What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2024-08-01 compared with 2024-05-02 · 203 added, 93 removed, 257 unchanged (54% of the section changed)

1 unchanged sentence

Forward-Looking Statements

This Quarterly Report on Form 10-Q 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 Securities Exchange Act of 1934, as amended (the “Exchange Act”).

All statements other than statements of historical fact contained in this Quarterly Report on Form 10-Q, 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, the financial impact and expected savings of our recent reduction in workforce, 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, our new financial accounting system for financial reporting, including our transition to such system, and the impact of

such new financial accounting system on our financial reporting, including internal control over our financial reporting, and the impact of macroeconomic events, including interest rates and rising inflation, and our response to such events, are forward-looking statements.

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

All statements other than statements of historical fact contained in this Quarterly Report on Form 10-Q, 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, the financial impact and expected savings of our January 2024 reduction in workforce, 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 interest rates and 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.

4 unchanged sentences

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

Table o f Contents

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

• adverse macroeconomic conditions, including higher interest rates, inflation, slower growth or the potential for recession, disruptions in the global supply chain and other conditions affecting the retail environment for products we sell, and other matters that influence consumer spending and preferences;

• adverse macroeconomic conditions, including rising and fluctuating interest rates, inflation, slower growth or the potential for recession, disruptions in the global supply chain and other conditions affecting the retail environment for products we sell, and other matters that influence consumer spending and preferences, as well as our ability to plan for and respond to the impact of these conditions;

• our ability to manage our growth and the impacts of our internal restructuring and workforce reduction;

5 unchanged sentences

• disruptions, capacity constraints or inefficiencies in our information systems network, or any potential cybersecurity incident;

• geopolitical events, natural disasters, public health emergencies, civil disturbances and terrorist attacks;

• geopolitical events, including the 2024 United States (“U.S.”) presidential election, natural disasters, public health emergencies, 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.

1 unchanged sentence

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

All dollar and percentage comparisons made herein refer to the three months ended March 31, 2024, compared with the three months ended March 31, 2023, unless otherwise noted.

All dollar and percentage comparisons made herein refer to the three and six months ended June 30, 2024, compared with the three and six months ended June 30, 2023, unless otherwise noted.

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

4 unchanged sentences

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.

During the three months ended March 31, 2024, net revenue decreased by 1.6% compared to the same period in 2023.

As of March 31, 2024, we had 22 million active customers and during the three months ended March 31, 2024, 80.5% of orders came from repeat buyers.

The lower sales were a function of normalization in average order value following a period of inflation, in combination with a decrease in order volume due to challenges in the category.

During the three months ended June 30, 2024, net revenue decreased by 1.7% compared to the same period in 2023.

As of June 30, 2024, we had 22 million active customers and during the three months ended June 30, 2024, 81.7% of orders came from repeat buyers.

The lower sales were due to lower order volume, which was driven by challenges in the category, compared to the same period in 2023.

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.

3 unchanged sentences

As our customers react to these global economic conditions, we may take additional precautionary measures to limit or delay expenditures and preserve capital and liquidity.

Table o f Contents

While it is difficult to quantify and predict all of the impacts these global economic events, including rising and fluctuating inflation and interest rates, will have on our business and to predict consumer spending in the near term, we believe the long-term opportunity that we see for shopping for the home online remains unchanged.

8 unchanged sentences

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

Three Months Ended March 31,

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

2024 2023 2024 2023

(in millions, except LTM net revenue per active customer, average order value and per share data)

7 unchanged sentences

Diluted $ (0.34) $ (0.41) $ (2.39) $ (3.60)

Net cash used in operating activities $ (139) $ (147)

Net cash provided by operating activities $ 245 $ 217 $ 106 $ 70

Key Operating Metrics:

1 unchanged sentence

LTM net revenue per active customer (2)

$ 540 $ 545 $ 540 $ 545

Orders delivered (3)

Average order value (4)

$ 313 $ 307 $ 299 $ 297

Non-GAAP Financial Measures:

1 unchanged sentence

Free Cash Flow $ 183 $ 128 $ (10) $ (106)

Adjusted Diluted Loss per Share $ (0.32) $ (1.13)

Adjusted Diluted Earnings (Loss) per Share $ 0.47 $ 0.21 $ 0.16 $ (0.90)

(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.

1 unchanged sentence

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

Table o f Contents

(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.

