Wayfair Inc.

Wayfair Inc.

Notes to Condensed Consolidated Financial Statements

1. Summary of Significant Accounting Policies

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements contained in this Quarterly Report on Form 10-Q are those of Wayfair Inc. and its wholly-owned subsidiaries. Unless the context indicates otherwise, “Wayfair,” “the Company” or similar terms refer to Wayfair Inc. and its subsidiaries. In the Company’s opinion, the accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) and applicable rules and regulations of the United States (“U.S.”) Securities and Exchange Commission (“SEC”) regarding interim financial reporting and reflect all adjustments, consisting of normal recurring adjustments, necessary for a fair statement of the results of the interim periods presented. Certain information and note disclosures normally included in the audited financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. The information included in this Quarterly Report on Form 10-Q should be read in conjunction with the audited consolidated financial statements and accompanying notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025. Furthermore, interim results are not necessarily indicative of the results for the full year ended December 31, 2026 or future periods.

The Company has identified significant accounting policies that are critical to understanding its business and results of operations. Wayfair believes that there have been no significant changes during the three and nine months ended September 30, 2026 to the items disclosed in Note 1, Summary of Significant Accounting Policies, included in Part II, Item 8, Financial Statements and Supplementary Data, of the Company’s Annual Report on Form 10-K for the year ended December 31, 2025.

Adoption of New Accounting Principles

Wayfair adopted ASU 2024-04, Debt - Debt with Conversion and Other Options (Subtopic 470-20): Induced Conversions of Convertible Debt Instruments, on January 1, 2026 prospectively. The amendment clarifies the assessment of whether certain settlements of convertible debt instruments should be accounted for as an induced conversion. The amendment did not have a material impact on the Company’s results of operations, financial condition, or cash flows.

Recently Issued Accounting Pronouncements

In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, which requires disclosure of specific expense categories in the notes to the financial statements. The amendment is effective for annual periods beginning after December 15, 2026, and interim reporting periods within annual reporting periods beginning after December 15, 2027, with early adoption permitted. The amendment should be applied prospectively to financial statements issued for reporting periods after the effective date of this ASU or retrospectively to any or all prior periods presented in the financial statements. Wayfair is currently evaluating the impact that the adoption of this standard will have on its consolidated financial statements and related disclosures.

In September 2025, the FASB issued ASU 2025-06, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software, which clarifies and modernizes the accounting for costs related to internal-use software, and clarifies the threshold that entities apply to begin capitalizing costs. The amendment is effective for annual periods beginning after December 15, 2027, and interim periods within those fiscal years. The amendment can be applied on a fully prospective basis, a modified basis for in-process projects, or on a retrospective basis. Wayfair is currently evaluating the impact that the adoption of this standard will have on its consolidated financial statements and related disclosures.

In December 2025, the FASB issued ASU 2025-11, Interim Reporting (Topic 270): Narrow-Scope Improvements. This ASU amends Topic 270 by improving the navigability of the required interim disclosures and clarifying when that guidance is applicable. The amendment also provides additional guidance on what disclosures should be provided in interim reporting periods. Additionally, the amendment requires entities to disclose events since the end of the last annual reporting period that had a material impact on the entity. The amendment is effective for annual periods beginning after December 15, 2027, and interim periods within those fiscal years, with early adoption permitted. The Company is currently evaluating the disclosure requirements of this standard and the impact on its consolidated financial statements.

2. Supplemental Financial Statement Disclosures

Accounts Receivable, Net

As of September 30, 2026, accounts receivable was $165 million, net of allowance for credit losses of $32 million. As of December 31, 2025, accounts receivable was $132 million, net of allowance for credit losses of $27 million. The changes in the allowance for credit losses werenot material for the three and nine months ended September 30, 2026. Management believes credit risk is mitigated for the three and nine months ended September 30, 2026, as approximately 97.9% and 97.8%, respectively, of the net revenue recognized was collected in advance of recognition.

