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Item 7. Management’s Discussion and Analysis

2024-02-22 compared with 2023-02-23 · 153 added, 177 removed, 245 unchanged (57% of the section changed)

Management's Discussion and Analysis of Financial Condition and Results of Operations

Forward-Looking Statements

This Annual Report on Form 10-K contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Exchange Act.

All statements other than statements of historical fact contained in this Annual Report on Form 10-K, including statements regarding our investment plans and anticipated returns on those investments, our future customer growth, our future results of operations and financial position, including our financial outlook and profitability goals, available liquidity and access to financing sources, our business strategy, plans and objectives of management for future operations, including our international expansion and omni-channel strategy, consumer activity and behaviors, developments in our technology and systems and anticipated results of those developments and the impact of macroeconomic events, including the COVID-19 pandemic, interest rates and rising inflation, and our response to such events, are forward-looking statements.

In some cases, you can identify forward-looking statements by terms such as “may,” “will,” “should,” “expects,” “plans,” “anticipates,” “continues,” “could,” “intends,” “goals,” “target,” “projects,” “contemplates,” “believes,” “estimates,” “predicts,” “potential” or “continue” or the negative of these terms or other similar expressions.

Forward-looking statements are based on current expectations of future events.

We cannot guarantee that any forward-looking statement will be accurate, although we believe that we have been reasonable in our expectations and assumptions.

Investors should realize that if underlying assumptions prove inaccurate or that known or unknown risks or uncertainties materialize, actual results could vary materially from Wayfair’s expectations and projections.

Investors are therefore cautioned not to place undue reliance on any forward-looking statements.

These forward-looking statements speak only as of the date of this Annual Report on Form 10-K and, except as required by applicable law, we undertake no obligation to publicly update or revise any forward-looking statements contained herein, whether as a result of any new information, future events or otherwise.

Factors that could cause or contribute to differences in our future results include, without limitation, the following:

• our ability to acquire new customers and sustain and/or manage our growth;

• our ability to increase our net revenue per active customer;

• our ability to build and maintain strong brands;

• our ability to manage our growth and expansion initiatives;

• our ability to compete successfully;

• the rate of growth of the Internet and e-commerce;

• macroeconomic factors, such as interest rates, rising inflation, the housing market, currency exchange fluctuations and changes in customer spending;

• disruptions, capacity constraints or inefficiencies in our supply chain or logistics network, including any impact of the COVID-19 pandemic on our suppliers and third party carriers and delivery agents;

• world events, natural disasters, public health emergencies, including the COVID-19 pandemic, civil disturbances and terrorist attacks;

• developments in, and the outcome of, legal and regulatory proceedings and investigations to which we are a party or are subject, and the liabilities, obligations and expenses, if any, that we may incur in connection therewith.

A further list and description of risks, uncertainties and other factors that could cause or contribute to differences in our future results include the cautionary statements herein and in our other filings with the Securities and Exchange Commission, including those set forth under Part I, Item 1A, Risk Factors, of this Annual Report on Form 10-K.

We qualify all of our forward-looking statements by these cautionary statements.

All dollar and percentage comparisons made herein refer to the year ended December 31, 2022, compared with the year ended December 31, 2021, unless otherwise noted.

Refer to Part II, Item 7 of our Annual Report on Form 10-K for fiscal 2021 for a comparative discussion of our fiscal 2021 financial results as compared to fiscal 2020 filed with the SEC on February 24, 2022.

The following Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is intended to help the reader understand the company, our operations and our present business environment.

Our MD&A is provided as a supplement to — and should be read in conjunction with — our consolidated financial statements and the accompanying Notes thereto contained in Part II, Item 8, Financial Statements and Supplementary Data , in this Annual Report on Form 10-K.

All dollar and percentage comparisons made in our MD&A refer to the year ended December 31, 2023 financial results, compared with the year ended December 31, 2022 financial results, unless otherwise noted.

Refer to Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations , in our Annual Report on Form 10-K for the year ended December 31, 2022 for a comparative discussion of our year ended December 31, 2022 financial results as compared to our year ended December 31, 2021 financial results filed with the SEC on February 23, 2023.

The following discussion contains forward-looking statements that are subject to risks and uncertainties.

results may differ from those referred to herein due to a number of factors, including but not limited to risks described in

Part I, Item 1A, Risk Factors in this Annual Report on Form 10-K.

Wayfair is one of the world’s largest online destinations for the home.

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We turn these customers into recurring shoppers by creating a seamless shopping experience across their entire journey — offering best-in-class product discovery, purchasing, fulfillment and customer service.

In fiscal year 2022, our business generated lower sales volumes compared to the previous year.

As of December 31, 2022, we had 22.1 million active customers, and 78% of fiscal year 2022 orders came from repeat buyers.

Macroeconomic weakness contributed to lower order volume, so we initiated a set of cost reduction efforts over the course of the year to reduce spending on labor and non-labor operational costs.

During the year ended December 31, 2023, net revenue decreased by 1.8% compared to the same period in 2022.

As of December 31, 2023, we had 22 million active customers and during the year ended December 31, 2023, 79.6% of orders came from repeat buyers.

The lower sales were a function of normalization in average order value following a period of intense inflation in 2022, which were offset by a recovery in order volume, which showed positive growth year-over-year.

We also continued to manage our advertising spend according to a return on investment-oriented approach that carefully tracks and monitors the results of advertising campaigns as we seek to maintain appropriate return targets.

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Global Considerations

We are continuing to closely monitor macroeconomic impacts, including, but not limited to, rising and fluctuating interest rates, inflation and the effects of the COVID-19 pandemic, on our business, results of operations and financial results.

We are continuing to closely monitor macroeconomic impacts, including, but not limited to, geopolitical events and rising and fluctuating interest rates and inflation on our business, results of operations and financial results.

These developments have and may continue to negatively impact global economic activity and consumer behavior, which have and may continue to adversely affect our business and our results of operations.

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Factors Affecting our Performance

We believe that our performance and future success depend on a number of factors that present significant opportunities for us but also pose risks and challenges, including those discussed in Part I, Item 1A, Risk Factors of this Annual Report on Form 10-K.

