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Item 1. Financial Statements

2023-08-03 compared with 2023-05-04 · 147 added, 72 removed, 339 unchanged (39% of the section changed)

1 unchanged sentence

CONDENSED CONSOLIDATED BALANCE SHEETS

March 31, December 31,

June 30, December 31,

(in millions, except share and per share data)

22 unchanged sentences

Convertible preferred stock, $ 0.001 par value per share:

10,000,000 shares authorized and none issued at March 31, 2023 and December 31, 2022

Class A common stock, par value $ 0.001 per share, 500,000,000 shares authorized, 85,546,393 and 82,903,862 shares issued and outstanding at March 31, 2023 and December 31, 2022

Class B common stock, par value $ 0.001 per share, 164,000,000 shares authorized, 25,691,352 and 25,691,397 shares issued and outstanding at March 31, 2023 and December 31, 2022

10,000,000 shares authorized and none issued at June 30, 2023 and December 31, 2022

Class A common stock, par value $ 0.001 per share, 500,000,000 shares authorized, 86,919,329 and 82,903,862 shares issued and outstanding at June 30, 2023 and December 31, 2022

Class B common stock, par value $ 0.001 per share, 164,000,000 shares authorized, 25,691,323 and 25,691,397 shares issued and outstanding at June 30, 2023 and December 31, 2022

Additional paid-in capital

5 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2023 2022 2023 2022

(in millions, except per share data)

11 unchanged sentences

Interest expense, net ( 5 ) ( 6 ) ( 10 ) ( 14 )

Other expense, net ( 1 ) —

Other income, net 3 1 2 1

Gain on debt extinguishment 100 — 100 —

Loss before income taxes ( 44 ) ( 377 ) ( 397 ) ( 695 )

9 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2023 2022 2023 2022

(in millions)

14 unchanged sentences

(in millions)

Balance at March 31, 2022 105 $ — $ 374 $ ( 2,268 ) $ ( 10 ) $ ( 1,904 )

Net loss — — — ( 378 ) — ( 378 )

Other comprehensive loss — — — — ( 2 ) ( 2 )

Issuance of common stock upon vesting of RSUs 1 — — — — —

Equity-based compensation — — 139 — — 139

Balance at June 30, 2022 106 $ — $ 513 $ ( 2,646 ) $ ( 12 ) $ ( 2,145 )

Balance at March 31, 2023 111 $ — $ 894 $ ( 3,635 ) $ ( 4 ) $ ( 2,745 )

Net loss — — — ( 46 ) — ( 46 )

Other comprehensive loss — — — — ( 1 ) ( 1 )

Issuance of common stock upon vesting of RSUs 2 — — — — —

Equity-based compensation — — 181 — — 181

Premiums paid for capped calls — — ( 87 ) — — ( 87 )

Balance at June 30, 2023 113 $ — $ 988 $ ( 3,681 ) $ ( 5 ) $ ( 2,698 )

See notes to unaudited condensed consolidated financial statements.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT

Six Months Ended

Class A and Class B Common Stock

Shares Amount Additional

Capital Accumulated

Deficit Accumulated

Comprehensive

Stockholders' Deficit

(in millions)

Balance at December 31, 2021 105 $ — $ 337 $ ( 1,949 ) $ ( 7 ) $ ( 1,619 )

4 unchanged sentences

Repurchase of common stock ( 1 ) — ( 75 ) — — ( 75 )

Balance at March 31, 2022 105 $ — $ 374 $ ( 2,268 ) $ ( 10 ) $ ( 1,904 )

Balance at June 30, 2022 106 $ — $ 513 $ ( 2,646 ) $ ( 12 ) $ ( 2,145 )

Balance at December 31, 2022 109 $ — $ 737 $ ( 3,280 ) $ ( 7 ) $ ( 2,550 )

3 unchanged sentences

Equity-based compensation — — 338 — — 338

Balance at March 31, 2023 111 $ — $ 894 $ ( 3,635 ) $ ( 4 ) $ ( 2,745 )

