Wayfair Q2 Earnings Miss Estimates, Revenues Down Y/Y

Wayfair W reported second-quarter 2024 non-GAAP earnings of 47 cents per share, missing the Zacks Consensus Estimate by 6%. The company reported earnings of 21 cents per share in the year-ago quarter.

Net revenues of $3.12 billion lagged the consensus mark by 2%. The top line decreased 1.7% year over year.

LTM net revenues per active customer decreased 0.9% year over year to $540, which beat the Zacks Consensus Estimate by 1.5%.

Nevertheless, growth in the active customer base remained positive. Active customers increased 0.9% year over year to 22 million and missed the consensus mark by 2.1%.

Quarter Details

Net revenues in the United States (87.6% of total net revenues) decreased 2% year over year to $2.73 billion. The figure missed the Zacks Consensus Estimate by 2.2%.

International net revenues (12.4% of total net revenues) grew 0.3% year over year and 1.3% on a constant currency basis to $387 million. It beat the consensus mark by 1.8%.

Orders per customer for the quarter were 1.85, up from 1.82 reported in the year-ago quarter. The figure beat the Zacks Consensus Estimate by 1.1%.

The average order value increased 2% year over year to $313, which beat the consensus mark by 1.9%.

The total number of orders delivered in the reported quarter was 10 million, which decreased 2.9% year over year.

Repeat customers placed 8.1 million orders (accounting for 81.7% of total orders) in the second quarter, down 2.4% year over year.

Additionally, 63.7% of total orders delivered were placed through mobile devices in the reported quarter compared with 61.6% in the year-ago quarter.

Operating Results

Wayfair's second-quarter gross margin was 30.2%, contracting 90 basis points on a year-over-year basis.

Adjusted EBITDA was $163 million, up from $128 million in the year-ago quarter.

Customer service and merchant fees decreased 16% year over year to $121 million.

Advertising expenses increased 3.7% year over year to $365 million. Selling, operations, technology and general and administrative expenses decreased 22.4% year over year to $489 million.

Wayfair incurred a GAAP operating loss of $35 million in the reported quarter compared with an operating loss of $142 million in the year-ago quarter.

Balance Sheet & Cash Flow

As of Jun 30, 2024, cash, cash equivalents and short-term investments were $1.34 billion, up from $1.2 billion reported on Mar 31, 2024.

Long-term debt, as of Jun 30, 2024, was $3.059 billion compared with $3.095 billion on Mar 31, 2024.

In the second quarter, cash from operations amounted to $245 million compared with $139 million used in operations in the first quarter.

Wayfair reported a free cash flow of $183 million in the second quarter.

Zacks Rank & Stocks to Consider

Currently, Wayfair has a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader retail-wholesale sector are The Gap GPS, Amazon and Best Buy BBY. While The Gap sports a Zacks Rank #1 (Strong Buy), Amazon and Best Buy carry a Zacks Rank #2 (Buy) each at present.

The Gap has gained 11.2% in the year-to-date period. The long-term earnings growth rate for GPS is currently estimated at 3.38%.

Shares of Amazon have gained 19.6% in the year-to-date period. The long-term earnings growth rate for AMZN is currently projected at 29.60%.

Best Buy has gained 11.5% in the year-to-date period. The long-term earnings growth rate for BBY is currently anticipated at 5.07%.

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