What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-11-01 compared with 2024-08-01 · 118 added, 122 removed, 338 unchanged (42% of the section changed)

10 unchanged sentences

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

• 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;

• adverse macroeconomic conditions, including 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;

9 unchanged sentences

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

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.

All dollar and percentage comparisons made herein refer to the three and nine months ended September 30, 2024, compared with the three and nine months ended September 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 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.

During the three months ended September 30, 2024, net revenue decreased by 2.0% compared to the same period in 2023.

As of September 30, 2024, we had 22 million active customers and during the three months ended September 30, 2024, 79.9% 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.

1 unchanged sentence

Global Considerations

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.

We are continuing to closely monitor macroeconomic impacts, including, but not limited to, geopolitical events and fluctuating interest rates and inflationary pressures 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.

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.

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.

While it is difficult to quantify and predict all of the impacts these global economic events, including fluctuating interest rates and inflationary pressures, 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.

We will continue to monitor economic conditions as we work to manage our business to meet the evolving needs of our customers, employees, suppliers, partners, stockholders and communities.

7 unchanged sentences

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

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

Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

32 unchanged sentences

Results of Consolidated Operations

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.

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

During the three months ended September 30, 2024, net revenue decreased by $60 million, or 2.0%, 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,

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

net revenue decreased by 2.3%.

International net revenue and International Net Revenue Constant Currency Growth remained constant year over year (see “Non-GAAP Financial Measures” below for more information regarding our use of Net Revenue Constant Currency Growth).

Three Months Ended September 30,

2024 2023 % Change

6 unchanged sentences

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 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 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,

During the three months ended September 30, 2024, cost of goods sold decreased by $16 million, or 0.8%, compared to the same period in 2023.

The decrease in cost of goods sold is driven by a combination of operational cost savings initiatives and 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 increased to 69.7% for the three months ended September 30, 2024 compared to 68.9% in the same period in 2023, primarily due to mix shifts.

Three Months Ended September 30,

2024 2023 % Change

5 unchanged sentences

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,

Three Months Ended September 30,

2024 2023 % Change

15 unchanged sentences

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

Three Months Ended June 30,

Three Months Ended September 30,

(in millions)

1 unchanged sentence

Selling, operations, technology, general and administrative $ 92 $ 137

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.

During the three months ended September 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 $48 million, or 33.3%, compared to the same period in 2023, primarily 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 June 30,

Three Months Ended September 30,

Customer service and merchant fees 3.7 % 4.4 %

1 unchanged sentence

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.

During the three months ended September 30, 2024, excluding the impact of equity-based compensation, our expenses for customer service and merchant fees decreased by $21 million, or 16.3%, 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.

As a percentage of net revenue, total customer service and merchant fees decreased to 3.9% for the three months ended September 30, 2024 compared to 4.6% in the same period in 2023 primarily due to decreased compensation costs.

During the three months ended September 30, 2024, our advertising expenses increased by $17 million, or 5.0%, compared to the same period in 2023.

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

As a percentage of net revenue, advertising expenses increased to 12.3% for the three months ended September 30, 2024 compared to 11.4% in the same period in 2023 due to changes in our advertising channel mix as we seek to maximize returns on advertising spend within our efficiency parameters.

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.

During the three months ended September 30, 2024, excluding the impact of equity-based compensation and related taxes, our expenses for selling, operations, technology, general and administrative activities decreased by $71 million, or 15.5%, 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.

As a percentage of net revenue, total selling, operations, technology, general and administrative expenses decreased to 16.6% for the three months ended September 30, 2024, compared to 20.2% 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.

During the three months ended September 30, 2024, impairment and other related charges increased by $1 million or 100.0%, compared to the same period in 2023.

During the three months ended September 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,

During the three months ended September 30, 2024, interest expense, net remained constant at $5 million, compared to the same period in 2023.

Three Months Ended September 30,

2024 2023 % Change

1 unchanged sentence

Interest expense, net $ (5) $ (5) — %

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,

Other income (expense), net

During the three months ended September 30, 2024, other income (expense), net increased by $12 million or 300.0%, compared to the same period in 2023, primarily driven by 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.

Three Months Ended September 30,

2024 2023 % Change

(in millions)

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

Other income (expense), net $ 8 $ (4) (300.0) %

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.