Premiums paid for capped calls — — ( 87 ) — — ( 87 )

Balance at June 30, 2023 113 $ — $ 988 $ ( 3,681 ) $ ( 5 ) $ ( 2,698 )

See notes to unaudited condensed consolidated financial statements.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Three Months Ended March 31,

Six Months Ended June 30,

(in millions)

Cash flows for operating activities:

Cash flows from (for) operating activities:

Net loss $ ( 401 ) $ ( 697 )

Adjustments to reconcile net loss to net cash used in operating activities:

Adjustments to reconcile net loss to net cash provided by (used) in operating activities:

Depreciation and amortization 206 176

2 unchanged sentences

Impairment and other related net charges 14 40

Gain on debt extinguishment ( 100 ) —

Other non-cash adjustments ( 3 ) 32

3 unchanged sentences

Prepaid expenses and other current assets ( 11 ) 4

Other assets 3 —

Accounts payable and other current liabilities ( 118 ) ( 18 )

Other liabilities 12 —

Net cash used in operating activities ( 147 ) ( 226 )

Net cash provided by (used in) operating activities 70 ( 341 )

Cash flows from (for) investing activities:

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Net cash provided by (used in) investing activities 49 ( 189 )

Cash flows for financing activities:

Cash flows from (for) financing activities:

Repurchase of common stock — ( 75 )

Net cash used in financing activities — ( 75 )

Proceeds from issuance of convertible notes, net of issuance costs 678 —

Premiums paid for capped call confirmations ( 87 ) —

Payments to extinguish convertible debt ( 514 ) —

Net cash provided by (used in) financing activities 77 ( 75 )

Effect of exchange rate changes on cash and cash equivalents 3 ( 7 )

Net decrease in cash and cash equivalents ( 80 ) ( 506 )

Net increase (decrease) in cash and cash equivalents 199 ( 612 )

Cash and cash equivalents:

3 unchanged sentences

$ 1,249 $ 1,094

See notes to unaudited condensed consolidated financial statements

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Six Months Ended June 30,

(in millions)

Supplemental Cash Flow Information:

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Furthermore, interim results are not necessarily indicative of the results for the full year ended December 31, 2023 or future periods.

The Company has identified the 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 months ended March 31, 2023 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, 2022.

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 six months ended June 30, 2023 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, 2022.

Recent Accounting Pronouncements

The Company has considered recently issued accounting pronouncements and does not believe that any are applicable or expected to have a material impact on the consolidated financial statements.

Supplemental Financial Statement Disclosures

Accounts Receivable, Net

As of March 31, 2023, accounts receivable was $ 181 million, net of allowance for credit losses of $ 35 million.

As of June 30, 2023, accounts receivable was $ 128 million, net of allowance for credit losses of $ 30 million.

As of December 31, 2022, accounts receivable was $ 272 million, net of allowance for credit losses of $ 24 million.

The changes in the allowance for credit losses were not material for the three months ended March 31, 2023.

Management believes credit risk is mitigated since approximately 99 % of the net revenue recognized for the three months ended March 31, 2023 was collected in advance of recognition.

The changes in the allowance for credit losses were not material for the three and six months ended June 30, 2023.

Management believes credit risk is mitigated for the three and six months ended June 30, 2023, as approximately 99.8 % and 99.6 %, respectively, of the net revenue recognized was collected in advance of recognition.

Contract Liabilities

Contractual liabilities included in other current liabilities was $ 236 million at March 31, 2023 and $ 224 million at December 31, 2022.

During the three months ended March 31, 2023, Wayfair recognized $ 135 million of net revenue that was included within other current liabilities as of December 31, 2022.

Contract liabilities included in other current liabilities were $ 250 million at June 30, 2023 and $ 224 million at December 31, 2022.

During the six months ended June 30, 2023, Wayfair recognized $ 146 million of net revenue that was included within other current liabilities as of December 31, 2022.

