Wayfair Inc

Previous wording

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). All statements other than statements of historical fact contained in this Quarterly Report on Form 10-Q, 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, the financial impact and expected savings of our recent reduction in workforce, available liquidity and access to financing sources, our business strategy, plans and objectives of management for future operations, including our international expansion and omni-channel strategy, consumer activity and behaviors, developments in our technology and systems and anticipated results of those developments, our new financial accounting system for financial reporting, including our transition to such system, and the impact of

Current wording

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). All statements other than statements of historical fact contained in this Quarterly Report on Form 10-Q, 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, the financial impact and expected savings of our January 2024 reduction in workforce, available liquidity and access to financing sources, our business strategy, plans and objectives of management for future operations, including our international expansion and omni-channel strategy, consumer activity and behaviors, developments in our technology and systems and anticipated results of those developments, and the impact of macroeconomic events, including interest rates and inflation, 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.

Previous wording

•adverse macroeconomic conditions, including higher interest rates, inflation, slower growth or the potential for recession, disruptions in the global supply chain and other conditions affecting the retail environment for products we sell, and other matters that influence consumer spending and preferences;

Current wording

•adverse macroeconomic conditions, including rising and fluctuating interest rates, inflation, slower growth or the potential for recession, disruptions in the global supply chain and other conditions affecting the retail environment for products we sell, and other matters that influence consumer spending and preferences, as well as our ability to plan for and respond to the impact of these conditions;

Previous wording

•geopolitical events, natural disasters, public health emergencies, civil disturbances and terrorist attacks; and

Current wording

•geopolitical events, including the 2024 United States (“U.S.”) presidential election, natural disasters, public health emergencies, civil disturbances and terrorist attacks; and

Previous wording

All dollar and percentage comparisons made herein refer to the three months ended March 31, 2024, compared with the three months ended March 31, 2023, unless otherwise noted.

Current wording

All dollar and percentage comparisons made herein refer to the three and six months ended June 30, 2024, compared with the three and six months ended June 30, 2023, unless otherwise noted.

Previous wording

During the three months ended March 31, 2024, net revenue decreased by 1.6% compared to the same period in 2023. As of March 31, 2024, we had 22 million active customers and during the three months ended March 31, 2024, 80.5% of orders came from repeat buyers. The lower sales were a function of normalization in average order value following a period of inflation, in combination with a decrease in order volume due to challenges in the category. We also continued to manage our advertising spend according to a return on investment-oriented approach that carefully tracks and monitors the results of advertising campaigns as we seek to maintain appropriate return targets.

Current wording

During the three months ended June 30, 2024, net revenue decreased by 1.7% compared to the same period in 2023. As of June 30, 2024, we had 22 million active customers and during the three months ended June 30, 2024, 81.7% of orders came from repeat buyers. The lower sales were due to lower order volume, which was driven by challenges in the category, compared to the same period in 2023. We also continued to manage our advertising spend according to a return on investment-oriented approach that carefully tracks and monitors the results of advertising campaigns as we seek to maintain appropriate return targets.

Previous wording

During the three months ended March 31, 2024, net revenue decreased by $45 million, or 1.6%, compared to the same period in 2023, which reflects recent macroeconomic pressures felt by consumers. The decrease in net revenue was due to lower average order value, which was driven by normalization of inflationary pressures in the supply chain and partially due to lower order volume, which was driven by challenges in the category, compared to the same period in 2023.

Current wording

During the three months ended June 30, 2024, net revenue decreased by $54 million, or 1.7%, compared to the same period in 2023, which reflects continued macroeconomic pressures felt by consumers. The decrease in net revenue is due to lower order volume, which was driven by challenges in the category, compared to the same period in 2023.

Previous wording

During the three months ended March 31, 2024, our United States (“U.S.”) net revenue decreased by 1.0% and International net revenue decreased by 5.8% compared to the same period in 2023. During the three months ended March 31, 2024, International Net Revenue Constant Currency Growth was (7.5)% (see “Non-GAAP Financial Measures” below for more information regarding our use of Net Revenue Constant Currency Growth).

