.001 par value per share:
10,000,000 shares authorized
|
|
|
—
|
|
|
|
—
|
|
and none issued at March 31, 2017 and December 31, 2016
|
|
|
|
|
|
|
|
|
Stockholders’ equity:
|
|
|
|
|
|
|
Class A common stock, par value $0.001 per share, 500,000,000
shares authorized,
|
|
|
51
|
|
|
|
50
|
|
50,971,401 and 49,945,202 shares issued and outstanding at March
31, 2017 and
|
|
|
|
|
|
|
|
|
December 31, 2016, respectively
|
|
|
|
|
|
|
|
|
Class B common stock, par value $0.001 per share, 164,000,000
shares authorized,
|
|
|
35
|
|
|
|
36
|
|
35,475,888 and 35,885,692 shares issued and outstanding at March
31, 2017 and
|
|
|
|
|
|
|
|
|
December 31, 2016, respectively
|
|
|
|
|
|
|
|
|
Additional paid-in capital
|
|
|
431,812
|
|
|
|
409,225
|
|
Accumulated deficit
|
|
|
(395,191
|
)
|
|
|
(329,940
|
)
|
Accumulated other comprehensive (loss) gain
|
|
|
(245
|
)
|
|
|
13
|
|
Total stockholders’ equity
|
|
|
36,462
|
|
|
|
79,384
|
|
Total liabilities and stockholders’ equity
|
|
|
$
|
742,123
|
|
|
|
$
|
761,683
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
WAYFAIR INC.
|
CONSOLIDATED AND CONDENSED STATEMENTS OF OPERATIONS
|
(In thousands, except per share data)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
Three months ended March 31,
|
|
|
|
2017
|
|
|
2016
|
Net revenue
|
|
|
$
|
960,825
|
|
|
|
$
|
747,348
|
|
Cost of goods sold (1)
|
|
|
|
723,942
|
|
|
|
|
568,292
|
|
Gross profit
|
|
|
|
236,883
|
|
|
|
|
179,056
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
Customer service and merchant fees (1)
|
|
|
|
35,058
|
|
|
|
|
27,350
|
|
Advertising
|
|
|
|
118,265
|
|
|
|
|
97,677
|
|
Merchandising, marketing and sales (1)
|
|
|
|
50,794
|
|
|
|
|
37,856
|
|
Operations, technology, general and administrative (1)
|
|
|
|
88,972
|
|
|
|
|
58,282
|
|
Total operating expenses
|
|
|
|
293,089
|
|
|
|
|
221,165
|
|
Loss from operations
|
|
|
|
(56,206
|
)
|
|
|
|
(42,109
|
)
|
Interest (expense) income, net
|
|
|
|
(299
|
)
|
|
|
|
552
|
|
Other income, net
|
|
|
|
176
|
|
|
|
|
669
|
|
Loss before income taxes
|
|
|
|
(56,329
|
)
|
|
|
|
(40,888
|
)
|
Provision for income taxes
|
|
|
|
210
|
|
|
|
|
317
|
|
Net loss
|
|
|
$
|
(56,539
|
)
|
|
|
$
|
(41,205
|
)
|
Net loss per share, basic and diluted
|
|
|
$
|
(0.66
|
)
|
|
|
$
|
(0.49
|
)
|
Weighted average number of common stock outstanding used in
computing per share
|
|
|
|
86,036
|
|
|
|
|
84,445
|
|
amounts, basic and diluted
|
|
|
|
|
|
|
|
|
|
|
(1) Includes equity based compensation and related taxes as
follows:
|
|
|
|
|
|
|
|
|
|
|
Cost of goods sold
|
|
|
$
|
145
|
|
|
|
$
|
58
|
|
Customer service and merchant fees
|
|
|
|
644
|
|
|
|
|
333
|
|
Merchandising, marketing and sales
|
|
|
|
7,160
|
|
|
|
|
5,101
|
|
Operations, technology, general and administrative
|
|
|
|
7,009
|
|
|
|
|
5,170
|
|
|
|
|
$
|
14,958
|
|
|
|
$
|
10,662
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
WAYFAIR INC.
|
CONSOLIDATED AND CONDENSED STATEMENTS OF CASH FLOWS
|
(In thousands)
|
(Unaudited)
|
|
|
|
|
Three months ended March 31,
|
|
|
|
2017
|
|
|
2016
|
Cash flows from operating activities
|
|
|
|
|
|
|
Net loss
|
|
|
$
|
(56,539
|
)
|
|
|
$
|
(41,205
|
)
|
Adjustments to reconcile net loss to net cash used in operating
activities
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
20,352
|
|
|
|
10,487
|
|
Equity based compensation
|
|
|
13,629
|
|
|
|
9,715
|
|
Other non-cash adjustments
|
|
|
(246
|
)
|
|
|
(156
|
)
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
Accounts receivable
|
|
|
(2,651
|
)
|
|
|
(1,941
|
)
|
Inventories
|
|
|
4,094
|
|
|
|
2,142
|
|
Prepaid expenses and other current assets
|
|
|
(28,200
|
)
|
|
|
(8,643
|
)
|
Accounts payable and accrued expenses
|
|
|
(22,412
|
)
|
|
|
(29,097
|
)
|
Deferred revenue and other liabilities
|
|
|
25,930
|
|
|
|
7,926
|
|
Other assets
|
|
|
(55
|
)
|
|
|
(432
|
)
|
Net cash used in operating activities
|
|
|
(46,098
|
)
|
|
|
(51,204
|
)
|
|
|
|
|
|
|
|
Cash flows from investing activities
|
|
|
|
|
|
|
Purchase of short-term and long-term investments
|
|
|
(16,225
|
)
|
|
|
(28,489
|
)
|
Sale and maturities of short-term investments
|
|
|
18,275
|
|
|
|
29,620
|
|
Purchase of property and equipment
|
|
|
(11,952
|
)
|
|
|
(23,927
|
)
|
Site and software development costs
|
|
|
(10,920
|
)
|
|
|
(5,451
|
)
|
Net cash used in investing activities
|
|
|
(20,822
|
)
|
|
|
(28,247
|
)
|
|
|
|
|
|
|
|
Cash flows from financing activities
|
|
|
|
|
|
|
Taxes paid related to net share settlement of equity awards
|
|
|
(592
|
)
|
|
|
(6,621
|
)
|
Net proceeds from exercise of stock options
|
|
|
54
|
|
|
|
51
|
|
Net cash used in financing activities
|
|
|
(538
|
)
|
|
|
(6,570
|
)
|
Effect of exchange rate changes on cash and cash equivalents
|
|
|
26
|
|
|
|
643
|
|
Net decrease in cash and cash equivalents
|
|
|
(67,432
|
)
|
|
|
(85,378
|
)
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
|
|
|
|
Beginning of period
|
|
|
279,840
|
|
|
|
334,176
|
|
End of period
|
|
|
$
|
212,408
|
|
|
|
$
|
248,798
|
|
|
|
|
|
|
|
|
|
|
|
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20170509005246/en/
Source: Wayfair Inc.