7 unchanged sentences

Results of Consolidated Operations

Comparison of the three months ended March 31, 2024 and 2023

During the three months ended March 31, 2024, net revenue decreased by $45 million, or 1.6%, compared to the same period in 2023, which reflects recent macroeconomic pressures felt by consumers.

The decrease in net revenue was due to lower average order value, which was driven by normalization of inflationary pressures in the supply chain and partially due to lower order volume, which was driven by challenges in the category, compared to the same period in 2023.

During the three months ended March 31, 2024, our United States (“U.S.”) net revenue decreased by 1.0% and International net revenue decreased by 5.8% compared to the same period in 2023.

During the three months ended March 31, 2024, International Net Revenue Constant Currency Growth was (7.5)% (see “Non-GAAP Financial Measures” below for more information regarding our use of Net Revenue Constant Currency Growth).

Three Months Ended March 31,

Comparison of the three months ended June 30, 2024 and 2023

During the three months ended June 30, 2024, net revenue decreased by $54 million, or 1.7%, compared to the same period in 2023, which reflects continued macroeconomic pressures felt by consumers.

The decrease in net revenue is due to lower order volume, which was driven by challenges in the category, compared to the same period in 2023.

During the three months ended June 30, 2024, our U.S.

net revenue decreased by 2.0% and International net revenue increased by 0.3% compared to the same period in 2023.

During the three months ended June 30, 2024, International Net Revenue Constant Currency Growth was 1.3% (see “Non-GAAP Financial Measures” below for more information regarding our use of Net Revenue Constant Currency Growth).

Three Months Ended June 30,

2024 2023 % Change

3 unchanged sentences

Net revenue $ 3,117 $ 3,171 (1.7) %

For more information on our segments, see Note 10 Segment and Geographic Information , in the notes to the condensed consolidated financial statements, included in Part I, Item 1, Financial Statements , in this Quarterly Report on Form 10-Q.

For more information on our segments, see Note 10, Segment and Geographic Information , included in Part I, Item 1, Financial Statements , in this Quarterly Report on Form 10-Q.

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, including associated applicable customs duties and fees earned for supplier services rendered.

During the three months ended March 31, 2024, cost of goods sold decreased by $43 million, or 2.2%, compared to the same period in 2023.

During the three months ended June 30, 2024, cost of goods sold decreased by $10 million, or 0.5%, compared to the same period in 2023.

The decrease in cost of goods sold is primarily driven by operational cost savings initiatives and partially due to lower order volume, which was driven by challenges in the category compared to the same period in 2023.

As a percentage of net revenue, cost of goods sold decreased to 70.0% for the three months ended March 31, 2024 compared to 70.4% in the same period in 2023 due to mix shifts, operational efficiencies and decreased logistics costs.

Three Months Ended March 31,

As a percentage of net revenue, cost of goods sold increased to 69.8% for the three months ended June 30, 2024 compared to 68.9% in the same period in 2023 due to mix shifts and lower net revenue.

Three Months Ended June 30,

2024 2023 % Change

2 unchanged sentences

As a percentage of net revenue 69.8 % 68.9 %

Table o f Contents

Operating expenses

Operating expenses consist of customer service and merchant fees, advertising, selling, operations, technology, general and administrative expenses, impairment and other related net charges and restructuring charges.

We disclose separately the equity-based compensation and related taxes that are included in customer service and merchant fees and selling, operations, technology and general and administrative expenses.

Three Months Ended June 30,

2024 2023 % Change

(in millions)

Customer service and merchant fees (1)

$ 121 $ 144 (16.0) %

Advertising 365 352 3.7 %

Selling, operations, technology, general and administrative (1)

489 630 (22.4) %

Impairment and other related net charges 1 1 — %

Total operating expenses $ 976 $ 1,127 (13.4) %

As a percentage of net revenue:

Customer service and merchant fees (1)

Advertising 11.7 % 11.1 %

Selling, operations, technology, general and administrative (1)

15.7 % 19.9 %

Impairment and other related net charges — % — %

31.3 % 35.5 %

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

Three Months Ended June 30,

(in millions)

Customer service and merchant fees $ 5 $ 8

Selling, operations, technology, general and administrative $ 90 $ 157

During the three months ended June 30, 2024, our equity-based compensation and related taxes included in customer service and merchant fees and selling, operations, technology, general and administrative decreased by $70 million, or 42.4%, compared to the same period in 2023, primarily driven by a decrease in units granted in 2024 compared to the same period in 2023.