Current wording

During the three months ended June 30, 2024, our U.S. net revenue decreased by 2.0% and International net revenue increased by 0.3% compared to the same period in 2023. During the three months ended June 30, 2024, International Net Revenue Constant Currency Growth was 1.3% (see “Non-GAAP Financial Measures” below for more information regarding our use of Net Revenue Constant Currency Growth).

Previous wording

For more information on our segments, see Note 10 Segment and Geographic Information, in the notes to the condensed consolidated financial statements, included in Part I, Item 1, Financial Statements, in this Quarterly Report on Form 10-Q.

Current wording

For more information on our segments, see Note 10, Segment and Geographic Information, included in Part I, Item 1, Financial Statements, in this Quarterly Report on Form 10-Q.

Previous wording

Cost of goods sold is sensitive to many factors, including quarter-to-quarter variability in product mix, pricing strategies, changes in wholesale, shipping and fulfillment costs, including associated applicable customs duties and fees earned for supplier services rendered. During the three months ended March 31, 2024, cost of goods sold decreased by $43 million, or 2.2%, compared to the same period in 2023. The decrease in cost of goods sold is primarily driven by operational cost savings initiatives and partially due to lower order volume which was driven by challenges in the category compared to the same period in 2023.

Current wording

Cost of goods sold is sensitive to many factors, including quarter-to-quarter variability in product mix, pricing strategies, changes in wholesale, shipping and fulfillment costs, including associated applicable customs duties and fees earned for supplier services rendered. During the three months ended June 30, 2024, cost of goods sold decreased by $10 million, or 0.5%, compared to the same period in 2023. The decrease in cost of goods sold is primarily driven by operational cost savings initiatives and partially due to lower order volume, which was driven by challenges in the category compared to the same period in 2023.

Previous wording

As a percentage of net revenue, cost of goods sold decreased to 70.0% for the three months ended March 31, 2024 compared to 70.4% in the same period in 2023 due to mix shifts, operational efficiencies and decreased logistics costs.

Current wording

As a percentage of net revenue, cost of goods sold increased to 69.8% for the three months ended June 30, 2024 compared to 68.9% in the same period in 2023 due to mix shifts and lower net revenue.

Previous wording

As a percentage of net revenue, total customer service and merchant fees decreased to 4.3% for the three months ended March 31, 2024 compared to 5.0% in the same period in 2023 due to decreased compensation costs.

Current wording

As a percentage of net revenue, total customer service and merchant fees decreased to 3.9% for the three months ended June 30, 2024 compared to 4.5% in the same period in 2023 primarily due to decreased compensation costs.

Previous wording

During the three months ended March 31, 2024, excluding the impact of equity-based compensation and related taxes, our expenses for selling, operations, technology, general and administrative activities decreased by $68 million, or 14.0% compared to the same period in 2023. The decrease is primarily due to decreased personnel costs.

Current wording

During the three months ended June 30, 2024, excluding the impact of equity-based compensation and related taxes, our expenses for selling, operations, technology, general and administrative activities decreased by $74 million, or 15.6%, compared to the same period in 2023. The decrease is primarily due to decreased compensation costs.

Previous wording

As a percentage of net revenue, total selling, operations, technology, general and administrative expenses decreased to 19.6% for the three months ended March 31, 2024 compared to 22.5% in the same period in 2023, primarily due to decreased compensation costs.

Current wording

As a percentage of net revenue, total selling, operations, technology, general and administrative expenses decreased to 15.7% for the three months ended June 30, 2024, compared to 19.9% in the same period in 2023, primarily due to decreased compensation costs.

Previous wording

During the three months ended March 31, 2024, our interest expense, net increased by $1 million, or 20.0%, compared to the same period in 2023, primarily driven by the issuance of the 2028 Notes in May 2023.

Current wording

During the three months ended June 30, 2024, interest expense, net decreased by $1 million, or 20.0%, compared to the same period in 2023.

Previous wording

During the three months ended March 31, 2024, our other expense, net increased by $3 million compared to the same period in 2023, primarily driven by increases in foreign currency transaction losses. Included in other expense, net are changes in foreign currency transaction gains and losses and long-term investment income or losses.

Current wording

During the three months ended June 30, 2024, other (expense) income, net increased by $4 million or 133.3%, compared to the same period in 2023. Included in other (expense) income, net are changes in foreign currency transaction gains and losses and long-term investment income or losses.