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 10, Segment and Geographic Information, for additional detail.

Refer to Note 10, Segment and Geographic Information, for additional information.

Impairment and Other Related Net Charges

During the three months ended March 31, 2023, Wayfair 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.

During the six months ended June 30, 2023, Wayfair recorded charges of $ 5 million related to consolidation of certain customer service centers in identified U.S.

During the three and six months ended June 30, 2023, Wayfair recorded charges of $ 1 million and $ 9 million, respectively, related to construction in progress assets at identified U.S.

These charges are recorded within impairment and other related net charges on the condensed consolidated statements of operations.

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On January 20, 2023, Wayfair announced an update to the Company’s cost efficiency plan, including a workforce reduction involving approximately 1,750 employees.

As a result of this workforce reduction, during the three months ended March 31, 2023, Wayfair incurred $ 65 million of charges recorded within restructuring charges on the condensed consolidated statements of operations.

As a result of this workforce reduction, during the six months ended June 30, 2023,

Wayfair incurred $ 65 million of charges recorded within restructuring charges on the condensed consolidated statements of operations.

Wayfair does not expect to incur any further material charges related to this workforce reduction.

The charges consist primarily of one-time employee severance and benefit costs.

As of March 31, 2023, $ 11 million is accrued within other current liabilities for employee severance benefits which are expected to be paid in the second quarter of 2023.

Cash and Cash Equivalents, Investments and Fair Value Measurements

As of March 31, 2023 and December 31, 2022, all of 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 months ended March 31, 2023 and 2022, Wayfair did not have any realized gains or losses.

During the three months ended March 31, 2023 and 2022, Wayfair did not recognize any credit losses related to its available-for-sale debt securities.

Further, as of March 31, 2023 and December 31, 2022, Wayfair did not record an allowance for credit losses related to its available-for-sale debt securities.

As of June 30, 2023 and December 31, 2022, all of 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 six months ended June 30, 2023 and 2022, Wayfair did not have any realized gains or losses.

During the three and six months ended June 30, 2023 and 2022, Wayfair did not recognize any credit losses related to its available-for-sale debt securities.

Further, as of June 30, 2023 and December 31, 2022, Wayfair did not have an allowance for credit losses recorded related to its available-for-sale debt securities.

The following tables present details of Wayfair’s investment securities:

March 31, 2023

June 30, 2023

Losses Estimated

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The following tables set forth the fair value of Wayfair's financial assets measured at fair value on a recurring basis:

March 31, 2023

June 30, 2023

Level 1 Level 2 Level 3 Total

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

March 31, 2023 December 31, 2022

June 30, 2023 December 31, 2022

Debt Instrument Principal Amount Unamortized Debt Discount Net Carrying Amount Principal Amount Unamortized Debt Discount Net Carrying Amount

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2027 Notes 690 ( 10 ) 680 690 ( 12 ) 678

2028 Notes 690 ( 12 ) 678 — — —

2025 Accreting Notes 38 — 38 37 — 37

5 unchanged sentences

Under the Revolver, Wayfair may, from time to time, request letters of credit, which reduce the availability of credit under the Revolver.

Wayfair had approximately $ 77 million in outstanding letters of credit as of March 31, 2023, primarily as security for lease agreements.

As of March 31, 2023, there were no revolving loans outstanding under the Revolver.

Wayfair had $ 77 million in outstanding letters of credit as of June 30, 2023, primarily as security for lease agreements.

As of June 30, 2023, there were no revolving loans outstanding under the Revolver.

Convertible Non-Accreting Notes

In May 2023, Wayfair issued $ 690 million in aggregate principal amount of 3.50 % Convertible Senior Notes due 2028 (the “2028 Notes”), which includes the exercise in full of a $ 90 million option granted to the initial purchasers.

In connection with the issuance of the 2028 Notes, Wayfair entered into capped calls that covered, initially, the number of shares of Wayfair’s Class A common stock underlying the 2028 Notes, subject to anti-dilution adjustments substantially similar to those applicable to the 2028 Notes (the “2028 Capped Calls”).