Key Financial and Operating Metrics

We measure our business using key financial and operating metrics, as well as Adjusted EBITDA, Free Cash Flow and Adjusted Diluted (Loss) Earnings per share, see “Non-GAAP Financial Measures” below.

Our Free Cash Flow and Adjusted Diluted (Loss) Earnings per share are measured on a consolidated basis, while our Adjusted EBITDA is measured on a consolidated and reportable segment basis.

All other key financial and operating metrics are derived and reported from our consolidated net revenue.

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Key Financial Statement and Operating Metrics

We measure our business using the key financial statement and operating metrics that are reflected in the below table.

See “Non-GAAP Financial Measures” below for more information regarding our use of Adjusted EBITDA, Free Cash Flow and Adjusted Diluted Earnings or Loss per Share and a reconciliation of these non-U.S.

generally accepted accounting principles (“GAAP’) financial measures to the most directly comparable GAAP financial measure.

Our Free Cash Flow and Adjusted Diluted Earnings or Loss per Share are measured on a consolidated basis, while our Adjusted EBITDA is measured on a consolidated and reportable segment basis.

All other key financial statement and operating metrics are derived and reported from our consolidated net revenue.

We use the following metrics to assess the near and longer-term performance of our overall business:

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Gross profit $ 3,667 $ 3,416 $ 3,895

(Loss) income from operations $ (1,384) $ (94) $ 360

Net (loss) income $ (1,331) $ (131) $ 185

(Loss) earnings per share:

Loss from operations $ (813) $ (1,384) $ (94)

Net loss $ (738) $ (1,331) $ (131)

Loss per share:

Basic $ (6.47) $ (12.54) $ (1.26)

Diluted $ (6.47) $ (12.54) $ (1.26)

Net cash (used in) provided by operating activities $ (674) $ 410 $ 1,417

Net cash provided by (used in) operating activities $ 349 $ (674) $ 410

Key Operating Metrics:

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Adjusted Diluted (Loss) Earnings per share $ (1.13) $ (7.71) $ 2.32

$ (7.71) $ 2.32 $ 5.04

(1) The number of active customers represents the total number of individual customers who have purchased at least once directly from our sites during the preceding twelve-month period.

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We view the number of active customers as a key indicator of our growth.

(2) LTM net revenue per active customer represents our total net revenue in the last twelve months divided by our total number of active customers for the same preceding twelve-month period.

(2) Last twelve months (“LTM”) net revenue per active customer represents our total net revenue in the last twelve months divided by our total number of active customers for the same preceding twelve-month period.

We view LTM net revenue per active customer as a key indicator of our customers’ purchasing patterns, including their initial and repeat purchase behavior.

(3) Orders delivered represents the total orders delivered in any period, inclusive of orders that may eventually be returned.

(3) Orders delivered represent the total orders delivered in any period, inclusive of orders that may eventually be returned.

As we ship a large volume of packages through multiple carriers, actual delivery dates may not always be available, and as such we estimate delivery dates based on historical data.

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We view average order value as a key indicator of the mix of products on our sites, the mix of offers and promotions and the purchasing behavior of our customers.

(5) Adjusted Diluted (Loss) Earnings per share for the year ended December 31, 2021 reflects our adoption of ASU 2020-06, effective January 1, 2021.

Prior periods have not been restated.

For further information, refer to our fiscal 2021 Annual Report on Form 10-K filed with the SEC on February 24, 2022.

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Results of Consolidated Operations

In 2022, net revenue decreased by $1.5 billion, or 10.9% compared to 2021, which reflects recent macroeconomic pressures felt by consumers.

The decrease in net revenue was driven by lower orders, partially offset by higher average order values.

There was a decrease in order frequency, with LTM orders per active customer decreasing by 4.1% in 2022 compared to 2021.

LTM net revenue per active customer increased by 10.2% in 2022 compared to 2021 driven by higher average order value.

In 2022, our United States (“U.S.”) net revenue decreased by $785 million, or 7.0% while our International net revenue decreased by $705 million, or 28.7% compared to 2021.

International Net Revenue Constant Currency Growth (see “Non-GAAP Financial Measures” below) was (23.8)% for the year ended December 31, 2022.

During the year ended December 31, 2023, net revenue decreased by $215 million, or 1.8%, compared to the same period in 2022, which reflects recent macroeconomic pressures felt by consumers.

The decrease in net revenue was due to lower average order value due, in part, to normalization of inflationary pressures in the supply chain compared to the same period in 2022.

During the year ended December 31, 2023, our United States (“U.S.”) net revenue increased by 0.2% and International net revenue decreased by 13.3% compared to the same period in 2022.

During the year ended December 31, 2023, International Net Revenue Constant Currency Growth was (11.6)% (see “Non-GAAP Financial Measures” below for more information regarding our use of Net Revenue Constant Currency Growth).

Year Ended December 31,

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Net revenue $ 12,003 $ 12,218 (1.8) %

For more information on our segments, see Note 13, Segment and Geographic Information, in the notes to the consolidated financial statements, included in Part II, Item 8, Financial Statements and Supplementary Data , of this Annual Report on Form 10-K.

For more information on our segments, see Note 13 Segment and Geographic Information , in the notes to the consolidated financial statements, included in Part II, Item 8, Financial Statements and Supplementary Data , in this Annual Report on Form 10-K.

Cost of goods sold

Cost of goods sold is sensitive to many factors, including quarter-to-quarter variability in product mix, pricing strategies, changes in wholesale, shipping and fulfillment costs and fees earned for supplier services rendered.

In 2022, cost of goods sold decreased by $1.0 billion, or 10.3%, compared to 2021.

The decrease in cost of goods sold on an absolute dollar basis is primarily driven by a decrease in the number of orders delivered.

As a percentage of net revenue, cost of goods sold increased to 72.0% in 2022 as compared to 71.6% in 2021, partially due to mix shifts, lower operational efficiencies from fewer orders and rising logistics costs.

During the year ended December 31, 2023, cost of goods sold decreased by $466 million, or 5.3%, compared to the same period in 2022.

The decrease in cost of goods sold is primarily driven by operational cost savings initiatives.