During the three months ended September 30, 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.

and certain foreign jurisdictions and U.S.

state income taxes.

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,

Three Months Ended September 30,

2024 2023 % Change

1 unchanged sentence

Provision for income taxes, net $ 3 $ 2 50.0 %

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.

Comparison of the nine months ended September 30, 2024 and 2023

During the nine months ended September 30, 2024, net revenue decreased by $159 million, or 1.8%, 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.

During the nine months ended September 30, 2024, our U.S.

net revenue decreased by 1.8% and International net revenue decreased by 1.8% 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,

During the nine months ended September 30, 2024, International Net Revenue Constant Currency Growth was (1.9)% (see “Non-GAAP Financial Measures” below for more information regarding our use of Net Revenue Constant Currency Growth).

Nine Months Ended September 30,

2024 2023 % Change

6 unchanged sentences

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,

During the nine months ended September 30, 2024, cost of goods sold decreased by $69 million, or 1.1%, compared to the same period in 2023.

As a percentage of net revenue, cost of goods sold increased to 69.8% for the nine months ended September 30, 2024, compared to 69.4% in the same period in 2023 due to mix shifts and lower net revenue.

Nine Months Ended September 30,

2024 2023 % Change

5 unchanged sentences

Six Months Ended June 30,

Nine Months Ended September 30,

2024 2023 % Change

17 unchanged sentences

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

Six Months Ended June 30,

Nine Months Ended September 30,

(in millions)

1 unchanged sentence

Selling, operations, technology, general and administrative $ 300 $ 434

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.

During the nine months ended September 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 $142 million, or 31.1%, 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:

Six Months Ended June 30,

Nine Months Ended September 30,

Customer service and merchant fees 3.8 % 4.5 %

1 unchanged sentence

Customer Service and Merchant Fees

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.

During the nine months ended September 30, 2024, excluding the impact of equity-based compensation, our expenses for customer service and merchant fees decreased by $61 million, or 15.4%, compared to the same period in 2023.

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

As a percentage of net revenue, total customer service and merchant fees decreased to 4.0% for the nine months ended September 30, 2024, compared to 4.7% in the same period in 2023 due to decreased compensation costs.

During the nine months ended September 30, 2024, our advertising expenses increased by $27 million, or 2.7%, compared to the same period in 2023.

The increase reflects our response to changing market conditions and renewed investment opportunities, 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 nine months ended September 30, 2024 compared to 11.4% in the same period in 2023 due to changes in our advertising channel mix as we seek to maximize returns on advertising spend within our efficiency parameters.

Selling, operations, technology, general and administrative

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.

During the nine months ended September 30, 2024, excluding the impact of equity-based compensation and related taxes, our expenses for selling, operations, technology, general and administrative activities decreased by $213 million, or 15.0% 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.

As a percentage of net revenue, total selling, operations, technology, general and administrative expenses decreased to 17.2% for the nine months ended September 30, 2024, compared to 20.8% in the same period in 2023, primarily due to decreased compensation costs.

Impairment and other related net charges

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

During the nine months ended September 30, 2024, impairment and other related charges decreased by $12 million, or 85.7%.

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 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.

During the nine months ended September 30, 2024, we recorded charges of $2 million related to changes in sublease market conditions for U.S.

office locations.

During the nine months ended September 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

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

During the nine months ended September 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 0.9% from 0.7% in the same period in 2023.

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.

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

Six Months Ended June 30,

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

Nine Months Ended September 30,

2024 2023 % Change

1 unchanged sentence

Interest expense, net $ (15) $ (15) — %

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.

Six Months Ended June 30,

Other income (expense), net

During the nine months ended September 30, 2024, other income (expense), net increased by $5 million, or 250.0%, compared to the same period in 2023, primarily driven by 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.

Nine Months Ended September 30,

2024 2023 % Change

(in millions)

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

Other income (expense), net $ 3 $ (2) (250.0) %

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,

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

During the nine months ended September 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.

Nine Months Ended September 30,

2024 2023 % Change

2 unchanged sentences

Provision for income taxes, net

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.

During the nine months ended September 30, 2024, our provision for income taxes, net increased by $2 million, or 33.3%, 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.