Previous wording

During the three months ended March 31, 2024, our equity-based compensation and related taxes included in customer service and merchant fees and selling, operations, technology, general and administrative decreased by $24 million, or 16.2% compared to the same period in 2023, driven by a decrease in vested restricted stock units in 2024 compared to the same period in 2023.

Current wording

During the six months ended June 30, 2024, our equity-based compensation and related taxes included in customer service and merchant fees and selling, operations, technology, general and administrative decreased by $94 million, or 30.0%, compared to the same period in 2023, driven by a decrease in vested restricted stock units in 2024 compared to the same period in 2023.

Previous wording

During the three months ended March 31, 2024, excluding the impact of equity-based compensation, our expenses for customer service and merchant fees decreased by $20 million, or 15.3% compared to the same period in 2023. The decrease in customer service and merchant fees is primarily due to decreased compensation costs during the three months ended March 31, 2024 compared to the same period in 2023.

Current wording

During the six months ended June 30, 2024, excluding the impact of equity-based compensation, our expenses for customer service and merchant fees decreased by $40 million, or 15.0%, compared to the same period in 2023. The decrease in customer service and merchant fees is primarily due to decreased compensation costs during the six months ended June 30, 2024 compared to the same period in 2023.

Previous wording

As a percentage of net revenue, advertising expenses increased to 11.9% for the three months ended March 31, 2024 compared to 11.8% in the same period in 2023 due in part to maintaining efficiencies in our advertising channel mix.

Current wording

As a percentage of net revenue, advertising expenses increased to 11.8% for the six months ended June 30, 2024 compared to 11.4% in the same period in 2023 due in part to maintaining efficiencies in our advertising channel mix.

Previous wording

During the three months ended March 31, 2024, impairment and other related charges decreased by $13 million or 100.0% as compared to the same period in 2023. As a percentage of net revenue, impairment and other related net charges decreased to 0.0% from 0.5% in the same period in 2023.

Current wording

During the six months ended June 30, 2024, impairment and other related charges decreased by $13 million, or 92.9%. compared to the same period in 2023. As a percentage of net revenue, impairment and other related net charges decreased to 0.0% from 0.2% in the same period in 2023.

Previous wording

During the three months ended March 31, 2023, we recorded charges of $5 million related to consolidation of certain customer service centers in identified U.S. locations and $8 million related to construction in progress assets at identified U.S. locations.

Current wording

During the six months ended June 30, 2024, we recorded charges of $1 million related to changes in sublease market conditions for an identified U.S. office location. During the six months ended June 30, 2023, we recorded charges of $14 million, inclusive of $5 million related to consolidation of certain customer service centers and $9 million related to construction in progress assets at identified U.S. locations.

Previous wording

On January 19, 2024, we announced a workforce realignment plan, including a workforce reduction involving approximately 1,650 employees. As a result, during the three months ended March 31, 2024, restructuring charges increased by $14 million or 21.5% as compared to the same period in 2023. As a percentage of net revenue, restructuring charges increased to 2.9% from 2.3% in the same period in 2023.

Current wording

During the six months ended June 30, 2024, restructuring charges increased by $14 million, or 21.5%, compared to the same period in 2023. As a percentage of net revenue, restructuring charges increased to 1.4% from 1.1% in the same period in 2023.

Previous wording

During the three months ended March 31, 2024, we incurred $79 million of charges consisting primarily of one-time employee severance and benefit costs associated with the January 2024 workforce reductions. During the three months ended March 31, 2023, we incurred $65 million of charges consisting primarily of one-time employee severance and benefit costs associated with the January 2023 workforce reductions.

Current wording

During the six months ended June 30, 2024, we incurred $79 million of charges consisting primarily of one-time employee severance and benefit costs associated with the January 2024 workforce reductions. During the six months ended June 30, 2023, we incurred $65 million of charges consisting primarily of one-time employee severance and benefit costs associated with the January 2023 workforce reductions.

Previous wording

During the three months ended March 31, 2024, our provision for income taxes, net increased by $1 million or 50.0% compared to the same period in 2023, primarily related to the level and mix of income earned in the U.S. and certain foreign jurisdictions and U.S. state income taxes. Refer to Note 8, Income Taxes, in the notes to the condensed consolidated financial statements, included in Part I, Item 1, Financial Statements, in this Quarterly Report on Form 10-Q for additional information.