As a percentage of net revenue, cost of goods sold decreased to 69.4% for the year ended December 31, 2023 compared to 72.0% in the same period in 2022 due to mix shifts, operational efficiencies and decreased logistics costs.

Year Ended December 31,

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As a percentage of net revenue 69.4 % 72.0 %

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Operating expenses

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Impairment and other related net charges 14 39 (64.1) %

Restructuring charges 31 — n.m.

Restructuring charges 65 31 109.7 %

Total operating expenses $ 4,480 $ 4,800 (6.7) %

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37.2 % 39.4 %

(1) Not meaningful (n.m.) year-over-year comparison

(1) Includes equity-based compensation and related taxes as follows:

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Selling, operations, technology, general and administrative $ 584 $ 482

Our equity-based compensation and related taxes included in customer service and merchant fees and selling, operations, technology, general and administrative increased by $154 million, or 42.5% in 2022 compared to 2021 as a result of increased restricted stock units granted in 2022 compared to the same period in 2021.

During the year ended December 31, 2023, our equity-based compensation and related taxes included in customer service and merchant fees and selling, operations, technology, general and administrative increased by $97 million, or 18.8% compared to the same period in 2022, driven by an increase in vested restricted stock units in 2023 compared to the same period in 2022.

The following table summarizes operating expenses as a percentage of net revenue, excluding equity-based compensation and related taxes:

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Customer Service and Merchant Fees

Excluding the impact of equity-based compensation, our expenses for customer service and merchant fees, increased by $41 million, or 7.4% in 2022 compared to 2021.

The increase in customer service and merchant fees is due to increased compensation costs.

As a percentage of net revenue, total customer service and merchant fees increased to 5.2% in 2022 compared to 4.3% in 2021 due to a decrease in net revenue.

In 2022, our advertising expenses increased by $95 million or 6.9% as compared to the same period in 2021.

The increase reflects our response to changing market conditions as we sought to maintain our return targets across various channels.

As a percentage of net revenue, advertising expenses increased to 12.1% in 2022 compared to 10.1% in 2021 due in part to changes in

advertising channel mix as well as lower direct traffic.

During the year ended December 31, 2023, excluding the impact of equity-based compensation, our expenses for customer service and merchant fees decreased by $70 million, or 11.7% compared to the same period in 2022.

The decrease in customer service and merchant fees is primarily due to decreased compensation costs in 2023 compared to the same period in 2022.

As a percentage of net revenue, total customer service and merchant fees decreased to 4.6% for the year ended December 31, 2023 compared to 5.2% in the same period in 2022 due to decreased compensation costs.

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During the year ended December 31, 2023, our advertising expenses decreased by $76 million or 5.2% as compared to the same period in 2022.

The decrease reflects our response to changing market conditions as we sought to maintain our return targets across various channels.

As a percentage of net revenue, advertising expenses decreased to 11.6% for the year ended December 31, 2023 compared to 12.1% in the same period in 2022 due in part to maintaining efficiencies in our advertising channel mix.

Selling, operations, technology, general and administrative

Excluding the impact of equity-based compensation and related taxes, our expenses for selling, operations, technology, general and administrative activities increased by $463 million, or 27.6% in 2022 compared to 2021.

The increase is primarily attributable to higher personnel costs, and to a lesser extent higher information technology costs and depreciation and amortization.

As a percentage of net revenue, total selling, operations, technology, general and administrative expenses increased to 21.5% in 2022 compared to 14.7% in 2021, primarily due to the decrease in net revenue.

During the year ended December 31, 2023, excluding the impact of equity-based compensation and related taxes, our expenses for selling, operations, technology, general and administrative activities decreased by $280 million, or 13.1% compared to the same period in 2022.

The decrease is primarily due to decreased personnel and information technology costs, partially offset by increased depreciation and amortization.

As a percentage of net revenue, total selling, operations, technology, general and administrative expenses decreased to 20.4% for the year ended December 31, 2023 compared to 21.5% in the same period in 2022, primarily due to decreased compensation costs.

Impairment and other related net charges

During the year ended December 31, 2022, we recorded $39 million of lease impairment and other related net charges primarily related to changes in market conditions around future sublease income for one of our office locations in the U.S.

During the year ended December 31, 2021, we recorded a charge of $12 million as a result of enacting a plan to consolidate certain customer service centers in identified U.S.

For further information, refer to Note 4, Property and Equipment, net and Note 5, Leases in the notes to the consolidated financial statements, included in Part II, Item 8, Financial Statements and Supplementary Data , of this Annual Report on Form 10-K.

During the year ended December 31, 2023, impairment and other related charges decreased by $25 million or 64.1% as compared to the same period in 2022.

As a percentage of net revenue, impairment and other related net charges decreased to 0.1% from 0.3% in the same period in 2022.

During the year ended December 31, 2023, we recorded net charges of $14 million, inclusive of $5 million related to consolidation of certain customer service centers and $9 million related to construction in progress assets at identified U.S.

During the year ended December 31, 2022, we recorded net charges of $31 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.

and charges of $8 million related to construction in progress assets at an International warehouse.

Restructuring charges

During the year ended December 31, 2022, we announced a workforce reduction involving approximately 870 employees in connection with our previously announced plans to manage operating expenses and realign investment priorities.

This reduction represented approximately 5% of our global workforce and approximately 10% of our corporate team at that time.

As a result of this workforce reduction, we incurred a total of $31 million of costs, consisting primarily of one-time employee severance and benefit costs.

During the year ended December 31, 2023, restructuring charges increased by $34 million or 109.7% as compared to the same period in 2022.

As a percentage of net revenue, restructuring charges increased to 0.5% from 0.3% in the same period in 2022.

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

During the year ended December 31, 2022, we incurred $31 million of charges consisting primarily of one-time employee severance and benefit costs associated with the August 2022 workforce reductions.

Interest expense, net

Our interest expense, net decreased by $5 million, or 15.6%, in 2022 compared to 2021, primarily driven by higher interest income.

During the year ended December 31, 2023, our interest expense, net decreased by $10 million, or 37.0%, compared to the same period in 2022, primarily driven by higher interest income.

Year Ended December 31,

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Interest expense, net $ (17) $ (27) (37.0) %

Other expense, net

Other expense, net remained constant in 2022 compared to 2021.