Contract Liabilities

Contract liabilities included in other current liabilities were $296 million at September 30, 2026 and $277 million at December 31, 2025. During the nine months ended September 30, 2026, Wayfair recognized $195 million of net revenue that was included within other current liabilities as of December 31, 2025. During the nine months ended September 30, 2025, Wayfair recognized $163 million of net revenue that was included within other current liabilities as of December 31, 2024.

Net revenue from contracts with customers is disaggregated by geographic region because this manner of disaggregation best depicts how the nature, amount, timing and uncertainty of net revenue and cash flows are affected by economic factors. Refer to Note 9, Segment and Geographic Information, for additional information.

Impairment and Other Related Net Charges

During the nine months ended September 30, 2026, Wayfair recorded a net charge of $2 million associated with its decision to exit a customer service center in the U.S. During the nine months ended September 30, 2025, Wayfair recorded net charges of $23 million, inclusive of $20 million associated with its decision to exit the Germany market (the “Germany Restructuring”) and weakened macroeconomic conditions in connection with its Germany operations and $3 million associated with changes in sublease market conditions for a technology center in the U.S.

Leases

During the nine months ended September 30, 2026, Wayfair terminated the operating lease for a logistics facility resulting in a reduction of its operating lease obligations of $138 million. Wayfair also entered into contractual obligations of $110 million for future minimum lease payments under non-cancellable operating leases that have not yet commenced. Additionally, operating lease liabilities arising from obtaining right-of-use assets were $200 million during the three months ended September 30, 2026 and $238 million during the nine months ended September 30, 2026.

Restructuring and Other Charges, Net

During the nine months ended September 30, 2026, Wayfair recorded $24 million of charges related to a loss on termination of an operating lease for a logistics facility. During the three and nine months ended September 30, 2025, Wayfair incurred $3 million and $68 million, respectively, of charges consisting primarily of one-time employee severance, benefits, relocation and transition costs. This is inclusive of $2 million and $48 million, respectively, related to the Germany Restructuring and $1 million and $20 million, respectively, related to the March 2025 workforce reduction, which impacted members of the technology team. Wayfair does not expect to incur any further material charges related to this workforce reduction.

Income Tax

On July 4, 2025, the One Big Beautiful Bill Act was signed into law in the U.S., which contains a broad range of tax reform provisions affecting businesses. Wayfair has evaluated the full effects on the full year income tax provision and cash tax position, and the legislation is not expected to have a material impact on the financial statements. The impacts are not material to operating results for the three and nine months ended September 30, 2026 and September 30, 2025.

3. Cash, Cash Equivalents and Restricted Cash, Investments and Fair Value Measurements

Investments

As of September 30, 2026 and December 31, 2025, Wayfair’s marketable securities, which primarily consisted of corporate bonds and other government obligations that are priced at fair value, were classified as available-for-sale investments. During the three and nine months ended September 30, 2026 and 2025, Wayfair didnot have any realized gains or losses. Interest income includes interest earned from cash and cash equivalents and marketable securities. During the three and nine months ended September 30, 2026, Wayfair recorded $9 million and $30 million of interest income, respectively. During the three and nine months ended September 30, 2025, Wayfair recorded $11 million and $34 million of interest income, respectively.

The following table presents details of Wayfair’s investment securities as of September 30, 2026 and December 31, 2025:

Fair Value Measurements

Wayfair's financial assets and liabilities are measured at fair value, which is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). The three levels of inputs used to measure fair value are as follows:

▪Level 1—Unadjusted quoted prices in active markets for identical assets or liabilities

▪Level 2—Unadjusted quoted prices in active markets for similar assets or liabilities, unadjusted quoted prices for identical or similar assets or liabilities in markets that are not active, or inputs other than quoted prices that are observable or can be corroborated by observable market data for substantially the full term of the asset or liability

▪Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the asset or liability

This hierarchy requires Wayfair to use observable market data, when available, and to minimize the use of unobservable inputs when determining fair value. Wayfair classifies cash equivalents and certificates of deposit within Level 1 because these are valued using quoted market prices. The fair value of Level 1 financial assets is based on quoted market prices of the identical underlying security. Wayfair classifies short-term investments within Level 2 because unadjusted quoted prices for identical or similar assets in markets are not active. Wayfair does not have assets that are classified as Level 3.

