Wayfair Inc. Q4 FY2025 earnings call

Niraj Shah discussed Q4 results, noting strong year with revenue growth, new customer growth, and repeat orders growth. Talked about physical retail expansion with new stores in Atlanta, Columbus, Denver, and benefits like driving awareness and share of wallet. Also discussed Wayfair Rewards loyalty program, with over a million members, members driving over 15% of Wayfair US revenue, higher conversion rates, and impact on contribution margin and adjusted EBITDA. Kate Gulliver walked through financials, discussing top line growth, gross margin, contribution margin, SOT G&A, and guidance for Q1.

Net revenue grew 6.9% year over year on a reported basis and 7.8% year over year excluding the impact from exit from Germany. US business up over 7% year over year, international business grew nearly 4%. Adjusted gross margin for Q4 was 30.3% of net revenue. Contribution margin for Q4 was 15.3%, 250 basis points better than 2024. Adjusted EBITDA in Q4 was $224,000,000, 6.7% margin. Full year 2025 adjusted EBITDA grew over 60% to $743,000,000. Ended Q4 with $1,500,000,000 cash, net leverage under 2.5x.

Guides to mid single digit top line growth for Q1. Guides gross margins to 30 - 31% range, likely low end. Customer service and merchant fees expected just below 4% of net revenue, advertising 11 - 12% of net revenue, contribution margin roughly 15% for Q1. SOT G&A expected $360,000,000 - $370,000,000. Adjusted EBITDA expected 4.5% - 5.5% of net revenue. Equity-based compensation and related taxes roughly $70,000,000 - $90,000,000. Depreciation and amortization approx $67,000,000 - $73,000,000. Net interest expense approx $37,000,000. Weighted average shares outstanding approx 132,000,000. CapEx $55,000,000 - $65,000,000.

Q: Eric Sheridan from Goldman Sachs asked about AI initiatives internally and externally.

A: Niraj Shah talked about internal AI benefits like improving quality, speed, reducing cost, automating workflows, and external parties including helping suppliers succeed and partnering with external agentic surfaces.

Q: Simeon Gutman from Morgan Stanley asked about margins and holdout test.

A: Niraj Shah and Kate Gulliver discussed incremental margins evolving with top line recovery, SOT G&A cost base, and holdout tests being ongoing.

Q: Steven Forbes from Guggenheim Securities LLC asked about physical retail DMA performance and multichannel fulfillment.

A: Niraj Shah discussed Wilmette store DMA performance and multichannel fulfillment benefits.

Q: Zachary Fadem from Wells Fargo asked about Q4 cadence and Wayfair Rewards impact.

A: Kate Gulliver and Niraj Shah talked about Q4 momentum and Wayfair Rewards impact on gross margin.

Q: John Blackledge from TD Cowen asked about home category rebound and agentic commerce.

A: Niraj Shah and Kate Gulliver discussed home category rebound uncertainty and agentic commerce impact on advertising.

Q: Brian Nagel from Oppenheimer asked about market share and balance sheet delevering.

A: Niraj Shah and Kate Gulliver talked about market share across cohorts and balance sheet delevering goals.