Included in our other expense, net are changes in unrealized gains (losses) from foreign currency transactions and income (losses) on our long-term investments.

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Other income (expense), net

During the year ended December 31, 2023, we recorded other income, net of $1 million, compared to other expense, net of $4 million in the same period in 2022, primarily driven by increases in foreign currency transaction gains.

Included in other income (expense), net are changes in foreign currency transaction gains and losses and long-term investment income or losses.

Year Ended December 31,

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(in millions)

Other expense, net $ (4) $ (4) — %

Other income (expense), net $ 1 $ (4) (125.0) %

Gain on debt extinguishment

During the year ended December 31, 2022, we used approximately $506 million of the net proceeds from the issuance of the 2027 Notes to repurchase for cash approximately $375 million aggregate principal amount of the 2024 Notes and approximately $229 million aggregate principal amount of the 2025 Notes, as well as aggregate accrued interest of $2 million for both the 2024 Notes and 2025 Notes, in privately negotiated repurchase transactions.

In accounting for the repurchases of the 2024 Notes and 2025 Notes, Wayfair recorded a $96 million gain on debt extinguishment, representing the difference between the cash paid for principal of $504 million and the combined net carrying value of the 2024 Notes and 2025 Notes of $600 million.

Refer to Note 6, Debt and Other Financing , included in Part II, Item 8, Financial Statements and Supplementary Data , of this Annual Report on Form 10-K.

During the year ended December 31, 2023, our gain on debt extinguishment increased by $4 million or 4.2% compared to the same period in 2022.

In connection with the issuance of our 2028 Notes, we 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.

In connection with the issuance of our 2027 Notes, we recorded a $96 million gain on debt extinguishment, representing the difference between the cash paid for principal of $504 million and the combined net carrying value of the 2024 Notes and 2025 Notes of $600 million.

Refer to Note 6, Debt and Other Financing , in the notes to the consolidated financial statements, included in Part II, Item 8, Financial Statements and Supplementary Data , in this Annual Report on Form 10-K for additional information.

Year Ended December 31,

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Provision for income taxes, net

Our provision for income taxes, net increased by $11 million in 2022 compared to 2021, primarily related to

the level and mix of income earned in the U.S.

During the year ended December 31, 2023, our provision for income taxes, net decreased by $3 million or 25.0% compared to the same period in 2022, primarily related to the level and mix of income earned in the U.S.

and certain foreign jurisdictions and U.S.

state income taxes, as well as the recognition of a lower discrete tax benefit related to excess tax benefits on equity awards for U.S.

Refer to Note 11, Income Taxes , included in Part II, Item 8, Financial Statements and Supplementary Data , of this Annual Report on Form 10-K.

state income taxes.

Refer to Note 11, Income Taxes , in the notes to the consolidated financial statements, included in Part II, Item 8, Financial Statements and Supplementary Data, in this Annual Report on Form 10-K for additional information.

Year Ended December 31,

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Provision for income taxes, net $ 9 $ 12 (25.0) %

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Liquidity and Capital Resources

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

We had outstanding letters of credit, primarily as security for certain lease agreements, for approximately $68 million as of December 31, 2022, which reduced the availability of credit under the Revolver.

Excluding liquidity available through our Revolver, the following table shows sources of liquidity as of December 31, 2022 and 2021:

We had outstanding letters of credit, primarily as security for certain lease agreements, for $76 million as of December 31, 2023, which reduced the availability of credit under the Revolver.

Excluding liquidity available through our Revolver, the following table shows sources of liquidity for the periods presented:

(in millions)

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The amounts involved may be material.

Further, on January 20, 2023, we announced an update to our cost efficiency plan, including a workforce reduction involving approximately 1,750 employees.

As a result, we expect to incur between approximately $68 million and $78 million of costs, consisting primarily of employee severance and benefit costs, most of which are expected to be incurred in the first quarter of 2023.

Our future capital requirements and the adequacy of available funds will depend on many factors, including those described herein and in our other filings with the SEC, including those set forth in Part I, Item 1A, Risk Factors of this Annual Report on Form 10-K.

Further, on January 19, 2024, we announced a workforce realignment plan, including a workforce reduction

involving approximately 1,650 employees.

As a result, we expect to incur between approximately $70 million and $80 million of

costs, consisting primarily of employee severance and benefit costs, most of which are expected to be incurred in the first quarter

In addition, macroeconomic events have caused disruption in the capital markets, including increased inflation and interest rates, which could make obtaining financing more difficult and/or expensive.

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Credit Agreement and Convertible Debt

As of December 31, 2022, we had $3.2 billion principal of indebtedness outstanding.

As of December 31, 2023, we had $3.2 billion principal amount of indebtedness outstanding.

Under the terms of our Revolver, we may use proceeds to finance working capital, to refinance existing indebtedness and to provide funds for permitted acquisitions, repurchases of equity interests and other general corporate purposes.

Any amounts outstanding under the Revolver are due at maturity.

See Note 6, Debt and Other Financing in the notes to the consolidated financial statements, included in Part II, Item 8, Financial Statements and Supplementary Data , of this Annual Report on Form 10-K for more information regarding the repurchase of the 2024 Notes and the 2025 Notes.

The conditional conversion features of the 2024 Notes, 2025 Notes, 2026 Notes and 2027 Notes were not triggered during the fourth quarter of 2022, and therefore the 2024 Notes, 2025 Notes, 2026 Notes and 2027 Notes are not convertible in the first quarter of 2023 pursuant to the applicable last reported sales price conditions.

During the year ended December 31, 2023, we used $514 million of the net transaction amount from the issuance of the 2028 Notes 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.

See Note 6, Debt and Other Financing , in the notes to the consolidated financial statements, included in Part II, Item 8, Financial Statements and Supplementary Data , in this Annual Report on Form 10-K.

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The conditional conversion features of the 2024 Notes, 2025 Notes, 2026 Notes, 2027 Notes and 2028 Notes (collectively, the “Non-Accreting Notes” and together with the 2025 Accreting Notes, the “Notes”) were not triggered during the calendar quarter ended December 31, 2023, therefore, the 2024 Notes, 2025 Notes, 2026 Notes, 2027 Notes and 2028 Notes are not convertible during the calendar quarter ended March 31, 2024 pursuant to the applicable last reported sales price conditions.