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

Three Months Ended June 30,

Customer service and merchant fees 3.7 % 4.3 %

Selling, operations, technology, general and administrative 12.8 % 14.9 %

Customer Service and Merchant Fees

During the three months ended June 30, 2024, excluding the impact of equity-based compensation, our expenses for customer service and merchant fees decreased by $20 million, or 14.7%, compared to the same period in 2023.

The decrease in customer service and merchant fees is primarily due to decreased compensation costs in 2024 compared to the same period in 2023.

As a percentage of net revenue, total customer service and merchant fees decreased to 3.9% for the three months ended June 30, 2024 compared to 4.5% in the same period in 2023 primarily due to decreased compensation costs.

During the three months ended June 30, 2024, our advertising expenses increased by $13 million, or 3.7%, compared to the same period in 2023.

The increase is due to advertising holdbacks in the second quarter of 2023 as well as efforts to maintain our efficiency targets.

As a percentage of net revenue, advertising expenses increased to 11.7% for the three months ended June 30, 2024 compared to 11.1% in the same period in 2023 due, in part, to changes in advertising channel mix and our efforts to drive efficiency across our channel portfolio.

Selling, operations, technology, general and administrative

During the three months ended June 30, 2024, excluding the impact of equity-based compensation and related taxes, our expenses for selling, operations, technology, general and administrative activities decreased by $74 million, or 15.6%, compared to the same period in 2023.

The decrease is primarily due to decreased compensation costs.

As a percentage of net revenue, total selling, operations, technology, general and administrative expenses decreased to 15.7% for the three months ended June 30, 2024, compared to 19.9% in the same period in 2023, primarily due to decreased compensation costs.

Impairment and other related net charges

During the three months ended June 30, 2024, impairment and other related net charges remained constant at $1 million compared to the same period in 2023.

During the three months ended June 30, 2024, we recorded charges of $1 million related to changes in sublease market conditions for an identified U.S.

office location.

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

Interest expense, net

During the three months ended June 30, 2024, interest expense, net decreased by $1 million, or 20.0%, compared to the same period in 2023.

Three Months Ended June 30,

2024 2023 % Change

(in millions)

Interest expense, net $ (4) $ (5) (20.0) %

Other (expense) income, net

During the three months ended June 30, 2024, other (expense) income, net increased by $4 million or 133.3%, compared to the same period in 2023.

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

Three Months Ended June 30,

2024 2023 % Change

(in millions)

Other (expense) income, net $ (1) $ 3 (133.3) %

Gain on debt extinguishment

During the three months ended June 30, 2024, gain on debt extinguishment decreased by $100 million or 100.0%, compared to the same period in 2023.

During the three months ended June 30, 2023, 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.

Three Months Ended June 30,

2024 2023 % Change

(in millions)

Gain on debt extinguishment $ — $ 100 (100.0) %

Provision for income taxes, net

During the three months ended June 30, 2024, our provision for income taxes, net remained constant at $2 million compared to the same period in 2023.

Refer to Note 8, Income Taxes , included in Part I, Item 1, Financial Statements, in this Quarterly Report on Form 10-Q for additional information.

Three Months Ended June 30,

2024 2023 % Change

(in millions)

Provision for income taxes, net $ 2 $ 2 — %

Comparison of the six months ended June 30, 2024 and 2023

During the six months ended June 30, 2024, net revenue decreased by $99 million, or 1.7%, compared to the same period in 2023, which reflects continued macroeconomic pressures felt by consumers.

The decrease in net revenue is due to lower order volume, which was driven by challenges in the category, compared to the same period in 2023.

During the six months ended June 30, 2024, our U.S.

net revenue decreased by 1.5% and International net revenue decreased by 2.7% compared to the same period in 2023.

During the six months ended June 30, 2024, International Net Revenue Constant Currency Growth was (3.0)% (see “Non-GAAP Financial Measures” below for more information regarding our use of Net Revenue Constant Currency Growth).

Six Months Ended June 30,

2024 2023 % Change

(in millions)

net revenue $ 5,121 $ 5,200 (1.5) %

International net revenue 725 745 (2.7) %

Net revenue $ 5,846 $ 5,945 (1.7) %

For more information on our segments, see Note 10, Segment and Geographic Information , included in Part I, Item 1, Financial Statements , in this Quarterly Report on Form 10-Q.