The following table summarizes certain terms related to the Company’s current outstanding non-accreting convertible notes (collectively, the “Non-Accreting Notes” and together with the 2025 Accreting Notes, the “Notes”):

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2027 Notes September 15, 2027 3.250 % 3.6 % March 15 and September 15

2028 Notes November 15, 2028 3.500 % 3.8 % May 15 and November 15

Convertible Accreting Notes

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The annual effective interest rate of the 2025 Accreting Notes is 2.7 %.

Seniority of the Notes

The Notes are general senior unsecured obligations of Wayfair.

The Notes rank senior in right of payment to any of Wayfair’s future indebtedness that is expressly subordinated in right of payment to the Notes, rank equal in right of payment to Wayfair’s existing and future unsecured indebtedness that is not so subordinated and are effectively subordinated in right of payment to any of Wayfair’s secured indebtedness to the extent of the value of the assets securing such indebtedness.

The Non-Accreting Notes are structurally subordinated to all existing and future indebtedness and liabilities of Wayfair’s subsidiaries, including Wayfair LLC’s guaranty of the 2025 Accreting Notes, and the 2025 Accreting Notes are structurally subordinated to all existing and future indebtedness and liabilities of Wayfair’s subsidiaries (other than Wayfair LLC).

The Notes are governed by separate indentures between Wayfair, as issuer, and U.S.

Bank National Association, as trustee.

The Non-Accreting Notes indenture also includes Wayfair LLC, as guarantor.

Each indenture contains customary terms and covenants, including that upon certain events of default occurring and continuing, either the trustee or the holders of not less than 25 % in aggregate principal amount of the respective Notes then outstanding may declare the entire principal amount or accreted principal amount, as the case may be, of the respective Notes plus accrued interest, if any, to be immediately due and payable.

Conversion and Redemption Terms of the Notes

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2027 Notes September 15, 2027 June 15, 2027 15.7597 $ 63.45 September 20, 2025

2028 Notes November 15, 2028 August 15, 2028 21.8341 $ 45.80 May 20, 2026

2025 Accreting Notes April 1, 2025 - 13.7931 $ 72.50 May 9, 2023

8 unchanged sentences

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 Non-Accreting Notes may convert their Non-Accreting Notes at any time.

Because 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, 2023, the 2024 Notes, 2025 Notes, 2026 Notes and 2027 Notes are not convertible during the calendar quarter ended June 30, 2023.

Because the conditional conversion features of the 2024 Notes, 2025 Notes, 2026 Notes and 2027 Notes were not triggered during the calendar quarter ended June 30, 2023, the 2024 Notes, 2025 Notes, 2026 Notes and 2027 Notes are not convertible during the calendar quarter ended September 30, 2023.

The conditional conversion features of the 2028 Notes are not applicable until the calendar quarter ending December 31, 2023.

The holders of the 2025 Accreting Notes may convert all or a portion of their 2025 Accreting Notes at any time prior to the close of business on the second business day immediately preceding the maturity date.

Wayfair will settle any conversion of 2025 Accreting Notes with a number of shares of Wayfair’s Class A common stock per $ 1,000 original principal amount of 2025 Accreting Notes equal to the accreted principal amount of such original principal amount of 2025 Accreting Notes divided by the conversion price.

Upon the occurrence of a fundamental change (as defined in the applicable indenture), holders of the Notes may require Wayfair to repurchase all or a portion of the Notes for cash at a price equal to 100 % of the principal amount (or accreted principal amount) of the Notes to be repurchased plus any accrued but unpaid interest to, but excluding, the fundamental change repurchase date (such interest to be included in the accreted principal amount for the 2025 Accreting Notes).

Holders of the Non-Accreting 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.

Upon the occurrence of a fundamental change (as defined in the applicable indenture), holders of the applicable series of 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 (or accreted principal amount) of such Notes to be repurchased plus any accrued but unpaid interest to, but excluding, the fundamental change repurchase date (such interest to be included in the accreted principal amount for the 2025 Accreting Notes).