The 2025 Accreting Notes are convertible at any time prior to the close of business on the second business day immediately preceding the maturity date.

During 2022, there were no conversions of the Notes.

During the year ended December 31, 2023, there were no conversions of the Notes.

Whether any of the Non-Accreting Notes will be convertible in future quarters will depend on the satisfaction of the applicable last reported sales price condition or another conversion condition in the future.

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The Revolver also requires us to maintain certain levels of performance in order to maintain our access to the Revolver.

For instance, we are required to maintain a Consolidated Senior Secured Debt to Consolidated EBITDA Ratio (as defined in the Credit Agreement) of 4.0 to 1.0, subject to a 0.5 step-up following certain permitted acquisitions.

For information regarding our credit agreement and convertible notes, see Note 6, Debt and Other Financing in the notes to the consolidated financial statements, included in Part II, Item 8, Financial Statements and Supplementary Data , of this Annual Report on Form 10-K.

During the year ended December 31, 2022, we were in compliance with all the terms and conditions of our debt agreements.

For instance, we are required to maintain a Consolidated Senior Secured Debt to Consolidated EBITDA Ratio (as defined in the credit agreement governing the Revolver) of 4.0 to 1.0, subject to a 0.5 step-up following certain permitted acquisitions.

For information regarding our credit agreement and convertible notes, see Note 6, Debt and Other Financing , in the notes to the consolidated financial statements, included in Part II, Item 8, Financial Statements and Supplementary Data , in this Annual Report on Form 10-K.

As of December 31, 2023, we were in compliance with all the terms and conditions of our debt agreements.

Stock Repurchase Program

On August 21, 2020, the Board authorized the repurchase of up to $700 million of our 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 21, 2020, the board of directors (the “Board”) authorized the repurchase of up to $700 million of our 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” together with the 2020 Repurchase Program, the “Repurchase Programs”).

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We will begin repurchasing shares under the 2021 Repurchase Program upon the completion of the 2020 Repurchase Program.

The Repurchase Programs do not obligate us to purchase any shares of Class A common stock and have no expiration but may be suspended or terminated by the Board at any time.

The actual timing, number and value of shares repurchased under the Repurchase Programs in the future will be determined by us in its discretion and will depend on a number of factors, including market conditions, applicable legal requirements, our capital needs and whether there is a better alternative use of capital.

The Repurchase Programs do not obligate us to purchase any shares of our Class A common stock and have no expiration but may be suspended or terminated by the Board at any time.

The actual timing, number and value of shares repurchased under the Repurchase Programs in the future will be determined by us in our discretion and will depend on a number of factors, including market conditions, applicable legal requirements, our capital needs and whether there is a better alternative use of capital.

As of December 31, 2023, we have repurchased 2,354,491 shares of Class A common stock for approximately $612 million under the Repurchase Programs.

During the year ended December 31, 2022, we repurchased 548,173 shares of Class A common stock for approximately $75 million under the Repurchase Programs.

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Trends and Historical Cash Flows

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(in millions)

Net (loss) income $ (1,331) $ (131) $ 185

Net cash (used in) provided by operating activities $ (674) $ 410 $ 1,417

Net cash provided by (used in) investing activities $ 1 $ (515) $ (236)

Net loss $ (738) $ (1,331) $ (131)

Net cash provided by (used in) operating activities $ 349 $ (674) $ 410

Net cash (used in) provided by investing activities $ (152) $ 1 $ (515)

Net cash provided by (used in) financing activities $ 77 $ 16 $ (303)

Operating Activities

Cash flows in connection with operating activities consisted of net (loss) income adjusted for certain non-cash items including depreciation and amortization, equity-based compensation and certain other non-cash expenses, as well as the effect of changes in working capital and other activities.

Operating cash flows can be volatile and are sensitive to many factors, including changes in working capital and our net (loss) income.

Cash flows used in operating activities increased by $1.1 billion in 2022 compared to 2021 primarily due to the increase in net loss adjusted for non-cash items of $1.0 billion and an increase of $69 million for cash used in operating assets and liabilities.

Cash flows in connection with operating activities consisted of net loss adjusted for certain non-cash items including depreciation and amortization, equity-based compensation and certain other non-cash expenses, as well as the effect of changes in working capital and other activities.

Operating cash flows can be volatile and are sensitive to many factors, including changes in working capital and our net loss.

Cash flows provided by operating activities increased by $1.0 billion during the year ended December 31, 2023 compared to the same period in 2022, primarily due to an increase in net cash adjusted for non-cash items of $658 million and an increase of $365 million for cash provided by changes in operating assets and liabilities.

Investing Activities

Cash flows provided by investing activities increased by $516 million in 2022 compared to 2021 primarily due to the decrease in purchases of short- and long-term investments of $559 million and increases in sales and maturities of short- and long-term investments of $140 million, partially offset by increases of cash used in site and software development costs of $93 million and purchases of property and equipment of $85 million.

Purchases of property and equipment and site and software development costs (collectively, “Capital Expenditures”) were 3.7% of net revenue for the year ended December 31, 2022 and related primarily to equipment purchases and improvements for leased warehouses within our expanding logistics network and ongoing investments in our proprietary technology and operational platform.

Cash flows used in investing activities increased by $153 million during the year ended December 31, 2023 compared to the same period in 2022, primarily due to decreases in sales and maturities of short- and long-term investments of $656 million, partially offset by decreases in purchases of short- and long-term investments of $394 million, decreases in purchases of property and equipment and site and software development costs of $107 million, and decreases in other investing activities of $2 million.

Purchases of property and equipment and site and software development costs (collectively, “Capital Expenditures”) were 2.9% of net revenue for the year ended December 31, 2023 and related primarily to equipment purchases and improvements for leased warehouses within our expanding logistics network and ongoing investments, including in our proprietary technology and operational platform.