Current wording

During the six months ended June 30, 2024, our provision for income taxes, net increased by $1 million, or 25.0%, compared to the same period in 2023, primarily related to the level and mix of income earned in the U.S. and certain foreign jurisdictions and U.S. state income taxes. Refer to Note 8, Income Taxes, included in Part I, Item 1, Financial Statements, in this Quarterly Report on Form 10-Q for additional information.

Previous wording

As of March 31, 2024, our principal source of liquidity was cash and cash equivalents and short-term investments totaling $1.2 billion. Additionally, we have a $600 million senior secured revolving credit facility that matures on March 24, 2026 (the “Revolver”). As of March 31, 2024, there were no revolving loans outstanding under the Revolver. We had outstanding letters of credit, primarily as security for certain lease agreements, for $72 million as of March 31, 2024, which reduced the availability of credit under the Revolver. Excluding liquidity available through our Revolver, the following table shows sources of liquidity for the periods presented:

Current wording

As of June 30, 2024, our principal source of liquidity was cash and cash equivalents and short-term investments totaling $1.3 billion. Additionally, we have a $600 million senior secured revolving credit facility that matures on March 24, 2026 (the “Revolver”). As of June 30, 2024, there were no revolving loans outstanding under the Revolver. We had outstanding letters of credit, primarily as security for certain lease agreements, for $69 million as of June 30, 2024, which reduced the availability of credit under the Revolver. Excluding liquidity available through our Revolver, the following table shows sources of liquidity for the periods presented:

Previous wording

The conditional conversion features of the 2028 Notes were triggered during the calendar quarter ended March 31, 2024, and the 2028 Notes therefore became convertible in the calendar quarter ended June 30, 2024 pursuant to the applicable last reported sales price condition. The conditional conversion features of the 2024 Notes, 2025 Notes, 2026 Notes and 2027 Notes were not triggered during the calendar quarter ended March 31, 2024, therefore, the 2024 Notes, 2025 Notes, 2026 Notes and 2027 Notes are not convertible during the calendar quarter ended June 30, 2024 pursuant to the applicable last reported sales price conditions. The 2025 Accreting Notes are convertible at any time prior to the close of business on the second business day immediately preceding the maturity date. During the period ended March 31, 2024, there were no conversions of the Notes.

Current wording

The conditional conversion features of the 2024 Notes, 2025 Notes, 2026 Notes, 2027 Notes and 2028 Notes were not triggered during the calendar quarter ended June 30, 2024, therefore, the 2024 Notes, 2025 Notes, 2026 Notes, 2027 Notes and 2028 Notes are not convertible during the calendar quarter ended September 30, 2024 pursuant to the applicable last reported sales price conditions. The 2025 Accreting Notes are convertible at any time prior to the close of business on the second business day immediately preceding the maturity date. During the period ended June 30, 2024, there were no conversions of the Notes.

Previous wording

The credit agreement and indentures governing our convertible notes contain restrictions and covenants that may limit our operating flexibility. Specifically, the Revolver contains affirmative and negative covenants customarily applicable to senior secured credit facilities, including covenants that, among other things, limit or restrict our ability, subject to negotiated exceptions, to incur additional indebtedness and additional liens on our assets, engage in mergers or acquisitions or dispose of assets, pay dividends or make other distributions, voluntarily prepay other indebtedness, enter into transactions with affiliated persons, make investments, or change the nature of our businesses. The Revolver also requires us to maintain certain levels of performance in order to maintain our access to the Revolver. For instance, we are required to maintain a Consolidated Senior Secured Debt to Consolidated EBITDA Ratio (as defined in the credit agreement governing the Revolver) of 4.0 to 1.0, subject to a 0.5 step-up following certain permitted acquisitions. For information regarding our credit agreement and convertible notes, see Note 4, Debt and Other Financing, in the notes to the condensed consolidated financial statements, included in Part I, Item 1, Financial Statements, in this Quarterly Report on Form 10-Q and Note 6, Debt and Other Financing, included in Part II, Item 8, Financial Statements and Supplementary Data, in our Annual Report on Form 10-K for the year ended December 31, 2023. As of March 31, 2024, we were in compliance with all the terms and conditions of our debt agreements.