Cost of goods sold

During the six months ended June 30, 2024, cost of goods sold decreased by $53 million, or 1.3%, compared to the same period in 2023.

As a percentage of net revenue, cost of goods sold increased to 69.9% for the six months ended June 30, 2024, compared to 69.6% in the same period in 2023 due to mix shifts and lower net revenue.

Six Months Ended June 30,

2024 2023 % Change

(in millions)

Cost of goods sold $ 4,086 $ 4,139 (1.3) %

As a percentage of net revenue 69.9 % 69.6 %

Operating expenses

Operating expenses are comprised of customer service and merchant fees, advertising, selling, operations, technology, general and administrative expenses, impairment and other related net charges and restructuring charges.

Three Months Ended March 31,

Six Months Ended June 30,

2024 2023 % Change

17 unchanged sentences

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

Three Months Ended March 31,

Six Months Ended June 30,

(in millions)

1 unchanged sentence

Selling, operations, technology, general and administrative $ 208 $ 297

During the three months ended March 31, 2024, our equity-based compensation and related taxes included in customer service and merchant fees and selling, operations, technology, general and administrative decreased by $24 million, or 16.2% compared to the same period in 2023, driven by a decrease in vested restricted stock units in 2024 compared to the same period in 2023.

During the six months ended June 30, 2024, our equity-based compensation and related taxes included in customer service and merchant fees and selling, operations, technology, general and administrative decreased by $94 million, or 30.0%, compared to the same period in 2023, driven by a decrease in vested restricted stock units in 2024 compared to the same period in 2023.

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

Three Months Ended March 31,

Six Months Ended June 30,

Customer service and merchant fees 3.9 % 4.5 %

1 unchanged sentence

Customer Service and Merchant Fees

During the three months ended March 31, 2024, excluding the impact of equity-based compensation, our expenses for customer service and merchant fees decreased by $20 million, or 15.3% compared to the same period in 2023.

The decrease in customer service and merchant fees is primarily due to decreased compensation costs during the three months ended March 31, 2024 compared to the same period in 2023.

As a percentage of net revenue, total customer service and merchant fees decreased to 4.3% for the three months ended March 31, 2024 compared to 5.0% in the same period in 2023 due to decreased compensation costs.

Table o f Contents

During the three months ended March 31, 2024, our advertising expenses decreased by $3 million or 0.9% as compared to the same period in 2023.

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 increased to 11.9% for the three months ended March 31, 2024 compared to 11.8% in the same period in 2023 due in part to maintaining efficiencies in our advertising channel mix.

During the six months ended June 30, 2024, excluding the impact of equity-based compensation, our expenses for customer service and merchant fees decreased by $40 million, or 15.0%, compared to the same period in 2023.

The decrease in customer service and merchant fees is primarily due to decreased compensation costs during the six months ended June 30, 2024 compared to the same period in 2023.

As a percentage of net revenue, total customer service and merchant fees decreased to 4.1% for the six months ended June 30, 2024, compared to 4.8% in the same period in 2023 due to decreased compensation costs.

During the six months ended June 30, 2024, our advertising expenses increased by $10 million, or 1.5%, compared to the same period in 2023.

The increase is due to advertising holdbacks in the second quarter of 2023 as well as efforts to maintain our efficiency targets.

As a percentage of net revenue, advertising expenses increased to 11.8% for the six months ended June 30, 2024 compared to 11.4% in the same period in 2023 due in part to maintaining efficiencies in our advertising channel mix.

Selling, operations, technology, general and administrative

During the three months ended March 31, 2024, excluding the impact of equity-based compensation and related taxes, our expenses for selling, operations, technology, general and administrative activities decreased by $68 million, or 14.0% compared to the same period in 2023.

The decrease is primarily due to decreased personnel costs.

As a percentage of net revenue, total selling, operations, technology, general and administrative expenses decreased to 19.6% for the three months ended March 31, 2024 compared to 22.5% in the same period in 2023, primarily due to decreased compensation costs.

During the six months ended June 30, 2024, excluding the impact of equity-based compensation and related taxes, our expenses for selling, operations, technology, general and administrative activities decreased by $142 million, or 14.8% compared to the same period in 2023.