Financing Activities

Cash flows provided by financing activities increased by $319 million in 2022 compared to 2021, primarily due to $678 million of proceeds from the issuance of convertible notes, net of issuance costs and lower repurchases of our Class A common stock of $225 million, partially offset by an aggregate payment of $504 million to extinguish convertible debt and $80 million of premiums paid for capped call confirmations.

Cash flows provided by financing activities increased by $61 million during the year ended December 31, 2023 compared to the same period in 2022, primarily due to $75 million of repurchases of our Class A common stock and $3 million of principal payments upon maturity of convertible debt, both of which occurred during the year ended December 31, 2022.

These are partially offset by increased payments to extinguish convertible debt of $10 million and increased premiums paid for capped call confirmations of $7 million.

Off-Balance Sheet Arrangements

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We do not have any off-balance sheet interest in variable interest entities, which include special purpose entities and other structured finance entities.

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Contractual Obligations

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(in millions)

Long-term debt (1)

Short-term and long-term debt (1)

$ 3,450 $ 179 $ 1,820 $ 1,451 $ —

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(1) Represents future interest and principal payments on the Notes.

For information regarding our convertible notes, see Note 6, Debt and Other Financing , in the notes to the consolidated financial statements included in Part II, Item 8, Financial Statements and Supplementary Data, of this Annual Report on Form 10-K.

For information regarding our convertible notes, see Note 6, Debt and Other Financing , in the notes to the consolidated financial statements, included in Part II, Item 8, Financial Statements and Supplementary Data, in this Annual Report on Form 10-K.

(2) Represents the future minimum lease payments under non-cancellable leases.

For information regarding our lease obligations, see Note 5, Leases , in the notes to the consolidated financial statements included in Part II, Item 8, Financial Statements and Supplementary Data, of this Annual Report on Form 10-K.

For information regarding our lease obligations, see Note 5, Leases , in the notes to the consolidated financial statements, included in Part II, Item 8, Financial Statements and Supplementary Data, in this Annual Report on Form 10-K.

(3) Represents the future payments for enforceable and legally binding software license and freight commitments.

For information regarding our purchase obligations, see Note 7, Commitments and Contingencies, in the notes to the consolidated financial statements included in Part II, Item 8, Financial Statements and Supplementary Data, of this Annual Report on Form 10-K.

For information regarding our purchase obligations, see Note 7, Commitments and Contingencies, in the notes to the consolidated financial statements, included in Part II, Item 8, Financial Statements and Supplementary Data, in this Annual Report on Form 10-K.

(4) Represents the future minimum lease payments for additional, non-cancellable operating leases, primarily related to warehouse and retail leases that have not yet commenced.

For more information see Note 5, Leases , in the notes to the consolidated financial statements included in Part II, Item 8, Financial Statements and Supplementary Data, of this Annual Report on Form 10-K.

For more information see Note 5, Leases , in the notes to the consolidated financial statements, included in Part II, Item 8, Financial Statements and Supplementary Data, in this Annual Report on Form 10-K.

Non-GAAP Financial Measures

To provide investors with additional information regarding our financial results, we have disclosed in this Annual Report on Form 10-K the following non-GAAP financial measures:

Adjusted EBITDA, Free Cash Flow, Adjusted Diluted Earnings or Loss per Share and Net Revenue Constant Currency Growth.

Adjusted EBITDA

To provide investors with additional information regarding our financial results, we have disclosed here and elsewhere in this Annual Report on Form 10-K Adjusted EBITDA, a non-GAAP financial measure that we calculate as net (loss) income before depreciation and amortization, equity-based compensation and related taxes, interest expense, net, other expense, net, provision for income taxes, net, non-recurring items and other items not indicative of our ongoing operating performance.

We have provided a reconciliation below of Adjusted EBITDA to net (loss) income, the most directly comparable GAAP financial measure.

We have included Adjusted EBITDA in this Annual Report on Form 10-K because it is a key measure used by our management and the Board to evaluate our operating performance, generate future operating plans and make strategic decisions regarding the allocation of capital.

We calculate Adjusted EBITDA 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 not indicative of our ongoing operating performance.

We have provided a reconciliation below of Adjusted EBITDA to net income or loss, the most directly comparable GAAP financial measure.

We disclose Adjusted EBITDA because it is a key measure used by our management and the Board to evaluate our operating performance, generate future operating plans and make strategic decisions regarding the allocation of capital.

In particular, we believe the exclusion of certain expenses in calculating Adjusted EBITDA facilitates operating performance comparisons on a period-to-period basis as these costs may vary independent of business performance.

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Accordingly, we believe that Adjusted EBITDA provides useful information to investors and others in understanding and evaluating our operating results in the same manner as our management and the Board.

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Adjusted EBITDA has limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of our results as reported under GAAP.

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• Other companies, including companies in our industry, may calculate Adjusted EBITDA differently, which reduces its usefulness as a comparative measure.

Because of these limitations, you should consider Adjusted EBITDA alongside other financial performance measures, including various cash flow metrics, net (loss) income and our other GAAP results.

The following table reflects the reconciliation of net (loss) income to Adjusted EBITDA for each of the periods indicated:

Because of these limitations, you should consider Adjusted EBITDA alongside other financial performance measures, including various cash flow metrics, net income or loss and our other GAAP results.

The following table reflects the reconciliation of net income or loss to Adjusted EBITDA for each of the periods indicated:

Year Ended December 31,

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Reconciliation of Adjusted EBITDA:

Net (loss) income $ (1,331) $ (131) $ 185

Net loss $ (738) $ (1,331) $ (131)

Depreciation and amortization 417 371 322

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Interest expense, net 17 27 32

Other expense, net 4 4 9

Other (income) expense, net (1) 4 4

Provision for income taxes, net 9 12 1

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Adjusted EBITDA $ 306 $ (416) $ 614

In the year ended December 31, 2022, we recorded $40 million of lease impairment and other related charges related to changes in market conditions around future sublease income for one of our office locations in the U.S.

In the fourth quarter of 2022, we recorded a $9 million recovery related to the termination of the lease.

Additionally, we recorded an impairment charge of $8 million related to construction in progress assets at an International warehouse.

In the year ended December 31, 2021, we recorded $12 million of customer service center impairment and other related charges related to our plan to consolidate customer service centers in identified U.S.