Current wording

The credit agreement and indentures governing our convertible notes contain restrictions and covenants that may limit our operating flexibility. Specifically, the Revolver contains affirmative and negative covenants customarily applicable to senior secured credit facilities, including covenants that, among other things, limit or restrict our ability, subject to negotiated exceptions, to incur additional indebtedness and additional liens on our assets, engage in mergers or acquisitions or dispose of assets, pay dividends or make other distributions, voluntarily prepay other indebtedness, enter into transactions with affiliated persons, make investments, or change the nature of our businesses. The Revolver also requires us to maintain certain levels of performance in order to maintain our access to the Revolver. For instance, we are required to maintain a Consolidated Senior Secured Debt to Consolidated EBITDA Ratio (as defined in the credit agreement governing the Revolver) of 4.0 to 1.0, subject to a 0.5 step-up following certain permitted acquisitions. For information regarding our credit agreement and convertible notes, see Note 4, Debt and Other Financing, included in Part I, Item 1, Financial Statements, in this Quarterly Report on Form 10-Q and Note 6, Debt and Other Financing, included in Part II, Item 8, Financial Statements and Supplementary Data, in our Annual Report on Form 10-K for the year ended December 31, 2023. As of June 30, 2024, we were in compliance with all the terms and conditions of our debt agreements.

Previous wording

Cash flows used in operating activities decreased by $8 million during the three months ended March 31, 2024 compared to the same period in 2023, primarily due to an increase in net loss adjusted for non-cash items of $70 million, partially offset by a decrease of $62 million for cash provided by changes in operating assets and liabilities.

Current wording

Cash flows provided by operating activities increased by $36 million during the six months ended June 30, 2024, compared to the same period in 2023, primarily due to an increase in net loss adjusted for non-cash items of $98 million, partially offset by a decrease of $62 million for cash provided by changes in operating assets and liabilities.

Previous wording

Cash flows used in investing activities increased by $139 million during the three months ended March 31, 2024 compared to the same period in 2023, primarily due to increases in purchases of short- and long-term investments of $36 million and decreases in sales and maturities of short- and long-term investments of $136 million, partially offset by decreases in purchases of property and equipment and site and software development costs of $33 million.

Current wording

Cash flows used in investing activities increased by $176 million during the six months ended June 30, 2024, compared to the same period in 2023, primarily due to decreases in sales and maturities of short- and long-term investments of $198 million and increases in purchases of short- and long-term investments of $38 million, partially offset by decreases in purchases of property and equipment and site and software development costs of $60 million.

Previous wording

Purchases of property and equipment and site and software development costs (collectively, “Capital Expenditures”) were 2.0% of net revenue for the three months ended March 31, 2024 and related primarily to equipment purchases and improvements for leased warehouses within our expanding logistics network and ongoing investments, including in our proprietary technology and operational platform.

Current wording

Purchases of property and equipment and site and software development costs (collectively, “Capital Expenditures”) were 2.0% of net revenue for the six months ended June 30, 2024 and related primarily to equipment purchases and improvements for leased warehouses within our expanding logistics network and ongoing investments, including in our proprietary technology and operational platform.

Previous wording

During the three months ended March 31, 2024, there have been no material changes to our contractual obligations and estimates as compared to the contractual obligations described in Contractual Obligations included in Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, in our Annual Report on Form 10-K for the year ended December 31, 2023.

Current wording

During the six months ended June 30, 2024, there have been no material changes to our contractual obligations and estimates as compared to the contractual obligations described in Contractual Obligations included in Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, in our Annual Report on Form 10-K for the year ended December 31, 2023.

Previous wording

The information called for by this section is incorporated herein by reference to Note 1, Summary of Significant Accounting Policies, in the notes to the condensed consolidated financial statements, included in Part I, Item 1, Financial Statements, in this Quarterly Report on Form 10-Q.

Current wording

The information called for by this section is incorporated herein by reference to Note 1, Summary of Significant Accounting Policies, included in Part I, Item 1, Financial Statements, in this Quarterly Report on Form 10-Q.