Holders of the Non-Accreting 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.

Holders of the 2025 Accreting Notes who convert in connection with a make-whole fundamental change (as defined in the applicable indenture) may be entitled to a premium in the form of an increase in the conversion rate.

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The redemption price will be either 100 % of the principal amount (or accreted 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 Notes upon receiving notice of redemption.

Accounting for the Notes

The Notes are recorded as a single unit within liabilities in the condensed consolidated balance sheets as the conversion features within the Notes are not derivatives that require bifurcation and the Notes do not involve a substantial premium.

Transaction costs to issue the Notes were recorded as direct deductions from the related debt liabilities and amortized to interest expense, net using the effective interest method over the terms of the corresponding Notes.

Proceeds from 2028 Notes Transactions and Partial Extinguishment of 2024 Notes and 2025 Notes

The net transaction amount from the issuance of the 2028 Notes was $ 591 million after deducting the initial purchasers’ discounts, the offering expenses payable by Wayfair and the net proceeds used to purchase the 2028 Capped Calls.

In addition, Wayfair used $ 514 million of the net transaction amount to repurchase for cash $ 83 million aggregate principal amount of the 2024 Notes and $ 535 million aggregate principal amount of the 2025 Notes in privately negotiated repurchase transactions.

In accounting for the repurchases of the 2024 Notes and 2025 Notes, Wayfair recorded a $ 100 million gain on debt extinguishment, representing the difference between the cash paid for principal of $ 514 million and the combined net carrying value of the 2024 Notes and 2025 Notes of $ 614 million.

Wayfair intends to use the remaining net proceeds from the issuance of the 2028 Notes for working capital and general corporate purposes, including, but not limited to, operating and capital expenditures.

Wayfair may also use a portion of the net proceeds to finance acquisitions, strategic transactions, investments, repurchases of Class A common stock or the repayment, redemption, purchase or exchange of indebtedness (including the Notes).

Conversions of Notes

During the three months ended March 31, 2023, there were no conversions of the Notes.

During the three and six months ended June 30, 2023, there were no conversions of the Notes.

Interest Expense

During the three months ended March 31, 2023, Wayfair recognized contractual interest expense and debt discount amortization of $ 11 million and $ 1 million, respectively, and during the three months ended March 31, 2022, contractual interest expense and debt discount amortization of $ 6 million and $ 2 million, respectively.

During the three months ended June 30, 2023, Wayfair recognized contractual interest expense and debt discount amortization of $ 14 million and $ 2 million, respectively, and during the six months ended June 30, 2023, contractual interest expense and debt discount amortization of $ 25 million and $ 3 million, respectively.

During the three months ended June 30, 2022, Wayfair recognized contractual interest expense and debt discount amortization of $ 7 million and $ 2 million, respectively, and during the six months ended June 30, 2022, contractual interest expense and debt discount amortization of $ 13 million and $ 4 million, respectively.

Fair Value of Notes

As of March 31, 2023, the estimated fair value of the 2024 Notes, 2025 Notes, 2026 Notes, 2027 Notes and 2025 Accreting Notes was $ 173 million, $ 937 million, $ 627 million, $ 591 million and $ 18 million, respectively.

As of June 30, 2023, the estimated fair value of the 2024 Notes, 2025 Notes, 2026 Notes, 2027 Notes, 2028 Notes and 2025 Accreting Notes was $ 116 million, $ 648 million, $ 784 million, $ 856 million, $ 1.1 billion and $ 34 million, respectively.

The estimated fair value of the Non-Accreting Notes was determined through consideration of quoted market prices.

1 unchanged sentence

The fair values of the Non-Accreting Notes and the 2025 Accreting Notes are classified as Level 2 and Level 3, respectively, as defined in Note 3, Cash and Cash Equivalents, Investments and Fair Value Measurements .