In the year ended December 31, 2022, we recorded a $31 million charge to restructuring charges for severance costs associated with the August 2022 workforce reductions.

In the year ended December 31, 2020, we recorded a $4 million charge to restructuring charges for severance costs associated with February 2020 workforce reductions.

In the year ended December 31, 2022, we recorded a $96 million gain on debt extinguishment upon repurchase of $375 million aggregate principal amount of our 2024 Notes and $229 million aggregate principal amount of our 2025 Notes.

and charges of $8 million related to construction in progress assets at an International warehouse.

During the year ended December 31, 2021, we recorded $12 million of customer service center impairment and other related charges related to our plan to consolidate customer service centers in identified U.S.

During the year ended December 31, 2022, we incurred $31 million of charges consisting primarily of one-time employee severance and benefit costs associated with the August 2022 workforce reductions.

During the year ended December 31, 2023, we 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.

During the year ended December 31, 2022, we recorded a $96 million gain on debt extinguishment upon repurchase of $375 million in aggregate principal amount of the 2024 Notes and $229 million in aggregate principal amount of the 2025 Notes.

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Free Cash Flow

To provide investors with additional information regarding our financial results, we have also disclosed here and elsewhere in this Annual Report on Form 10-K Free Cash Flow, a non-GAAP financial measure that we calculate as net cash provided by or used in operating activities less Capital Expenditures.

We calculate Free Cash Flow as net cash provided by or used in operating activities less Capital Expenditures.

We have provided a reconciliation below of Free Cash Flow to net cash provided by or used in operating activities, the most directly comparable GAAP financial measure.

We have included Free Cash Flow in this Annual Report on Form 10-K because it is an important indicator of our business performance as it measures the amount of cash we generate.

We disclose Free Cash Flow because it is an important indicator of our business performance as it measures the amount of cash we generate.

Accordingly, we believe that Free Cash Flow provides useful information to investors and others in understanding and evaluating our operating results in the same manner as our management.

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Because of these limitations, you should consider Free Cash Flow alongside other financial performance measures, including net cash provided by or used in operating activities, Capital Expenditures, and our other GAAP results.

The following table presents a reconciliation of net cash (used in) provided by operating activities to Free Cash Flow for each of the periods indicated:

The following table presents a reconciliation of net cash provided by or used in operating activities to Free Cash Flow for each of the periods indicated:

Year Ended December 31,

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(in millions)

Net cash (used in) provided by operating activities $ (674) $ 410 $ 1,417

Net cash provided by (used in) operating activities $ 349 $ (674) $ 410

Purchase of property and equipment (148) (186) (101)

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Net Revenue Constant Currency Growth

To provide investors with additional information regarding our financial results, we have disclosed in this Annual Report on Form 10-K Net Revenue Constant Currency Growth, a non-GAAP financial measure that we calculate by translating the current period local currency net revenue by the currency exchange rates used to translate our financial statements in the comparable prior-year period.

Net Revenue Constant Currency Growth is included in this Annual Report on Form 10-K because it is an important indicator of our operating results.

We calculate Net Revenue Constant Currency Growth by translating the current period local currency net revenue by the currency exchange rates used to translate our financial statements in the comparable prior-year period.

We disclose Net Revenue Constant Currency Growth because it is an important indicator of our operating results.

Accordingly, we believe that Net Revenue Constant Currency Growth provides useful information to investors and others in understanding and evaluating trends in our operating results in the same manner as our management.

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For example, Net Revenue Constant Currency Growth rates, by their nature, exclude the impact of foreign exchange, which may have a material impact on net revenue.

Adjusted Diluted (Loss) Earnings per Share

To provide investors with additional information regarding our financial results, we have disclosed in this Annual Report on Form 10-K Adjusted Diluted (Loss) Earnings per Share, a non-GAAP financial measure that we calculate as net (loss) income plus equity-based compensation and related taxes, provision for income taxes, net, non-recurring items, other items not indicative of our ongoing operating performance, and, if dilutive, interest expense associated with convertible debt instruments under the if-converted method divided by the weighted-average number of shares of common stock used in the computation of diluted (loss) earnings per share.

Accordingly, we believe that these adjustments to our adjusted diluted net loss (income) before calculating per share amounts for all periods presented provides a more meaningful comparison between our operating results from period to period.

Adjusted Diluted (Loss) Earnings per Share has limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of our results as reported under GAAP.

For example, Adjusted Diluted (Loss) Earnings per Share, by their nature, excludes equity-based compensation and related taxes, provision for income taxes, net, non-recurring items, other

items not indicative of our ongoing operating performance, and, if dilutive, interest expense associated with convertible debt instruments under the if-converted method.

Because of these limitations, you should consider Adjusted Diluted (Loss) Earnings per Share alongside other financial performance measures.

A reconciliation of the numerator and denominator for diluted (loss) earnings per share, the most directly comparable GAAP financial measure, and the numerator and denominator for Adjusted Diluted (Loss) Earnings per Share, is as follows:

Adjusted Diluted Earnings or Loss per Share

We calculate Adjusted Diluted Earnings or Loss per Share as net income or loss plus equity-based compensation and related taxes, provision or benefit for income taxes, net, non-recurring items, other items not indicative of our ongoing operating performance, and, if dilutive, interest expense associated with convertible debt instruments under the if-converted method divided by the weighted-average number of shares of common stock used in the computation of diluted earnings or loss per share.

Accordingly, we believe that these adjustments to our adjusted diluted net income or loss before calculating per share amounts for all periods presented provide a more meaningful comparison between our operating results from period to period.

Adjusted Diluted Earnings or Loss per Share has limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of our results as reported under GAAP.

For example, Adjusted Diluted Earnings or Loss per Share, by their nature, excludes equity-based compensation and related taxes, provision or benefit for income taxes, net, non-recurring items, other items not indicative of our ongoing operating performance, and, if dilutive, interest expense associated with convertible debt instruments under the if-converted method.

Because of these limitations, you should consider Adjusted Diluted Earnings or Loss per Share alongside other financial performance measures.