The decrease is primarily due to decreased compensation costs.

As a percentage of net revenue, total selling, operations, technology, general and administrative expenses decreased to 17.5% for the six months ended June 30, 2024, compared to 21.1% in the same period in 2023, primarily due to decreased compensation costs.

Impairment and other related net charges

During the three months ended March 31, 2024, impairment and other related charges decreased by $13 million or 100.0% as compared to the same period in 2023.

During the six months ended June 30, 2024, impairment and other related charges decreased by $13 million, or 92.9%.

compared to the same period in 2023.

As a percentage of net revenue, impairment and other related net charges decreased to 0.0% from 0.2% in the same period in 2023.

During the three months ended March 31, 2023, we 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, 2024, we recorded charges of $1 million related to changes in sublease market conditions for an identified U.S.

office location.

During the six months ended June 30, 2023, we recorded 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.

Restructuring charges

On January 19, 2024, we announced a workforce realignment plan, including a workforce reduction involving approximately 1,650 employees.

As a result, during the three months ended March 31, 2024, restructuring charges increased by $14 million or 21.5% as compared to the same period in 2023.

During the six months ended June 30, 2024, restructuring charges increased by $14 million, or 21.5%, compared to the same period in 2023.

As a percentage of net revenue, restructuring charges increased to 1.4% from 1.1% in the same period in 2023.

During the three months ended March 31, 2024, we incurred $79 million of charges consisting primarily of one-time employee severance and benefit costs associated with the January 2024 workforce reductions.

During the three months ended March 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 six months ended June 30, 2024, we incurred $79 million of charges consisting primarily of one-time employee severance and benefit costs associated with the January 2024 workforce reductions.

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

Interest expense, net

During the three months ended March 31, 2024, our interest expense, net increased by $1 million, or 20.0%, compared to the same period in 2023, primarily driven by the issuance of the 2028 Notes in May 2023.

Three Months Ended March 31,

During the six months ended June 30, 2024, interest expense, net remained constant compared to the same period in 2023.

Six Months Ended June 30,

2024 2023 % Change

1 unchanged sentence

Interest expense, net $ (10) $ (10) — %

Table o f Contents

Other expense, net

During the three months ended March 31, 2024, our other expense, net increased by $3 million compared to the same period in 2023, primarily driven by increases in foreign currency transaction losses.

Other (expense) income, net

During the six months ended June 30, 2024, other (expense) income, net increased by $7 million, or 350.0%, compared to the same period in 2023.

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

Three Months Ended March 31,

Six Months Ended June 30,

2024 2023 % Change

(in millions)

Other expense, net $ (4) $ (1) 300.0 %

Other (expense) income, net $ (5) $ 2 (350.0) %

Gain on debt extinguishment

During the six months ended June 30, 2024, gain on debt extinguishment decreased by $100 million, or 100.0%, compared to the same period in 2023.

During the six months ended June 30, 2023, 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.

Six Months Ended June 30,

2024 2023 % Change

(in millions)

Gain on debt extinguishment $ — $ 100 (100.0) %

Provision for income taxes, net

During the three months ended March 31, 2024, our provision for income taxes, net increased by $1 million or 50.0% compared to the same period in 2023, primarily related to the level and mix of income earned in the U.S.

During the six months ended June 30, 2024, our provision for income taxes, net increased by $1 million, or 25.0%, compared to the same period in 2023, primarily related to the level and mix of income earned in the U.S.

and certain foreign jurisdictions and U.S.

state income taxes.

Refer to Note 8, Income Taxes , in the notes to the condensed consolidated financial statements, included in Part I, Item 1, Financial Statements, in this Quarterly Report on Form 10-Q for additional information.

Three Months Ended March 31,

Refer to Note 8, Income Taxes , included in Part I, Item 1, Financial Statements, in this Quarterly Report on Form 10-Q for additional information.

Six Months Ended June 30,

2024 2023 % Change

3 unchanged sentences

Sources of Liquidity

As of March 31, 2024, our principal source of liquidity was cash and cash equivalents and short-term investments totaling $1.2 billion.

As of June 30, 2024, our principal source of liquidity was cash and cash equivalents and short-term investments totaling $1.3 billion.

Additionally, we have a $600 million senior secured revolving credit facility that matures on March 24, 2026 (the “Revolver”).

As of March 31, 2024, there were no revolving loans outstanding under the Revolver.

We had outstanding letters of credit, primarily as security for certain lease agreements, for $72 million as of March 31, 2024, which reduced the availability of credit under the Revolver.

As of June 30, 2024, there were no revolving loans outstanding under the Revolver.

We had outstanding letters of credit, primarily as security for certain lease agreements, for $69 million as of June 30, 2024, 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:

March 31, December 31,

June 30, December 31,

(in millions)

8 unchanged sentences

The amounts involved may be material.

Table o f Contents

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, in our Annual Report on Form 10-K for the year ended December 31, 2023.

4 unchanged sentences

Credit Agreement and Convertible Debt

As of March 31, 2024, we had $3.2 billion principal amount of indebtedness outstanding.

As of June 30, 2024, 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.

The conditional conversion features of the 2028 Notes were triggered during the calendar quarter ended March 31, 2024, and the 2028 Notes therefore became convertible in the calendar quarter ended June 30, 2024 pursuant to the applicable last reported sales price condition.

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, 2024, therefore, the 2024 Notes, 2025 Notes, 2026 Notes and 2027 Notes are not convertible during the calendar quarter ended June 30, 2024 pursuant to the applicable last reported sales price conditions.

The conditional conversion features of the 2024 Notes, 2025 Notes, 2026 Notes, 2027 Notes and 2028 Notes were not triggered during the calendar quarter ended June 30, 2024, therefore, the 2024 Notes, 2025 Notes, 2026 Notes, 2027 Notes and 2028 Notes are not convertible during the calendar quarter ended September 30, 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 the period ended March 31, 2024, there were no conversions of the Notes.

During the period ended June 30, 2024, 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.

4 unchanged sentences

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 4, Debt and Other Financing , in the notes to the condensed consolidated financial statements, included in Part I, Item 1, Financial Statements , in this Quarterly Report on Form 10-Q and Note 6, Debt and Other Financing , included in Part II, Item 8, Financial Statements and Supplementary Data , in our Annual Report on Form 10-K for the year ended December 31, 2023.

As of March 31, 2024, we were in compliance with all the terms and conditions of our debt agreements.

For information regarding our credit agreement and convertible notes, see Note 4, Debt and Other Financing , included in Part I, Item 1, Financial Statements , in this Quarterly Report on Form 10-Q and Note 6, Debt and Other Financing , included in Part II, Item 8, Financial Statements and Supplementary Data , in our Annual Report on Form 10-K for the year ended December 31, 2023.

As of June 30, 2024, we were in compliance with all the terms and conditions of our debt agreements.

Stock Repurchase Program

3 unchanged sentences

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

Table o f Contents

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 March 31, 2024, we have repurchased 2,354,491 shares of Class A common stock for approximately $612 million under the Repurchase Programs.

As of June 30, 2024, we have repurchased 2,354,491 shares of Class A common stock for approximately $612 million under the Repurchase Programs.

Trends and Historical Cash Flows

Three Months Ended March 31,

Six Months Ended June 30,

(in millions)

Net loss $ (290) $ (401)

Net cash used in operating activities $ (139) $ (147)

Net cash provided by operating activities $ 106 $ 70

Net cash (used in) provided by investing activities $ (127) $ 49

3 unchanged sentences

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

Cash flows used in operating activities decreased by $8 million during the three months ended March 31, 2024 compared to the same period in 2023, primarily due to an increase in net loss adjusted for non-cash items of $70 million, partially offset by a decrease of $62 million for cash provided by changes in operating assets and liabilities.

Cash flows provided by operating activities increased by $36 million during the six months ended June 30, 2024, compared to the same period in 2023, primarily due to an increase in net loss adjusted for non-cash items of $98 million, partially offset by a decrease of $62 million for cash provided by changes in operating assets and liabilities.

Investing Activities

Cash flows used in investing activities increased by $139 million during the three months ended March 31, 2024 compared to the same period in 2023, primarily due to increases in purchases of short- and long-term investments of $36 million and decreases in sales and maturities of short- and long-term investments of $136 million, partially offset by decreases in purchases of property and equipment and site and software development costs of $33 million.

Purchases of property and equipment and site and software development costs (collectively, “Capital Expenditures”) were 2.0% of net revenue for the three months ended March 31, 2024 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.

Cash flows used in investing activities increased by $176 million during the six months ended June 30, 2024, compared to the same period in 2023, primarily due to decreases in sales and maturities of short- and long-term investments of $198 million and increases in purchases of short- and long-term investments of $38 million, partially offset by decreases in purchases of property and equipment and site and software development costs of $60 million.

Purchases of property and equipment and site and software development costs (collectively, “Capital Expenditures”) were 2.0% of net revenue for the six months ended June 30, 2024 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 decreased by $74 million during the six months ended June 30, 2024, compared to the same period in 2023.

The decrease was primarily due to the net impact of debt and other financing transactions that occurred during the six months ended June 30, 2023.

Off-Balance Sheet Arrangements

2 unchanged sentences

Contractual Obligations

During the three months ended March 31, 2024, there have been no material changes to our contractual obligations and estimates as compared to the contractual obligations described in Contractual Obligations included in 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, 2023 .

Table o f Contents

During the six months ended June 30, 2024, there have been no material changes to our contractual obligations and estimates as compared to the contractual obligations described in Contractual Obligations included in 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, 2023 .

Non-GAAP Financial Measures

19 unchanged sentences

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.

Table o f Contents

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

Three Months Ended March 31,

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

2024 2023 2024 2023

(in millions)

4 unchanged sentences

Interest expense, net 4 5 10 10

Other expense, net 4 1

Other expense (income), net 1 (3) 5 (2)

Provision for income taxes, net 2 2 5 4

1 unchanged sentence

Restructuring charges (2)

Gain on debt extinguishment (3)

— (100) — (100)

Adjusted EBITDA $ 163 $ 128 $ 238 $ 114

During the three months ended March 31, 2023, we recorded net 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 and six months ended June 30, 2024, we recorded charges of $1 million related to changes in sublease market conditions for an identified U.S.

office location.

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

Free Cash Flow

8 unchanged sentences

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:

Three Months Ended March 31,

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

2024 2023 2024 2023

(in millions)

Net cash used in operating activities $ (139) $ (147)

Net cash provided by operating activities $ 245 $ 217 $ 106 $ 70

Purchase of property and equipment (23) (37) (36) (71)

1 unchanged sentence

Free Cash Flow $ 183 $ 128 $ (10) $ (106)

Table o f Contents

Adjusted Diluted Earnings or Loss per Share

5 unchanged sentences

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:

Three Months Ended March 31,

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

2024 2023 2024 2023

(in millions, except per share data)

1 unchanged sentence

Adjustments to net loss

Interest expense associated with convertible debt instruments 10 — — —

Equity-based compensation and related taxes 98 167 225 318

2 unchanged sentences

Restructuring charges — — 79 65

Numerator for Adjusted Diluted Loss per Share - Adjusted net loss

Gain on debt extinguishment — (100) — (100)

Numerator for Adjusted Diluted Earnings (Loss) per Share - Adjusted net income (loss)

$ 69 $ 24 $ 20 $ (100)

Denominator for basic and diluted loss per share - weighted-average number of shares of common stock outstanding 122 112 121 111

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

Adjustments to effect of dilutive securities:

Restricted stock units — 1 1 —

Convertible debt instruments 22 — — —

Denominator for Adjusted Diluted Earnings (Loss) per Share - Adjusted weighted-average number of shares of common stock outstanding after the effect of dilutive securities 144 113 122 111

Diluted Loss per Share $ (0.34) $ (0.41) $ (2.39) $ (3.60)

Adjusted Diluted Loss per Share $ (0.32) $ (1.13)

Adjusted Diluted Earnings (Loss) per Share $ 0.47 $ 0.21 $ 0.16 $ (0.90)

Net Revenue Constant Currency Growth

4 unchanged sentences

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.

Table o f Contents

Critical Accounting Policies and Estimates

6 unchanged sentences

Recent Accounting Pronouncements

The information called for by this section is incorporated herein by reference to Note 1, Summary of Significant Accounting Policies , in the notes to the condensed consolidated financial statements, included in Part I, Item 1, Financial Statements, in this Quarterly Report on Form 10-Q.

The information called for by this section is incorporated herein by reference to Note 1, Summary of Significant Accounting Policies , included in Part I, Item 1, Financial Statements, in this Quarterly Report on Form 10-Q.

Quantitative and Qualitative Disclosures About Market Risk

2 unchanged sentences

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 2. Management’s Discussion and Analysis