The if-converted value of the 2024 Notes, 2025 Notes, 2026 Notes, 2027 Notes and 2025 Accreting Notes did not exceed the principal value as of March 31, 2023.

The 2024 Capped Calls, 2025 Capped Calls, 2026 Capped Calls and 2027 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 Non-Accreting Notes upon conversion of the Non-Accreting 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 Non-Accreting 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 Calls (the “Initial Cap Price”).

As of June 30, 2023, the if-converted value of the 2027 Notes and 2028 Notes exceeded the principal value by $ 17 million and $ 289 million, respectively.

As of June 30, 2023, the if-converted value of the 2024 Notes, 2025 Notes, 2026 Notes and 2025 Accreting Notes did not exceed the principal value.

The 2024 Capped Calls, 2025 Capped Calls, 2026 Capped Calls, 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 Non-Accreting Notes upon conversion of the Non-Accreting 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 Non-Accreting 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 Calls (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 Non-Accreting Notes are converted, repurchased or redeemed prior to such date.

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2027 Capped Calls September 15, 2027 $ 97.62 100 %

2028 Capped Calls November 15, 2028 $ 73.28 100 %

The Capped Calls are separate transactions from the Non-Accreting Notes, are not subject to the terms of the Non-Accreting Notes and will not affect any holder’s rights under the Non-Accreting Notes.

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Stockholders’ Deficit

Since Wayfair's initial public offering through March 31, 2023, 56,347,062 shares of Class B common stock were converted to the same number of shares of Class A common stock.

Since Wayfair's initial public offering through June 30, 2023, 56,347,091 shares of Class B common stock were converted to the same number of shares of Class A common stock.

Stock Repurchase Programs

During the three months ended March 31, 2023, Wayfair did not repurchase any shares of Class A Common stock under its stock repurchase programs.

During the three months ended March 31, 2022, Wayfair repurchased 548,173 shares of Class A Common stock for $ 75 million .

During the three and six months ended June 30, 2023, Wayfair did not repurchase any shares of Class A common stock under its stock repurchase programs.

During the three months ended June 30, 2022, Wayfair did not repurchase any shares of Class A common stock.

During the six months ended June 30, 2022, Wayfair repurchased 548,173 shares of Class A common stock for $ 75 million under its stock repurchase programs .

Equity-Based Compensation

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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 awards and stock payments.

Under the 2014 Plan, 8,603,066 shares of Class A common stock initially were available for future award grants.

The 2014 Plan also contained an evergreen provision whereby the shares available for future grants were increased on the first day of each calendar year.

In October 2022, Wayfair’s stockholders amended the 2014 Plan to increase the aggregate number of shares of Class A common stock authorized for issuance under the 2014 Plan by 5,000,000 shares.

As of March 31, 2023, 5,378,097 shares of Class A common stock remained available for future grant under the 2014 Plan.

Under the 2023 Plan, the number of Class A common stock reserved for future award grants is the sum of (i) 15,000,000 shares of Class A common stock, (ii) any shares of Class A common stock which remained available for grant under the 2014 Plan as of the 2023 Plan Effective Date and (iii) any shares of Class A common stock subject to 2014 Plan awards that become available for issuance under the 2023 Plan pursuant to its terms after the 2023 Plan Effective Date.

The following table presents activity relating to RSUs for the three months ended March 31, 2023:

Under the 2023 Plan, 20,525,663 shares of Class A common stock initially were available for future award grants.

As of June 30, 2023, 17,636,121 shares of Class A common stock remained available for future grant under the 2023 Plan.

The following table presents activity relating to RSUs for the six months ended June 30, 2023:

Shares Weighted-Average

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RSUs forfeited/canceled ( 1,636,284 ) $ 107.73

Unvested at March 31, 2023

Unvested at June 30, 2023

7,897,829 $ 85.88

The intrinsic value of RSUs that vested during the three months ended March 31, 2023 and 2022 was $ 117 million and $ 106 million, respectively.

As of March 31, 2023, the aggregate intrinsic value of unvested RSUs was $ 224 million.