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A reconciliation of the numerator and denominator for diluted earnings or loss per share, the most directly comparable GAAP financial measure, to the numerator and denominator for Adjusted Diluted Earnings or Loss per Share in order to calculate Adjusted Diluted Earnings or Loss per Share, is as follows:

Year Ended December 31,

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(in millions, except per share data)

Numerator for diluted (loss) earnings per share - net (loss) income available to common stockholders after the effect of dilutive securities $ (1,331) $ (131) $ 185

Adjustments to net (loss) income

Numerator for basic and diluted loss per share - net loss $ (738) $ (1,331) $ (131)

Adjustments to net loss

Interest expense associated with convertible debt instruments — — 20

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$ (127) $ (818) $ 276

Denominator for diluted (loss) earnings per share - weighted-average number of shares of common stock outstanding after the effect of dilutive securities 106 104 99

Denominator for basic and diluted loss per share - weighted-average number of shares of common stock outstanding after the effect of dilutive securities 114 106 104

Adjustments to effect of dilutive securities:

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Denominator for Adjusted Diluted (Loss) Earnings per Share - Adjusted weighted-average number of shares of common stock outstanding after the effect of dilutive securities

Diluted (Loss) Earnings per Share

$ (12.54) $ (1.26) $ 1.86

Diluted Loss per Share $ (6.47) $ (12.54) $ (1.26)

Adjusted Diluted (Loss) Earnings per Share $ (1.13) $ (7.71) $ 2.32

$ (7.71) $ 2.32 $ 5.04

Critical Accounting Policies and Estimates

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Our actual results may differ from these estimates under different assumptions and conditions.

See Note 1, Summary of Significant Accounting Policies, in the notes to the consolidated financial statements included in Part II, Item 8, Financial Statements and Supplementary Data , of this Annual Report on Form 10-K for information about these critical accounting policies, as well as a description of our other significant accounting policies.

See Note 1, Summary of Significant Accounting Policies, in the notes to the consolidated financial statements included in Part II, Item 8, Financial Statements and Supplementary Data , in this Annual Report on Form 10-K for information about these critical accounting policies, as well as a description of our other significant accounting policies.

Revenue Recognition

We generate net revenue primarily through product sales on our family of sites.

We recognize revenue using the gross method for product sales generated through our family of sites only when we have concluded that Wayfair controls the product before it is transferred to the customer.

Wayfair controls products when it is the entity

responsible for fulfilling the promise to the customer and takes responsibility for the acceptability of the goods, assumes inventory risk from shipment through the delivery date, has discretion in establishing prices and selects the suppliers of products sold.

Wayfair controls products when it is the entity responsible for fulfilling the promise to the customer and takes responsibility for the acceptability of the goods, assumes inventory risk from shipment through the delivery date, has discretion in establishing prices and selects the suppliers of products sold.

We recognize net revenue when the product has been delivered to the customer.

We ship a large volume of packages through multiple carriers.

When delivery dates are not available, we estimate delivery dates based on historical data.

N et revenue from product sales includes shipping costs charged to the customer and is recorded net of taxes collected from customers, which are remitted to governmental authorities.

Cash discounts and rebates earned by customers at the time of purchase are deducted from gross revenue in determining net revenue.

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Allowances for sales returns are estimated and recorded based on prior returns history, recent trends and projections for returns on sales in the current period.

We recognize revenue from gift cards and site credits in the period they are redeemed.

Unredeemed gift cards and site credits not subject to requirements to remit balances to governmental agencies are recognized as net revenue based on historical redemption patterns, which are substantially within twenty-four months of issuance.

We maintain a membership rewards program for purchases made with our private label Wayfair credit card and co-branded Mastercard (“Credit Card Program”).

Enrolled customers earn points that may be redeemed for future purchases.

We defer a portion of our revenue associated with rewards that are ultimately expected to be redeemed.

As part of the Credit Card Program, in exchange for providing intellectual property, we receive payments based on spending activity and the profitability of the card.

Revenue based on the spending activity of the underlying accounts is recognized as the respective card purchases occur and profit share is recognized based on the performance of the underlying portfolio.

We generally lease office and warehouse facilities under non-cancelable agreements.

Upon each agreement's commencement date, we determine if the agreement is part of an arrangement that is or that contains a lease, determine the lease classification and recognize ROU assets and lease liabilities for all leases with the exception of leases with terms of 12 months or less.

We have arrangements with lease and non-lease components, and we account for lease and non-lease components as a single lease component for our corporate headquarters and field offices.

For all other lease arrangements, we account for lease and non-lease components separately.

As of December 31, 2022 and 2021 we did not have material finance lease arrangements.

Lease liabilities and their corresponding ROU assets are recorded based on the present value of lease payments over the expected lease term at the lease commencement date.

These estimates are based on historical rates of customer returns and allowances as well as the specific identification of outstanding returns that have not yet been received by us.

The actual amount of customer returns and allowances are inherently uncertain and may differ from our estimates.

If we determine that actual or expected returns or allowances are significantly higher or lower than the reserves established, we record a reduction or increase, as appropriate to net revenue in the period in which we make such a determination.

Lease liabilities and their corresponding right-of-use (“ROU”) assets are recorded based on the present value of lease payments over the expected lease term at the lease commencement date.

As most of our leases do not provide an implicit rate, we use an estimated incremental borrowing rate (“IBR”) based on the information available at the commencement date to determine the present value of future payments.

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The IBR is determined at lease commencement and is subsequently reassessed upon a modification to the lease arrangement.

The ROU asset also includes any lease payments made prior to the commencement date and excludes lease incentives and initial direct costs incurred.

Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term.

Our lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option.

For additional information regarding our lease arrangements, see Note 5, Leases , in the notes to the consolidated financial statements included in Part II, Item 8, Financial Statements and Supplementary Data , of this Annual Report on Form 10-K.

Recent Accounting Pronouncements

For information about recent accounting pronouncements, see Note 1, Summary of Significant Accounting Policies , in the notes to the consolidated financial statements included in Part II, Item 8, Financial Statements and Supplementary Data , of this Annual Report on Form 10-K.

We have considered recently issued accounting pronouncements and do not believe that any are applicable or expected to have a material impact on our consolidated financial statements.

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-K

Item 7. Management’s Discussion and Analysis