The following tables set forth the fair value of Wayfair's financial assets measured at fair value on a recurring basis as of September 30, 2026 and December 31, 2025:

(1)Cash and cash equivalents are included in the tables above; however, they are not measured at fair value on a recurring basis, and their carrying amounts approximate fair value.

4. Debt and Other Financing

The following table presents the outstanding principal amount and carrying value of debt and other financing:

(1)Short-term debt consists of $227 million for the 2027 Notes (as defined below) as of September 30, 2026 and $39 million for the unsecured 1.00% Convertible Senior Notes due 2026 (the “2026 Notes”) as of December 31, 2025. Short-term debt is presented within other current liabilities in the condensed consolidated balance sheets.

As of September 30, 2026, Wayfair had $2.8 billion principal amount of indebtedness outstanding. Wayfair’s indebtedness includes:

•unsecured 3.25% Convertible Senior Notes due 2027 (the “2027 Notes” or the “Convertible Notes”);

•7.250% Senior Secured Notes due 2029 (the “2029 Secured Notes”);

•7.750% Senior Secured Notes due 2030 (the “2030 Secured Notes”);

•6.750% Senior Secured Notes due 2032 (the “2032 Secured Notes”); and

•7.125% Senior Secured Notes due 2034 (the “2034 Secured Notes” and, together with the 2029 Secured Notes, 2030 Secured Notes, and 2032 Secured Notes, the “Senior Secured Notes”, and the Senior Secured Notes, together with the Convertible Notes, the “Notes”).

Revolving Credit Facility

Wayfair has afive-year senior secured revolving credit facility (the “Revolver”), which matures on March 13, 2030, and provides for revolving loans in an aggregate amount of $500 million. Under the Revolver, Wayfair may, from time to time, request letters of credit, which reduce the availability of credit under the Revolver. Wayfair had $82 million in outstanding letters of credit as of September 30, 2026, primarily as security for lease agreements, which reduced the availability of credit under the Revolver. As of September 30, 2026, there wereno revolving loans outstanding under the Revolver.

Senior Secured Notes

The following table summarizes certain terms related to the Company’s current outstanding Senior Secured Notes:

Convertible Notes

The following table summarizes certain terms related to the Company’s current outstanding Convertible Notes:

Conversion and Redemption Terms of the Notes

Wayfair's Convertible Notes will mature at their maturity date unless earlier purchased, redeemed or converted. The Convertible Notes’ initial conversion terms are summarized below:

The conversion rate is subject to adjustment upon the occurrence of certain specified events, including certain distributions and dividends to all or substantially all of the holders of Wayfair’s Class A common stock, but will not be adjusted for accrued and unpaid interest.

Wayfair will settle any conversions of the Convertible Notes in cash, shares of Wayfair’s Class A common stock or a combination thereof, with the form of consideration determined at Wayfair’s election. The holders of the Convertible Notes may convert all or a portion of such Notes prior to certain specified dates (each, a “Free Convertibility Date”) under the following circumstances (in each case, as applicable to each series of Convertible Notes):

•during any calendar quarter (and only during such calendar quarter), if the last reported sale price of Wayfair’s Class A common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price on each applicable trading day;

•during thefive-business day period after anyten consecutive trading day period (the “measurement period”) in which the trading price (as defined in the applicable indenture) per $1,000 principal amount of the notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price of Wayfair’s Class A common stock and the conversion rate on each such trading day;

•if Wayfair calls the notes for redemption, at any time prior to 5:00 p.m. (New York City time) (the “close of business”) on the second scheduled trading day immediately preceding the redemption date; and

•upon the occurrence of specified corporate events (as set forth in the applicable indenture).

On or after the applicable Free Convertibility Date until the close of business on the second scheduled trading day immediately preceding the applicable maturity date, holders of the Convertible Notes may convert their Convertible Notes at any time.

The conditional conversion features of the 2027 Notes were triggered during the calendar quarter ended September 30, 2026, therefore, the 2027 Notes are convertible during the calendar quarter ending December 31, 2026 pursuant to the applicable last reported sale price conditions. On August 15, 2026, the 2026 Notes matured and Wayfair paid in cash the remaining outstanding principal of $39 million to the holders of the 2026 Notes.

Upon the occurrence of a fundamental change (as defined in the applicable indenture), holders of the applicable series of the Convertible Notes may require Wayfair to repurchase all or a portion of such Notes for cash at a price equal to 100% of the principal amount of such Notes to be repurchased plus any accrued but unpaid interest to, but excluding, the fundamental change repurchase date. Holders of the Convertible Notes who convert their respective Notes in connection with a make-whole fundamental change or a notice of redemption (each as defined in the applicable indenture) may be entitled to a premium in the form of an increase in the conversion rate of the respective Notes.

Wayfair may not redeem the Convertible Notes prior to certain dates (the “Redemption Date”). On or after the applicable Redemption Date, Wayfair may redeem for cash all or part of the applicable series of the Convertible Notes if the last reported sale price of Wayfair’s Class A common stock equals or exceeds 130% of the conversion price then in effect for at least 20 trading days (whether or not consecutive), including at least one of the five trading days immediately preceding the date on which Wayfair provides notice of redemption, during any 30 consecutive trading days ending on, and including the trading day immediately preceding the date on which Wayfair provides notice of the redemption. The redemption price will be either 100% of the principal amount of the notes to be redeemed, plus accrued and unpaid interest, if any, or the if-converted value if the holder elects to convert their Convertible Notes upon receiving notice of redemption.

Partial Extinguishment of Convertible Notes

Between February 25, 2026 and March 4, 2026, Wayfair repurchased $56 million in aggregate principal amount of the unsecured 3.50% Convertible Senior Notes due 2028 (the “2028 Notes”). In accounting for the repurchases, Wayfair recorded a $43 million loss on debt extinguishment, representing the difference between the cash paid for principal, plus accrued and unpaid interest and transaction fees of $99 million and the net carrying value of the 2028 Notes of $56 million.

Between April 1, 2026 and May 1, 2026, Wayfair repurchased $89 million in aggregate principal amount of the 2028 Notes. In accounting for the repurchases, Wayfair recorded a $59 million loss on debt extinguishment, representing the difference between the cash paid for principal, plus accrued and unpaid interest and transaction fees of $148 million and the net carrying value of the 2028 Notes of $89 million.

Redemptions of Convertible Notes

On February 6, 2026, Wayfair issued a notice to holders of the Company’s 2027 Notes calling for redemption of $250 million principal amount of the outstanding 2027 Notes on March 23, 2026 (the “2027 Notes Redemption Date”). Holders of the 2027 Notes elected to convert $250 million in aggregate principal amount prior to the 2027 Notes Redemption Date. Wayfair settled these conversions with aggregate cash payments totaling $250 million, representing principal and cash in lieu of fractional shares, and the issuance of 0.9 million shares of common stock.

On May 14, 2026, Wayfair issued a notice to holders of the Company’s 2028 Notes calling for redemption of the remaining $444 million principal amount of the outstanding 2028 Notes on June 29, 2026 (the “2028 Notes Redemption Date”). Holders of the 2028 Notes elected to convert the entire remaining outstanding principal of $444 million prior to the 2028 Notes Redemption Date. Wayfair settled these conversions with aggregate cash payments totaling $444 million, representing principal and cash in lieu of fractional shares, and the issuance of 4.5 million shares of common stock. As a result, no 2028 Notes remained outstanding following these conversions.

Conversions of Convertible Notes

There were no conversions during the nine months ended September 30, 2026 other than the conversion of the 2027 Notes and 2028 Notes prior to the 2027 Notes Redemption Date and 2028 Notes Redemption Date, respectively.

Interest Expense

During the three months ended September 30, 2026, Wayfair recognized contractual interest expense and debt discount amortization of $48 million and $2 million, respectively, and during the nine months ended September 30, 2026, Wayfair recognized contractual interest expense and debt discount amortization of $143 million and $6 million, respectively.

During the three months ended September 30, 2025, Wayfair recognized contractual interest expense and debt discount amortization of $41 million and $4 million, respectively, and during the nine months ended September 30, 2025, Wayfair recognized contractual interest expense and debt discount amortization of $114 million and $9 million, respectively.

Fair Value of the Notes

As of September 30, 2026, the estimated fair value of each of the 2027 Notes, 2029 Secured Notes, 2030 Secured Notes, 2032 Secured Notes, and 2034 Secured Notes was $376 million, $812 million, $720 million, $692 million, and $398 million, respectively. The estimated fair values of the Notes were determined through consideration of quoted market prices. The fair values of the Notes are classified as Level 2 as defined in Note 3, Cash, Cash Equivalents and Restricted Cash, Investments and Fair Value Measurements. As of September 30, 2026, the if-converted value of the 2027 Notes exceeded the principal value by $141 million.

Capped Calls

The 2027 Capped Calls and 2028 Capped Calls (collectively, the “Capped Calls”) are expected generally to reduce the potential dilution and/or offset the cash payments Wayfair is required to make in excess of the principal amount of the Convertible Notes upon conversion of the Convertible Notes if the market price per share of Wayfair’s Class A common stock is greater than the strike price of the applicable Capped Call (which corresponds to the initial conversion price of the applicable Convertible Notes and is subject to certain adjustments under the terms of the applicable Capped Call), with such reduction and/or offset subject to a cap based on the cap price of the applicable Capped Call (the “Initial Cap Price”). The Capped Calls can, at Wayfair’s option, remain outstanding until their maturity date, even if all or a portion of the Convertible Notes are converted, repurchased or redeemed prior to such date.

Each of the Capped Calls has an initial cap price per share of Wayfair’s Class A common stock, which represented a premium over the last reported sale price of Wayfair’s Class A common stock on the date the corresponding Convertible Notes were priced (the “Cap Price Premium”), and is subject to certain adjustments under the terms of the corresponding agreements. Collectively, the Capped Calls cover, initially, the number of shares of Wayfair’s Class A common stock underlying the Convertible Notes, subject to anti-dilution adjustments substantially similar to those applicable to the Convertible Notes.

The initial terms for the Capped Calls are presented below:

The Capped Calls are separate transactions from the Convertible Notes, are not subject to the terms of the Convertible Notes and will not affect any holder’s rights under the Convertible Notes. Similarly, holders of the Convertible Notes do not have any rights with respect to the Capped Calls. The Capped Calls do not meet the criteria for separate accounting as a derivative as they are indexed to Wayfair's stock and meet the requirements to be classified in equity. The premiums paid for the Capped Calls were included as a net reduction to additional paid-in capital within stockholders’ deficit when they were entered.

5. Commitments and Contingencies

Legal Matters

From time to time, Wayfair is involved in litigation matters and other legal claims that arise during the ordinary course of business. The Company records a liability when it believes that it is both probable that a liability has been incurred and the amount of loss can be reasonably estimated. Significant judgment is required to determine both the probability of having incurred a liability and the estimated amount of the liability. As a result, it is at least reasonably possible that any such estimate could change and the effect of the potential change could be material. The Company does not record a gain contingency until the period in which the contingency is resolved and the gain is realizable or realized.

As of September 30, 2026, the Company has determined that liabilities associated with certain litigation matters are probable and can be reasonably estimated. The Company has accrued for these matters in other current liabilities and will continue to monitor each related legal issue and adjust accruals as might be warranted based on new information and further developments in accordance with ASC 450-20-25. The Company is fully insured for a majority of these matters and as of September 30, 2026 has recorded insurance recovery receivables in prepaid expenses and other current assets.

Litigation and legal claims are inherently unpredictable and claims cannot be predicted with certainty. An unfavorable resolution of any such matter could have a material adverse effect on the Company’s results of operations or financial condition, and regardless of the outcome, these matters can be costly and time consuming, as they can divert management's attention from important business matters and initiatives, negatively impacting Wayfair's overall operations. Wayfair may also find itself at greater risk to outside party claims as it increases its operations in jurisdictions where the laws with respect to the potential liability of online retailers are uncertain, unfavorable, or unclear. However, as of the date of this report, Wayfair does not believe that the outcome of any current legal matters will have a material adverse effect on Wayfair’s results of operations or financial condition.

6. Stockholders’ Deficit

Common Stock

Since Wayfair's initial public offering through September 30, 2026,61,060,576 shares of Class B common stock were converted to Class A common stock.

Stock Repurchase Programs

On August 21, 2020, the board of directors (the “Board”) authorized the repurchase of up to $700 million of the Company’s Class A common stock in the open market, through privately negotiated transactions, or otherwise, including pursuant to a Rule 10b5-1 plan (the “2020 Repurchase Program”). On August 10, 2021, the Board authorized a new $1.0 billion share repurchase program on the same terms (the “2021 Repurchase Program” and, together with the 2020 Repurchase Program, the “Repurchase Programs”). Wayfair will begin repurchasing shares under the 2021 Repurchase Program upon the completion of the 2020 Repurchase Program.

During the three and nine months ended September 30, 2026, Wayfair repurchased $60 million under the 2020 Repurchase Program at an average price of $100.01 per share of Class A common stock. During the three and nine months ended September 30, 2025, Wayfair didnot repurchase any shares of Class A common stock under the authorized Repurchase Programs.

During the three and nine months ended September 30, 2026, Wayfair entered into an equity instrument for $60 million to facilitate the repurchase of the Company’s Class A common stock. The equity instrument was settled on October 28, 2026, resulting in a cash settlement of $64 million.

7. Equity-Based Compensation

In April 2023, Wayfair’s stockholders approved the 2023 Incentive Award Plan (as amended, the “2023 Plan”) to replace Wayfair’s 2014 Incentive Award Plan, (as amended, the “2014 Plan” and, together with the 2023 Plan, the “Incentive Plans”). The Incentive Plans were adopted by the Board to grant cash and equity incentive awards to eligible participants in order to attract, motivate and retain talent. The Incentive Plans are administered by the Board for awards to non-employee directors and by the compensation committee of the Board for other participants and provide for the issuance of equity-based awards including stock options, stock appreciation rights, restricted stock, restricted stock units (“RSUs”), performance stock units (“PSUs”), performance awards and stock payments.

Since April 2025, Wayfair primarily withholds shares of Class A common stock upon vesting of RSUs to cover necessary tax withholding obligations as permitted by the 2023 Plan. The value of the withheld shares is classified as a reduction to common stock and additional paid-in capital. Shares subject to awards that are forfeited, expire or are otherwise terminated without shares being issued, or shares withheld to satisfy tax withholding obligations, will be returned to the pool of shares available for grant and issuance under the 2023 Plan.

Under the 2023 Plan,20,525,663 shares of Class A common stock initially were available for future award grants. In May 2026, Wayfair’s stockholders approved Amendment No. 1 (the “Amendment”) to the 2023 Plan, to increase the number of shares of Class A common stock authorized for issuance under the 2023 Plan by 20,000,000 shares. As of September 30, 2026,24,238,941 shares of Class A common stock remained available for future grant under the 2023 Plan (inclusive of the 5,000,000 shares underlying the CEO Award (defined below)).

Restricted Stock Units

The following table presents activity relating to RSUs for the nine months ended September 30, 2026:

(1)The amount of RSUs vested includes shares withheld by Wayfair to cover taxes.

As of September 30, 2026, unrecognized equity-based compensation expense related to RSUs expected to vest over time is $100 million with a weighted-average remaining vesting term of 0.3 years.

The following table summarizes activity for the nine months ended September 30, 2026 and 2025:

As of September 30, 2026, the aggregate intrinsic value of unvested RSUs was $232 million.

Performance Stock Units with Market-Based Conditions

In September 2025, under the 2023 Plan, the Company granted 5,000,000 PSUs to the Company’s Chief Executive Officer (the “CEO Award”). The CEO Award consists ofsix tranches of PSUs over specified performance periods that each vest based upon the satisfaction of both: (i) the CEO’s continued employment as CEO through the applicable vesting date, and (ii) the achievement of certain stock price hurdles. If the stock price hurdle for a particular tranche of PSUs is not met during the applicable performance period for such tranche, or if the CEO’s service is terminated before achieving such stock price hurdle, no portion of that tranche will vest.

The estimated fair value and derived service period for awards with market conditions are calculated using a Monte Carlo simulation. Expected volatility assumptions applied within the valuation model are derived from the market-based implied volatility levels of the Company’s options at the time of grant. The expected volatility used to estimate the fair value of the CEO Award was 60%.

The following table summarizes activity for the nine months ended September 30, 2026:

As of September 30, 2026, there was $203 million of unrecognized equity-based compensation expense related to PSUs. The Company expects to recognize this amount over a remaining weighted-average period of 3.5 years. During the nine months ended September 30, 2026, the Company incurred $56 million of equity-based compensation expense related to the PSUs.

As of September 30, 2026, the aggregate intrinsic value of unvested PSUs was $513 million.

Equity-based compensation was classified as follows in the condensed consolidated statements of operations for the three and nine months ended September 30, 2026 and 2025:

Equity-based compensation costs capitalized as software costs were$5 million and $14 million for the three and nine months ended September 30, 2026, respectively, and $7 million and $22 million for the three and nine months ended September 30, 2025, respectively.

8. Earnings (Loss) per Share

Wayfair follows the two-class method when computing earnings or loss per share for itstwo issued classes of common stock - Class A and Class B. Basic earnings or loss per share is computed using the weighted-average number of shares of common stock outstanding during the period. Diluted earnings or loss per share is computed using the weighted-average number of shares of common stock outstanding during the period plus, if dilutive, common stock equivalents outstanding during the period and stock issuable upon conversion of the convertible debt instruments. Wayfair's common stock equivalents consist of shares issuable upon the release of restricted stock units and performance stock units. The dilutive effect of these common stock equivalents is reflected in diluted earnings or loss per share by application of the treasury stock method. The dilutive effect of shares issuable upon conversion of the convertible debt instruments is included in the calculation of diluted earnings or loss per share under the if-converted method.

For periods in which Wayfair has reported net losses, diluted loss per share is the same as basic loss per share, as the effects of common stock equivalents outstanding and shares issuable upon conversion of convertible debt instruments are antidilutive and therefore excluded from the calculation of diluted loss per share.

Wayfair allocates undistributed earnings between the classes on a one-to-one basis when computing earnings or loss per share. As a result, basic and diluted earnings or loss per share per Class A and Class B share are equivalent.

The following table presents the calculation of basic and diluted earnings (loss) per share:

The potential common shares from anti-dilutive securities excluded from the weighted-average shares of common stock used to calculate diluted earnings (loss) per share were as follows:

(1) The CEO Award is excluded from the above table because the Company stock price hurdles had not been met as of September 30, 2026.

Wayfair may settle conversions of the Convertible Notes in cash, shares of Wayfair’s Class A common stock or any combination thereof at its election. The Capped Calls are generally expected to reduce the potential dilution of Wayfair's Class A common stock upon any conversion of the Convertible Notes and/or offset the cash payments Wayfair is required to make in excess of the principal amount of the Notes upon conversion of the Convertible Notes to the extent the market price per share of Wayfair’s Class A common stock is greater than the strike price of the Capped Calls (which corresponds to the initial conversion prices of the Convertible Notes, subject to certain adjustments under the terms of the Capped Calls), with such reduction and/or offset capped at the Initial Cap Price.

For more information on the structure of the Notes and the Capped Calls, see Note 4, Debt and Other Financing.

9. Segment and Geographic Information

Operating segments are defined as components of an enterprise for which separate financial information is available that is evaluated on a regular basis by the Chief Operating Decision Maker (“CODM”) in deciding how to allocate resources to an individual segment and in assessing performance. Wayfair’s CODM is its Chief Executive Officer.

Wayfair'soperating and reportable segments are the U.S. and International. These segments reflect the way the CODM allocates resources and evaluates financial performance, which is based upon each segment's Adjusted EBITDA. Adjusted EBITDA is defined 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 that Wayfair believes are not indicative of core operating performance. These charges are excluded from the evaluation of segment performance because it facilitates reportable segment performance comparisons on a period-to-period basis as these costs may vary independent of business performance. The CODM uses Adjusted EBITDA to assess segment performance by comparing actual results versus forecasted, as well as historical financial information, while deciding how to allocate resources as a benchmark to evaluate operating performance, generate future operating plans and make strategic decisions regarding the allocation of capital.

The accounting policies of the segments are the same as those described in Note 1, Summary of Significant Accounting Policies, included in Part II, Item 8, Financial Statements and Supplementary Data, of Wayfair’s Annual Report on Form 10-K for the year ended December 31, 2025. Wayfair allocates certain operating expenses to the operating and reportable segments, including customer service and merchant fees and selling, operations, technology, general and administrative expenses based on the usage and relative contribution provided to the segments. It excludes from the allocations certain operating expense lines, including depreciation and amortization, equity-based compensation and related taxes, impairment and other related net charges and restructuring and other charges, net, as well as interest income or expense, net, other income or expense, net, gain or loss on debt extinguishment and provision or benefit for income taxes, net. There are no net revenue transactions between Wayfair's reportable segments.

U.S.

The U.S. segment primarily consists of amounts earned through product sales through Wayfair's family of sites in the U.S., together with product sales from Wayfair’s U.S. physical retail stores.

International

The International segment primarily consists of amounts earned through product sales through Wayfair's international sites.

Net revenue from external customers for each group of similar products and services is not reported to the CODM. Separate identification of this information for purposes of segment disclosure is impractical, as it is not readily available and the cost to develop it would be excessive. No individual country outside the U.S. provided greater than 10% of consolidated net revenue.

The following tables present net revenue, significant segment expenses and Adjusted EBITDA attributable to Wayfair’s reportable segments for the periods presented:

(3) The following adjustments are made to reconcile total reportable segments Adjusted EBITDA to consolidated net income (loss):

The following table presents long-lived assets attributable to Wayfair's reportable segments reconciled to the consolidated amounts:

U.S. and International long-lived assets consist of property and equipment, net and operating lease right-of-use (“ROU”) assets. Corporate long-lived assets consist of property and equipment, net, including capitalized internal-use software and website development costs, and operating lease ROU assets at corporate facilities.

The following table presents total assets attributable to Wayfair's reportable segments reconciled to consolidated amounts:

U.S. and International segment assets consist primarily of accounts receivable, net, inventories, prepaid expenses and other current assets, property and equipment, net and operating lease ROU assets. Corporate assets include cash and cash equivalents, short-term investments, long-lived assets at corporate facilities, capitalized internal-use software and website development costs and other non-current assets.