Wayfair Inc. earnings

Management highlights

- Wayfair had solid start in 2026 despite macro volatility. Home furnishings category was down in low single-digit but Wayfair outperformed by high single-digit. - Strong revenue led to best Q1 adjusted EBITDA margin in 5 years. - Years of capital structure optimization allowed repurchase of convertible bonds reducing dilution. - Focus on outperforming category, maximizing EBITDA dollars, and deploying excess cash. - International markets progress: Canada most mature with highest non-COVID market share, UK seeing consistent share gains. Leveraging core recipe, global technology scale including AI use, and marketing loyalty programs like Wayfair rewards.

Guidance

- Top line: Guide mid-single digits year-over-year growth for Q2, considering category volatility and share spread. - Gross margins: Guide range 29.5% - 30.5% of net revenue. - Customer service and merchant fees: Just below 4%. - Advertising: 10.5% - 11.5% range. - SOTG&A: Expected $360 - $370 million range. - Adjusted EBITDA margin: 6% - 7% of net revenue range.

Segment performance

Net revenue grew by 7% in Q1, driven by 3% order growth and 4% AOV expansion. US segment had 7.5% growth, international segment 6%. Gross margin 30.1% of net revenue. Contribution margin 15% in Q1, up 70 basis points year-over-year. Selling, operations, technology, general, and administrative expenses were $356 million, lowest since Q2 2019. Adjusted EBITDA was $151 million, 5.2% margin, up 130 basis points year-over-year. International markets showing structural share gains in Canada and UK with efforts in core recipe, technology scale, and marketing loyalty.

Analyst Q&A

• Q: Diagnosis of environment impact, stimulus effect, wayday event signal;

  A: Macro environment still out of favor for home category, stimulus not driving much spending in category, wayday event optimization of promotional calendar.

• Q: Longer-term 20%+ organic growth rate, bridge dynamics;

  A: 20%+ growth through programs like rewards, verified, physical retail, consumer tech investments, brand marketing.

• Q: Q2 mid-single-digit revenue growth despite industry weakening;

  A: Share gains accelerating due to rewards, verified, physical retail, site and marketing improvements.

• Q: EBITDA bridge, gross margin impact of loyalty program;

  A: Loyalty program part of gross margin investment, long-term trajectory to 10%+ EBITDA margin still on track.

• Q: Consumer-facing agentic AI, vendor direct to customer;

  A: Early stage AI, vendors face challenges in customer service and logistics for direct to customer.

• Q: Gross margin pullback, agentic impact on platform value;

  A: Gross margin pullback partially due to loyalty program, agentic not changing platform value much.

• Q: Share gains, value-oriented marketplaces moving up;

  A: Difficult for marketplaces to move up/down market, Wayfair's specialty in middle to upper market with exclusive items.

• Q: Loyalty program impact on gross margin, balance sheet management;

  A: Loyalty program growth impacts gross margin, balance sheet managed by buying back convertible bonds to reduce dilution