1 unchanged sentence

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,

Nine Months Ended September 30,

2024 2023 % Change

3 unchanged sentences

Sources of Liquidity

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

As of September 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 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.

As of September 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 $72 million as of September 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:

June 30, December 31,

September 30, December 31,

(in millions)

9 unchanged sentences

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.

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.

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

As a consequence, we may not be able to secure additional financing to meet our operating requirements on acceptable terms, or at all.

1 unchanged sentence

We will continue to monitor our liquidity during this time of historic disruption and volatility in the global capital markets.

Credit Agreement and Convertible Debt

As of June 30, 2024, we had $3.2 billion principal amount of indebtedness outstanding.

Credit Agreement and Debt Arrangements

As of September 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 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 June 30, 2024, there were no conversions of the Notes.

On October 8, 2024, we issued $800 million aggregate principal amount of 7.250% senior secured notes due 2029.

Interest on the notes is payable semi-annually, in arrears, on April 15 and October 15 of each year, commencing on April 15, 2025, until their maturity date of October 31, 2029.

We intend to use the net proceeds from the senior secured notes offering, together with cash on hand, for the repayment, at or prior to maturity, of a portion of the Notes and general corporate purposes.

The conditional conversion features of the 2025 Notes, 2026 Notes, 2027 Notes and 2028 Notes were not triggered during the calendar quarter ended September 30, 2024, therefore, the 2025 Notes, 2026 Notes, 2027 Notes and 2028 Notes are not convertible during the calendar quarter ended December 31, 2024 pursuant to the applicable last reported sales price conditions.

As of August 1, 2024, the 2024 Notes were freely convertible and the holders of the 2024 Notes could have converted all or a portion of their 2024 Notes at any time prior to the close of business on the second scheduled trading day immediately preceding the maturity date;

however, no holders converted their 2024 Notes during this time period.

On November 1, 2024, the 2024 Notes matured and Wayfair paid in cash the remaining outstanding principal of $117 million to the holders of the 2024 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.

3 unchanged sentences

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 governing the Revolver) of 4.0 to 1.0, subject to a 0.5 step-up following certain permitted acquisitions.

following certain permitted acquisitions.

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.

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

Stock Repurchase Program

5 unchanged sentences

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

As of September 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

Six Months Ended June 30,

Nine Months Ended September 30,

(in millions)

1 unchanged sentence

Net cash provided by operating activities $ 155 $ 191

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

Net cash used in investing activities $ (178) $ (30)

Net cash provided by financing activities $ 3 $ 77

2 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 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.

Cash flows provided by operating activities decreased by $36 million during the nine months ended September 30, 2024, compared to the same period in 2023, primarily due to a decrease of $167 million for cash changes in operating assets and liabilities partially offset by an increase in net loss adjusted for non-cash items of $131 million.

Investing Activities

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.

Cash flows used in investing activities increased by $148 million during the nine months ended September 30, 2024, compared to the same period in 2023, primarily due to decreases in sales and maturities of short- and long-term investments of $196 million and increases in purchases of short- and long-term investments of $33 million, partially offset by decreases in purchases of property and equipment and site and software development costs of $81 million.

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

Cash flows provided by financing activities decreased by $74 million during the nine months ended September 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 nine months ended September 30, 2023.

Off-Balance Sheet Arrangements

2 unchanged sentences

Contractual Obligations

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 .

During the nine months ended September 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

20 unchanged sentences

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

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

Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

5 unchanged sentences

Interest expense, net 5 5 15 15

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

Other (income) expense, net (8) 4 (3) 2

Provision for income taxes, net 3 2 8 6

2 unchanged sentences

Gain on debt extinguishment (3)

— (100) — (100)

Adjusted EBITDA $ 119 $ 100 $ 357 $ 214

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.

During the three and nine months ended September 30, 2024, we recorded charges of $1 million and $2 million, respectively, related to changes in sublease market conditions for U.S.

office locations.

During the nine months ended September 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 June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

11 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 June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

1 unchanged sentence

Numerator for basic and diluted loss per share - net loss

$ (74) $ (163) $ (364) $ (564)

Adjustments to net loss

Interest expense associated with convertible debt instruments 10 — — —

Equity-based compensation and related taxes 98 146 323 464

8 unchanged sentences

Restricted stock units — — 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 123 116 123 113

20 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