As of March 31, 2023, unrecognized equity-based compensation expense related to RSUs expected to vest over time is $ 608 million with a weighted-average remaining vesting term of 1.1 years.

The intrinsic value of RSUs that vested during each of the six months ended June 30, 2023 and 2022 was $ 166 million.

As of June 30, 2023, the aggregate intrinsic value of unvested RSUs was $ 513 million.

As of June 30, 2023, unrecognized equity-based compensation expense related to RSUs expected to vest over time is $ 497 million with a weighted-average remaining vesting term of 0.7 years.

Equity-based compensation was classified as follows in the condensed consolidated statements of operations:

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended

2023 2022 2023 2022

(in millions)

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Total equity-based compensation expense $ 164 $ 128 $ 308 $ 233

Equity-based compensation costs capitalized as site and software development costs were $ 13 million and $ 8 million for the three months ended March 31, 2023 and 2022, respectively.

The provision for income taxes, net recorded during the three months ended March 31, 2023 is primarily related to income tax benefits for tax losses earned in the U.S.

Equity-based compensation costs capitalized as software costs were $ 17 million and $ 30 million for the three and six months ended June 30, 2023, respectively, and $ 10 million and $ 18 million for the three and six months ended June 30, 2022, respectively.

The provision for income taxes, net recorded during the three and six months ended June 30, 2023 is primarily related to income tax benefits for tax losses earned in the U.S.

and certain foreign jurisdictions and U.S.

1 unchanged sentence

state minimum and foreign taxes.

Wayfair had no material unrecognized tax benefits as of March 31, 2023 and December 31, 2022.

Wayfair had no material unrecognized tax benefits as of June 30, 2023 and December 31, 2022.

Loss per Share

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

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2023 2022 2023 2022

(in millions, except per share data)

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Denominator for basic and diluted loss per share - weighted-average number of shares of common stock outstanding

112 105 111 105

Loss per share

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

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2023 2022 2023 2022

(in millions)

1 unchanged sentence

Shares related to convertible debt instruments 36 16 36 16

Total 44 25 44 25

Wayfair may settle conversions of the Non-Accreting Notes in cash, shares of Wayfair’s Class A common stock or any combination thereof at its election.

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

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2023 2022 2023 2022

(in millions)

2 unchanged sentences

Total net revenue $ 3,171 $ 3,284 $ 5,945 $ 6,277

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2023 2022 2023 2022

(in millions)

7 unchanged sentences

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

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2023 2022 2023 2022

(in millions)

2 unchanged sentences

Interest expense, net 5 6 10 14

Other expense, net 1 —

Other income, net ( 3 ) ( 1 ) ( 2 ) ( 1 )

Provision for income taxes, net 2 1 4 2

1 unchanged sentence

Restructuring charges (b)

Gain on debt extinguishment (c)

( 100 ) — ( 100 ) —

Total reconciling items $ 174 $ 270 $ 515 $ 476

During the three months ended March 31, 2023, Wayfair 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.

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

See “Non-GAAP Financial Measures” in Part I, Item 2, Management's Discussion and Analysis of Financial Condition and Results of Operations in this Quarterly Report on Form 10-Q for more information regarding our use of Adjusted EBITDA.

During the six months ended June 30, 2023, Wayfair recorded charges of $ 5 million related to consolidation of certain customer service centers in identified U.S.

During the three and six months ended June 30, 2023, Wayfair recorded charges of $ 1 million and $ 9 million, respectively, related to construction in progress assets at identified U.S.

During the three and six months ended June 30, 2022, Wayfair recorded $ 40 million of lease impairment and other charges related to changes in market conditions around future sublease income for one office location in the U.S.

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

During the three and six months ended June 30, 2023, Wayfair recorded a $ 100 million gain on debt extinguishment upon repurchase of $ 83 million in aggregate principal amount of the 2024 Notes and $ 535 million in aggregate principal amount of the 2025 Notes.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements