What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2025-02-20 compared with 2024-02-22 · 213 added, 192 removed, 817 unchanged (33% of the section changed)

8 unchanged sentences

Notes to Consolidated Financial Statements

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Report of Independent Registered Public Accounting Firm

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The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

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Completeness of Sales Return Reserves

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As described in Note 1 and Note 2 to the consolidated financial statements, the Company had sales return reserves of $49 million, which were recorded as a reduction to net revenue for the year ended December 31, 2024.

Auditing the Company's measurement of sales return reserves on product revenue under its contracts with customers was especially challenging because the calculation involves subjective management assumptions about products delivered as of the balance sheet date that could be subject to return in future periods under the Company's returns policy.

Auditing the Company's measurement of sales return reserves on product revenue under its contracts with customers was especially challenging because the calculation involves subjective management assumptions about the quantity of products delivered as of the balance sheet date that are estimated to be returned in future periods under the Company's returns policy.

Management bases the sales returns estimate on prior returns history, recent trends, and projections for returns on sales in the current period.

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We obtained an understanding, evaluated the design and tested the operating effectiveness of internal controls over the Company's sales return reserve process.

For example, we tested controls over management's assessment of the assumptions about expected returns as of the balance sheet date.

For example, we tested controls over management's assessment of the assumptions about expected returns related to products sold as of the balance sheet date.

To test the Company’s reserves for returns on product revenue, our audit procedures included, among others, testing the accuracy and completeness of the underlying data used in the calculations and evaluating the significant assumptions used by management to estimate its reserves.

To test management’s significant assumptions, we performed procedures which included (1) agreeing revenues used in the analysis to the Company’s general ledger, (2) examining sales return levels for the 12 months before year end and the period subsequent to year end for unusual items or trends not consistent with the Company’s historical analysis of product returns, and (3) testing the historical accuracy of the Company’s estimates of returns on product revenue recorded in prior periods by comparing the reserve to returns actually processed.

To test management’s significant assumptions, we performed procedures which included (1) agreeing revenues used in the analysis to the Company’s general ledger, (2) examining sales return levels for the 12 months before year end and the period subsequent to year end for trends not consistent with the Company’s historical analysis of product returns, and (3) testing the historical accuracy of the Company’s estimates of returns on product revenue recorded in prior periods by comparing the reserve to returns actually processed.

We also compared the Company’s projections of future sales returns as of the balance sheet date with actual returns made subsequent to year end.

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February 20, 2025

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CONSOLIDATED BALANCE SHEETS

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10,000,000 shares authorized and none issued at December 31, 2024 and December 31, 2023

Class A common stock, par value $ 0.001 per share, 500,000,000 shares authorized, 92,457,562 and 82,903,862 shares issued and outstanding at December 31, 2023 and December 31, 2022

Class B common stock, par value $ 0.001 per share, 164,000,000 shares authorized, 25,691,295 and 25,691,397 shares issued and outstanding at December 31, 2023 and December 31, 2022

Class A common stock, par value $ 0.001 per share, 500,000,000 shares authorized, 100,762,581 and 92,457,562 shares issued and outstanding at December 31, 2024 and December 31, 2023, respectively

Class B common stock, par value $ 0.001 per share, 164,000,000 shares authorized, 24,658,295 and 25,691,295 shares issued and outstanding at December 31, 2024 and December 31, 2023, respectively

Additional paid-in capital

Accumulated deficit ( 4,510 ) ( 4,018 )

Accumulated other comprehensive loss ( 5 ) ( 7 )

Accumulated other comprehensive income (loss) 4 ( 5 )

Total stockholders' deficit ( 2,755 ) ( 2,707 )

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See notes to consolidated financial statements.

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CONSOLIDATED STATEMENTS OF OPERATIONS

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Interest expense, net ( 29 ) ( 17 ) ( 27 )

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

Other (expense) income, net ( 21 ) 1 ( 4 )

Gain on debt extinguishment 29 100 96

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See notes to consolidated financial statements

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CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

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Net loss $ ( 492 ) $ ( 738 ) $ ( 1,331 )

Other comprehensive income (loss):

Other comprehensive income:

Foreign currency translation adjustments 9 1 1

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See notes to consolidated financial statements.

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CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT

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Deficit Accumulated

Comprehensive

Comprehensive (Loss) Income Total

Stockholders' Deficit

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Net loss — — — ( 1,331 ) — ( 1,331 )

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

Issuance of common stock upon vesting of RSUs 5 — — — — —

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

Shares issued upon conversion of convertible notes 4 — 265 — — 265

Cumulative effect of adopting new convertible debt standard — — ( 699 ) 68 — ( 631 )

Premiums paid for capped calls — — ( 80 ) — — ( 80 )

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

Net loss — — — ( 738 ) — ( 738 )

Other comprehensive income — — — — 2 2

Issuance of common stock upon vesting of RSUs 9 — — — — —

Equity-based compensation — — 666 — — 666

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

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

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Equity-based compensation — — 432 — — 432

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

Unwind of capped calls — — 3 — — 3

Balance at December 31, 2024 125 $ — $ 1,751 $ ( 4,510 ) $ 4 $ ( 2,755 )

See notes to consolidated financial statements.

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CONSOLIDATED STATEMENTS OF CASH FLOWS

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Equity-based compensation expense 395 605 513

Amortization of discount and issuance costs on convertible notes 8 8 7

Amortization of debt discount and issuance costs

Impairment and other related net charges 37 14 39

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Net cash (used in) provided by investing activities ( 262 ) ( 152 ) 1

Cash flows from (for) financing activities:

Cash flows (for) from financing activities:

Repurchase of common stock — — ( 75 )

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

Proceeds from issuance of debt, net of issuance costs 786 678 678

Premiums paid for capped call confirmations — ( 87 ) ( 80 )

Payment of principal upon maturity of convertible debt — ( 3 ) —

Payments to extinguish convertible debt ( 514 ) ( 504 ) —

Payment of principal upon maturity of debt ( 117 ) — ( 3 )

Payments to extinguish debt ( 741 ) ( 514 ) ( 504 )

Other financing activities, net 3 — —

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

Net cash (used in) provided by financing activities ( 69 ) 77 16

Effect of exchange rate changes on cash, cash equivalents and restricted cash 8 2 1

Net increase (decrease) in cash, cash equivalents and restricted cash 276 ( 656 ) ( 424 )

Net (decrease) increase in cash, cash equivalents and restricted cash ( 6 ) 276 ( 656 )

Cash, cash equivalents and restricted cash

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See notes to consolidated financial statements

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CONSOLIDATED STATEMENTS OF CASH FLOWS

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Cash paid for interest on long-term debt $ 63 $ 53 $ 27

Non-cash impact to equity upon conversion of convertible notes, net of taxes $ — $ — $ 265

Purchase of property and equipment included in accounts payable and other liabilities $ 7 $ 19 $ ( 6 )

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See notes to consolidated financial statements

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Notes to Consolidated Financial Statements

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Description of Business and Basis of Presentation

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

is the destination for all things home.

Through its e-commerce business model, Wayfair offers visually inspired browsing, compelling merchandising, easy product discovery and attractive prices for over 30 million products from over 20 thousand suppliers.

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The cost basis of an investment sold is determined using the specific identification method.

Wayfair classifies its debt investments with readily determinable market values as available-for-sale.

These investments are classified as investments on the consolidated balance sheets and are carried at fair market value, with unrealized gains and losses reported within accumulated other comprehensive income or loss, within total stockholders’ deficit.

To the extent the amortized cost basis of the available-for-sale debt securities exceeds the fair value, management assesses the debt securities for credit loss.

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An equity method investment is written down to the estimated fair value if there is evidence of a loss in value which is other-than-temporary.

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Concentrations of Credit Risk

Financial instruments that subject Wayfair to credit risk consist of cash, cash equivalents, and restricted cash, short-term investments and accounts receivable.

Financial instruments that subject Wayfair to credit risk consist of cash, cash equivalents, restricted cash, short-term investments and accounts receivable.

The risk for cash, cash equivalents and restricted cash is minimized by Wayfair's policy to maintain these balances with major financial institutions of high-credit quality.

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Wayfair's exposure to credit loss is minimized through customer risk assessments performed prior to customer checkout and Wayfair's policy of monitoring the creditworthiness of its customers to which it grants credit terms in the normal course of business.

Further, management believes credit risk is mitigated since approximately 99.4 % of the net revenue recognized for the year ended December 31, 2023 was collected in advance of recognition.

Further, management believes credit risk is mitigated since approximat ely 98.9 % of the net revenue recognized for the year ended December 31, 2024 was collected in advance of recognition.

Inventories consisting of finished goods are stated at the lower of cost or net realizable value, determined by the first-in, first-out (“FIFO”) method, and consist of product for resale.

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Class Range of Life

Furniture and computer equipment 3 to 7

Furniture and equipment 3 to 7

Site and software development costs 2

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Long-Lived Assets

Wayfair reviews long-lived assets for impairment whenever events or changes in circumstances, such as service discontinuance or technological obsolescence, indicate that the carrying amount of the long-lived asset may not be recoverable.

Wayfair reviews long-lived assets for impairment whenever events or changes in circumstances, such as weakened macroeconomic conditions or brand awareness, service discontinuance or technological obsolescence, indicate that the carrying amount of the long-lived asset may not be recoverable.

When such events occur, Wayfair compares the carrying amount of the asset to the undiscounted expected future cash flows related to the asset.

If the comparison indicates that an impairment exists, the amount of the impairment is calculated as the difference between the excess of the carrying amount over the fair value of the asset.

If a readily determinable market price does not exist, fair value is estimated using discounted expected cash flows attributable to the asset.

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If a readily determinable market price does not exist, fair value is estimated using discounted expected cash flows attributable to the asset or market rate rent assumptions.

Wayfair generally leases office, retail and warehouse facilities under non-cancellable agreements.

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Cash discounts and rebates earned by customers at the time of purchase and estimates for sales return allowances are recorded as a deduction to net revenue.

Allowances for sales returns are estimated and recorded based on prior returns history, recent trends and projections for returns on

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sales in the current period.

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.

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 Wayfair.

Wayfair maintains a membership rewards program for customer purchases made with the Credit Card Program.

In exchange for providing intellectual property as part of the Credit Card Program, Wayfair records net revenue based on spending activity and the profitability of the card portfolio.

Wayfair maintains a membership rewards program:

Wayfair Rewards.

As part of this program, Wayfair provides customers with benefits for purchases made using its credit card program.

In exchange for providing intellectual property as part of its credit card program, Wayfair records net revenue based on spending activity and the profitability of the card portfolio.

Spending activity of the underlying accounts represents customer purchases used with their respective cards, and the profitability of the card portfolio is based on the financial performance of the underlying credit portfolio.

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Wayfair primarily has three types of contractual liabilities:

(i) cash collections from its customers prior to delivery of products purchased, which are initially recorded in unearned revenue within other current liabilities, and are recognized as net revenue when the products are delivered, (ii) unredeemed gift cards and site credits, which are initially recorded in unearned revenue within other current liabilities, and are recognized in the period they are redeemed, and (iii) membership rewards redeemable for future purchases, which are earned by customers on purchases made through the Credit Card Program, and are initially recorded in other current liabilities, and recognized as net revenue when redeemed.

(i) cash collections from its customers prior to delivery of products purchased, which are initially recorded in unearned revenue within other current liabilities, and are recognized as net revenue when the products are delivered, (ii) unredeemed gift cards and site credits, which are initially recorded in unearned revenue within other current liabilities, and are recognized in the period they are redeemed, and (iii) membership rewards redeemable for future purchases, which are earned by customers on purchases made through its credit card program and are initially recorded in other current liabilities, and recognized as net revenue when redeemed.

The portion of gift cards and store credits not expected to be redeemed are recognized as net revenue based on a pattern of historical redemptions, which are substantially within twenty-four months from the date of issuance.

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Prepayments for advertising that has not been incurred are included in prepaid expenses and other current assets, and advertising costs that have been incurred but not paid are included in other current liabilities.

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Selling, Operations, Technology, General and Administrative

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As a result, basic and diluted earnings or loss per share per Class A and Class B shares are equivalent.

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Recently Issued Accounting Pronouncements

Adoption of New Accounting Principles

Segment Reporting

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures, to update reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses.

The amendment is effective for fiscal years beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted.

The amendment should be applied retrospectively to all prior periods presented in the financial statements.

Wayfair is currently evaluating the impact that the adoption of this standard will have on its consolidated financial statements and related disclosures.

Wayfair adopted ASU 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures on January 1, 2024 retrospectively to all prior periods presented in the financial statements.

The new standard updates reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses.

Refer to Note 13, Segment and Geographic Information .

Recently Issued Accounting Pronouncements

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740):

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Wayfair is currently evaluating the impact that the adoption of this standard will have on its consolidated financial statements and related disclosures.

Disaggregation of Income Statement Expenses

In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40):

Disaggregation of Income Statement Expenses , which requires disclosure of specific expense categories in the notes to the financial statements.

The amendment is effective for annual periods beginning after December 15, 2026, with early adoption permitted.

The amendment should be applied prospectively to financial statements issued for reporting periods after the effective date or this ASU or retrospectively to any or all prior periods presented in the financial

Wayfair is currently evaluating the impact that the adoption of this standard will have on its consolidated financial statements and related disclosures.

Supplemental Financial Statement Disclosures

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Total prepaid expenses and other current assets $ 274 $ 289

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Other Non-current Assets

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Restructuring Charges

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

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

In January 2024, Wayfair announced a workforce realignment plan, including a workforce reduction involving approximately 1,650 employees.

As a result, during the year ended December 31, 2024, Wayfair incurred $ 79 million of charges recorded within restructuring charges on the consolidated statements of operations.

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

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

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In January 2024, Wayfair announced a workforce realignment plan, including a workforce reduction involving approximately 1,650 employees.

As a result, Wayfair expects 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

Germany Restructuring

On January 10, 2025, Wayfair announced its decision to exit the German market (the “Germany Restructuring”), including a workforce reduction impacting approximately 730 employees, although Wayfair expects approximately half of these positions to relocate to other corporate offices.

As a result of the Germany Restructuring, Wayfair expects to incur aggregate charges of approximately $ 102 million to $ 111 million, consisting of (i) approximately $ 40 million to $ 44 million in employee-related costs, including severance, benefits, relocation and transition costs and (ii) approximately $ 62 million to $ 67 million of other primarily non-cash charges, including gross impairment charges related to facility closures and other wind-down activities and excluding any recoveries that may be recognized related to our leases.

During the year ended December 31, 2024, Wayfair recorded impairment charges of $ 34 million associated with weakened macroeconomic conditions in connection with our German operations.

This is inclusive of $ 21 million related to ROU assets and $ 13 million related to property, plant and equipment.

Wayfair expects to incur the remainder of the aggregate charges during the first quarter of 2025.

Cash, Cash Equivalents and Restricted Cash, Investments and Fair Value Measurements

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During the years ended December 31, 2024, 2023 and 2022, Wayfair did not have any realized gains or losses.

During the years ended December 31, 2023, 2022 and 2021, Wayfair recorded interest income, including interest earned from cash and cash equivalents and marketable securities, of $ 47 million, $ 13 million and $ 5 million, respectively.

Interest income includes interest earned from cash and cash equivalents and marketable securities.

During the years ended December 31, 2024, 2023 and 2022, Wayfair recorde d $ 54 million, $ 47 million and $ 13 million of interest income, respectively.

During the years ended December 31, 2024, 2023 and 2022, Wayfair did not recognize any credit losses related to its available-for-sale debt securities.

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Wayfair classifies cash equivalents and certificate of deposits within Level 1 because these are valued using quoted market prices.

The fair value of Level 1 financial assets is based on quoted market prices of the identical

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underlying security.

The fair value of Level 1 financial assets is based on quoted market prices of the identical underlying security.

Wayfair classifies short-term investments within Level 2 because unadjusted quoted prices for identical or similar assets in markets are not active.

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Total $ 1,320 $ 56 $ — $ 1,376

(1) The certificate of deposit is classified as restricted cash that is primarily restricted to funds held in collateral.

December 31, 2023

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Investment securities — 29 — 29

Prepaid expenses and other current assets:

Certificate of deposit (1)

Total $ 1,326 $ 29 $ — $ 1,355

(1) The certificate of deposit is classified as restricted cash that is primarily restricted to funds held in collateral.

Property and Equipment, net

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(in millions)

Furniture and computer equipment $ 631 $ 593

Furniture and equipment $ 654 $ 631

Site and software development costs 1,000 960

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For the years ended December 31, 2024, 2023 and 2022, depreciation and amortization expense was $ 386 million , $ 416 million and $ 370 million, respectively, of which $ 257 million , $ 279 million and $ 224 million, respectively, was attributable to the

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amortization expense of site and software development costs.

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Impairment and other related net charges

During the year ended December 31, 2023, Wayfair recorded charges of $ 9 million related to construction in progress assets at identified U.S.

During the year ended December 31, 2024, Wayfair recorded charges of $ 14 million for the non-cash impairment of fixed assets.

This is inclusive of $ 13 million associated with weakened macroeconomic conditions in connection with our German operations and $ 1 million related to construction in progress assets at identified U.S.

During the year ended December 31, 2023, Wayfair recorded charges of $ 9 million for the non-cash impairment of fixed assets, related to construction in progress assets at identified U.S.

During the year ended December 31, 2022, Wayfair recorded charges of $ 15 million for the non-cash impairment of fixed assets.

This is inclusive of $ 7 million related to an impairment of a U.S.

office location due to current sublease market conditions and $ 8 million for other non-cash impairment charges, related to construction in progress assets at an International warehouse.

During the year ended December 31, 2021, in connection with the consolidation of certain customer service centers in identified U.S.

locations, Wayfair recorded charges of $ 5 million for the non-cash impairment of fixed assets.

For further information, refer to Note 5 , Leases .

office location due to current sublease market conditions and $ 8 million related to construction in progress assets at an International warehouse.

Wayfair has lease arrangements for warehouses, WDN facilities, which includes consolidation centers, cross docks and last mile delivery facilities and office spaces.

These leases expire at various dates through 2044.

Operating lease expense was $ 190 million, $ 180 million and $ 160 million for the years ended December 31, 2023, 2022 and 2021, respectively.

These leases expire at various dates throug h 2044.

O perating lease expense was $ 217 million, $ 190 million and $ 180 million for the years ended December 31, 2024, 2023 and 2022, respectively.

Sublease income was $ 6 million , $ 2 million and $ 14 million for the years ended December 31, 2024, 2023 and 2022, respectively.

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Imputed interest ( 334 )

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Total $ 1,103

The following table presents total operating leases liabilities:

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As there is no control of the underlying assets during the construction period, Wayfair is not considered the owner of the construction project for accounting purposes.

These operating leases will commence during 2024 through 2028 with lease terms of 1 to 12 years.

These operating leases will commence during 2025 with lease terms of 6 to 10 years.

Impairment and other related net charges

During the year ended December 31, 2023, Wayfair recorded charges of $ 5 million related to the consolidation of certain customer service centers in identified U.S.

During the year ended December 31, 2022, Wayfair recorded net charges of $ 23 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, in connection with the consolidation of certain customer service centers in identified U.S.

locations, Wayfair recorded charges of $ 6 million related to the impairment of ROU assets.

For further information, refer to Note 4, Property and Equipment, net .

During the year ended December 31, 2024, Wayfair recorded charges of $ 23 million for lease impairment.

This is inclusive of $ 21 million associated with weakened macroeconomic conditions in connection with our German operations and $ 2 million related to changes in sublease market conditions for identified U.S.

office locations.

During the years ended December 31, 2023 and 2022, Wayfair recorded net charges of $ 5 million and $ 23 million, respectively, primarily related to changes in sublease market conditions for identified U.S.

office locations.

Debt and Other Financing

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2028 Notes 690 ( 9 ) 681 690 ( 11 ) 679

2029 Secured Notes 800 ( 13 ) 787 — — —

2025 Accreting Notes — — — 38 — 38

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Long-term debt $ 2,882 $ 3,092

(1) Short-term debt consists of the 2024 Notes and is presented within other current liabilities in the consolidated balance sheets.

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(1) Short-term debt consists of $ 236 million for the 2025 Notes as of December 31, 2024, and $ 117 million for the 2024 Notes as of December 31, 2023.

Short-term debt and is presented within other current liabilities in the consolidated balance sheets.

Revolving Credit Facility

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

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

Wayfair had $ 71 million outstanding letters of credit as of December 31, 2024, primarily as security for lease agreements, which reduced the availability of credit under the Revolver.

Any amounts outstanding under the Revolver are due at maturity.

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As of December 31, 2024, Wayfair was in compliance with all covenants.

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Senior Secured Notes

On October 8, 2024, Wayfair LLC (the “Issuer”), a subsidiary of Wayfair, issued $ 800.0 million aggregate principal amount of 7.250 % senior secured notes due 2029 (the “2029 Secured Notes”, together with the Convertible Notes (as defined below), the “Notes”).

The 2029 Secured Notes are governed by an indenture between the Issuer, the guarantors named therein (including

Wayfair) and U.S.

Bank Trust Company, National Association, as trustee and notes collateral agent.

The indenture provides, among other things, that the 2029 Secured Notes will be senior secured obligations of the Issuer.

Interest on the 2029 Secured Notes is payable semi-annually, in arrears, on April 15 and October 15 of each year, commencing on April 15, 2025, at a rate of 7.250 % per annum.

The annual effective interest rate of the 2029 Secured Notes is 7.5 %.

Transaction costs to issue the 2029 Secured Notes were recorded as direct deductions from the related debt liabilities and amortized to interest expense, net using the effective interest method over the terms of the corresponding 2029 Secured Notes.

The 2029 Secured Notes will mature on October 31, 2029, unless earlier redeemed, in accordance with their terms or repurchased.

The indenture contains covenants that restrict the Issuer’s ability and the ability of its restricted subsidiaries to, among other things, incur additional indebtedness, declare or pay dividends, redeem stock or make other distributions or restricted payments, make certain investments, create certain liens, enter into certain transactions with affiliates, agree to certain restrictions on the ability of the Issuer’s restricted subsidiaries to make certain payments, sell or transfer certain assets and consolidate, merge, sell or otherwise dispose of all or substantially all of the Issuer’s or its restricted subsidiaries’ assets.

These covenants are subject to a number of important limitations, qualifications and exceptions.

In addition, certain of these covenants, including the limitation on indebtedness, will cease to apply to the 2029 Secured Notes for so long as the 2029 Secured Notes have investment grade ratings from any two of the prescribed rating agencies.

If a change of control occurs, the Issuer may be required to offer the holders of the 2029 Secured Notes an opportunity to sell all or part of their 2029 Secured Notes at a purchase price of 101 % of the principal amount of such 2029 Secured Notes, plus accrued and unpaid interest, if any, to, but excluding, the date of repurchase.

In addition, if Wayfair sells assets under certain circumstances, the Issuer may be required to make an offer to purchase a portion of the 2029 Secured Notes.

As of December 31, 2024, Wayfair was in compliance with all covenants in the indenture.

The indenture provides for customary events of default, which include (subject in certain cases to customary grace and cure periods) nonpayment of principal or interest;

breach of other agreements in the indenture;

defaults in failure to pay certain other indebtedness;

certain events of bankruptcy or insolvency;

the failure to pay final judgments in excess of certain amounts of money against the Issuer and its significant subsidiaries;

the failure of certain guarantees to be enforceable (other than in accordance with the terms of the indenture);

and the assertion by the Issuer, Wayfair or any guarantor that is a significant subsidiary in any pleading that any security interest related to the 2029 Secured Notes is invalid or unenforceable.

Convertible Non-Accreting Notes

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

Convertible Non-Accreting Notes Maturity Date Annual Coupon Rate Annual Effective Interest Rate Payment Dates for Semi-Annual Interest Payments in Arrears

2024 Notes November 1, 2024 1.125 % 1.5 % May 1 and November 1

The following table summarizes certain terms related to the Company’s current outstanding non-accreting convertible notes (collectively, the “Non-Accreting Notes,” together with the 2025 Accreting Notes, the “Convertible Notes” and together with the 2029 Secured Notes, the “Notes”):

Non-Accreting Notes Maturity Date Annual Coupon Rate Annual Effective Interest Rate Payment Dates for Semi-Annual Interest Payments in Arrears

2025 Notes October 1, 2025 0.625 % 0.9 % April 1 and October 1

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In November 2018, Wayfair issued $ 575.0 million in aggregate principal amount of 1.125 % Convertible Senior Notes due 2024 (the “2024 Notes”), which included the exercise in full of a $ 75.0 million option granted to the initial purchasers.

In connection with the 2024 Notes, Wayfair entered into capped calls that covered, initially, the number of shares of Wayfair’s Class A common stock underlying the 2024 Notes, subject to anti-dilution adjustments substantially similar to those applicable to the 2024 Notes (the “2024 Capped Calls”).

In September 2022, in connection with the issuance of the 2027 Notes, as defined below, Wayfair repurchased for cash approximately $ 375 million aggregate principal amount of the 2024 Notes.

In May 2023, in connection with the issuance of the 2028 Notes, as defined below, Wayfair repurchased for cash approximately $ 83 million aggregate principal amount of the 2024 Notes.

For more information, see “Extinguishment and Conversions of Notes” below.

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

In August 2020, Wayfair issued $ 1.518 billion in aggregate principal amount of 0.625 % Convertible Senior Notes due 2025 (the “2025 Notes”), which included the exercise in full of a $ 198.0 million option granted to the initial purchasers.

In connection with the issuance of the 2025 Notes, Wayfair entered into capped calls that covered, initially, the number of shares of Wayfair’s Class A common stock underlying the 2025 Notes, subject to anti-dilution adjustments substantially similar to those applicable to the 2025 Notes (the “2025 Capped Calls”).

In September 2022, in connection with the issuance of the 2027 Notes, as defined below, Wayfair repurchased for cash approximately $ 229 million aggregate principal amount of the 2025 Notes.

In May 2023, in connection with the issuance of the 2028 Notes, as defined below, Wayfair repurchased for cash approximately $ 535 million aggregate principal amount of the 2025 Notes.

For more information, see “Extinguishment and Conversions of Notes” below.

In September 2022, in connection with the issuance of the 2027 Notes, as defined below, Wayfair repurchased for cash $ 229 million aggregate principal amount of the 2025 Notes.

In May 2023, in connection with the issuance of the 2028 Notes, as defined below, Wayfair repurchased for cash $ 535 million aggregate principal amount of the 2025 Notes.

On November 11, 2024, Wayfair repurchased for cash $ 518 million aggregate principal amount of the 2025 Notes.

For more information, see “Partial Extinguishment the Convertible Notes” below.

In August 2019, Wayfair issued $ 948.75 million in aggregate principal amount of 1.000 % Convertible Senior Notes due 2026 (the “2026 Notes”), which included the exercise in full of a $ 123.75 million option granted to the initial purchasers.

In connection with the 2026 Notes, Wayfair entered into capped calls that covered, initially, the number of shares of Wayfair’s Class A common stock underlying the 2026 Notes, subject to anti-dilution adjustments substantially similar to those applicable to the 2026 Notes (the “2026 Capped Calls”).

On November 11, 2024, Wayfair repurchased for cash $ 215 million aggregate principal amount of the 2026 Notes.

For more information, see “Partial Extinguishment the Convertible Notes” below.

In September 2022, Wayfair issued $ 690.0 million in aggregate principal amount of 3.250 % Convertible Senior Notes due 2027 (the “2027 Notes”), which included the exercise in full of a $ 90.0 million option granted to the initial purchasers.

In connection with the issuance of the 2027 Notes, Wayfair entered into capped calls that covered, initially, the number of shares of Wayfair’s Class A common stock underlying the 2027 Notes, subject to anti-dilution adjustments substantially similar to those applicable to the 2027 Notes (the “2027 Capped Calls”).

In May 2023, Wayfair issued $ 690.0 million in aggregate principal amount of 3.500 % Convertible Senior Notes due 2028 (the “2028 Notes” and together with the 2024 Notes, 2025 Notes, 2026 Notes, 2027 Notes, the “Non-Accreting Notes”), which included the exercise in full of a $ 90.0 million option granted to the initial purchasers.

In May 2023, Wayfair issued $ 690.0 million in aggregate principal amount of 3.500 % Convertible Senior Notes due 2028 (the “2028 Notes” and together with the 2025 Notes, 2026 Notes and 2027 Notes, the “Non-Accreting Notes”), which included the exercise in full of a $ 90.0 million option granted to the initial purchasers.

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

Convertible Accreting Notes

In April 2020, Wayfair issued $ 535.0 million in aggregate original principal amount of 2.50 % Accreting Convertible Senior Notes due 2025 (the “2025 Accreting Notes”, and collectively with the Non-Accreting Notes, the “Notes”) to Great Hill, CBEP Investments, LLC (“Charlesbank”) and The Spruce House Partnership LLC.

In April 2020, Wayfair issued $ 535.0 million in aggregate original principal amount of 2.50 % Accreting Convertible Senior Notes due 2025 (the “2025 Accreting Notes”, and collectively with the Non-Accreting Notes, the “Convertible Notes”) to Great Hill, CBEP Investments, LLC (“Charlesbank”) and The Spruce House Partnership LLC.

The 2025 Accreting Notes are fully and unconditionally guaranteed on a senior unsecured basis by Wayfair LLC, a wholly-owned subsidiary of Wayfair Inc., as guarantor.

No cash interest is payable on the 2025 Accreting Notes.

Instead, the 2025 Accreting Notes accrue interest at a rate of 2.50 % per annum, which accretes to the principal amount on April 1 and October 1 of each year.

The 2025 Accreting Notes will

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mature on April 1, 2025, unless earlier purchased, redeemed or converted.

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

Seniority of the Notes

The Notes are general senior unsecured obligations of Wayfair.

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

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

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

On November 11, 2024, Wayfair repurchased in full the remaining $ 39 million in aggregate principal amount of the 2025 Accreting Notes.

Convertible Note Indentures

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

Bank National Association, as trustee.

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

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

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

Conversion and Redemption Terms of the Notes

Wayfair's Notes will mature at their maturity date unless earlier purchased, redeemed or converted.

The Notes’ initial conversion terms are summarized below:

Wayfair's Convertible Notes will mature at their maturity date unless earlier purchased, redeemed or converted.

The Non-Accreting Notes’ initial conversion terms are summarized below:

Convertible Notes Maturity Date Free Convertibility Date Initial Conversion Rate per $1,000 Principal Initial Conversion Price Redemption Date

2024 Notes November 1, 2024 August 1, 2024 8.5910 $ 116.40 May 8, 2022

2025 Notes October 1, 2025 July 1, 2025 2.3972 $ 417.15 October 4, 2022

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

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

The conversion rate is subject to adjustment upon the occurrence of certain specified events, including certain distributions and dividends to all or substantially all of the holders of Wayfair’s Class A common stock, but will not be adjusted for accrued and unpaid interest.

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• upon the occurrence of specified corporate events (as set forth in the applicable indenture).

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On or after the applicable Free Convertibility Date until the close of business on the second scheduled trading day immediately preceding the applicable maturity date, holders of the Non-Accreting Notes may convert their Non-Accreting Notes at any time.

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

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

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

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

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

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

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

Wayfair may not redeem the Notes prior to certain dates (the “Redemption Date”).

On or after the applicable Redemption Date, Wayfair may redeem for cash all or part of the applicable series of Notes if the last reported sale price of Wayfair’s Class A common stock equals or exceeds 130 % (Non-Accreting Notes) or 276 % (2025 Accreting Notes) of the conversion price then in effect for at least 20 trading days (whether or not consecutive), including at least one of the five trading days immediately preceding the date on which Wayfair provides notice of redemption, during any 30 consecutive trading days ending on, and including the trading day immediately preceding the date on which Wayfair provides notice of the redemption.

The redemption price will be either 100 % of the principal amount (or accreted principal amount) of the notes to be redeemed, plus accrued and unpaid interest, if any, or the if-converted value if the holder elects to convert their Notes upon receiving notice of redemption.

Accounting for the Notes

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

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

Interest for the Accreting Notes is amortized to interest expense, net using the effective interest method over the term of the Accreting Notes and recorded to other long-term liabilities in the consolidated balance sheet.

Upon accretion to the principal amount on April 1 and October 1 of each year, Wayfair will reclassify the interest accrued as of that date to long-term debt.

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

The net transaction amount from the issuance of the 2028 Notes, in the second quarter of 2023, was $ 591 million after deducting the initial purchasers’ discounts, the offering expenses payable by Wayfair and the net proceeds used to purchase the 2028 Capped Calls.

Additionally, during the second quarter of 2023, Wayfair used $ 514 million of the net transaction amount to repurchase for cash $ 83 million aggregate principal amount of the 2024 Notes and $ 535 million aggregate principal amount of the 2025 Notes in privately negotiated repurchase transactions.

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

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

Wayfair may also use a portion of the net proceeds to finance acquisitions, strategic

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transactions, investments, repurchases of Class A common stock or the repayment, redemption, purchase or exchange of indebtedness (including the Notes).

Conversions of Notes

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

Wayfair may not redeem the Non-Accreting Notes prior to certain dates (the “Redemption Date”).

On or after the applicable Redemption Date, Wayfair may redeem for cash all or part of the applicable series of the Non-Accreting Notes if the last reported sale price of Wayfair’s Class A common stock equals or exceeds 130 % of the conversion price then in effect for at least 20 trading days (whether or not consecutive), including at least one of the five trading days immediately preceding the date on which Wayfair provides notice of redemption, during any 30 consecutive trading days ending on, and including the trading day immediately preceding the date on which Wayfair provides notice of the redemption.

The redemption price will be either 100 % of the principal amount of the notes to be redeemed, plus accrued and unpaid interest, if any, or the if-converted value if the holder elects to convert their Non-Accreting Notes upon receiving notice of redemption.

Accounting for the Convertible Notes

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

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

Partial Extinguishment the Convertible Notes

On November 11, 2024, Wayfair repurchased $ 518 million in aggregate principal amount of the 2025 Notes, $ 215 million in aggregate principal amount of the 2026 Notes and the remaining $ 39 million in aggregate principal amount of the 2025 Accreting Notes, in privately negotiated transactions.

In accounting for the repurchases, Wayfair recorded a $ 29 million gain on debt extinguishment, representing the difference between the cash paid for principal, plus accrued and unpaid interest and transaction fees of $ 741 million and the combined net carrying value of the 2025 Notes, 2026 Notes and 2025 Accreting Notes of $ 770 million.

Conversions of Convertible Notes

During the year ended December 31, 2024, there were no conversions of the Convertible Notes.

Interest Expense

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2024 2023 2022

Convertible Notes Contractual Interest Expense Debt Discount Amortization Total Interest Expense Contractual Interest Expense Debt Discount Amortization Total Interest Expense Contractual Interest Expense Debt Discount Amortization Total Interest Expense

The Notes Contractual Interest Expense Debt Discount Amortization Total Interest Expense Contractual Interest Expense Debt Discount Amortization Total Interest Expense Contractual Interest Expense Debt Discount Amortization Total Interest Expense

(in millions)

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2028 Notes 24 3 27 15 1 16 — — —

2029 Secured Notes 13 — 13 — — — — — —

2025 Accreting Notes 1 — 1 1 — 1 1 — 1

Total $ 74 $ 9 $ 83 $ 55 $ 8 $ 63 $ 31 $ 8 $ 39

Fair Value of Notes

As of December 31, 2023, the estimated fair value of the 2024 Notes, 2025 Notes, 2026 Notes, 2027 Notes, 2028 Notes and 2025 Accreting Notes was $ 116 million, $ 684 million, $ 837 million, $ 870 million, $ 1.1 billion and $ 32 million, respectively.

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

The estimated fair value of the 2025 Accreting Notes was determined through an option pricing model using Level 3 inputs including volatility and credit spread.

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

As of December 31, 2023, the if-converted value of the 2028 Notes exceeded the principal value by $ 240 million.

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

The 2024 Capped Calls, 2025 Capped Calls, 2026 Capped Calls, 2027 Capped Calls and 2028 Capped Calls (collectively, the “Capped Calls”) are expected generally to reduce the potential dilution and/or offset the cash payments Wayfair is required to make in excess of the principal amount of the Non-Accreting Notes upon conversion of the Non-Accreting Notes if the market price per share of Wayfair’s Class A common stock is greater than the strike price of the applicable Capped Call (which corresponds to the initial conversion price of the applicable Non-Accreting Notes and is subject to certain adjustments under the terms of the applicable Capped Call), with such reduction and/or offset subject to a cap based on the cap price of the applicable Capped Calls (the “Initial Cap Price”).

Fair Value of the Notes

As of December 31, 2024, the estimated fair value of the 2025 Notes, 2026 Notes, 2027 Notes, 2028 Notes and 2029 Secured Notes was $ 227 million, $ 682 million, $ 738 million, $ 859 million and $ 802 million, respectively.

The estimated fair values of the Notes was determined through consideration of quoted market prices.

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

As of December 31, 2024, the if-converted value of the 2025 Notes, 2026 Notes, 2027 Notes and 2028 Notes did not exceed the principal value.

Seniority of the Notes

The 2029 Secured Notes are senior secured debt obligations secured by first-priority liens, which assets also secure the Revolver on a first-priority pari passu basis.

The 2029 Secured Notes are guaranteed, jointly and severally, on a senior basis by the Guarantors.

The Convertible Notes are general senior unsecured obligations of Wayfair.

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

The Convertible Notes are structurally subordinated to all existing and future indebtedness and liabilities of Wayfair’s subsidiaries.

The 2025 Capped Calls, 2026 Capped Calls, 2027 Capped Calls and 2028 Capped Calls (collectively, the “Capped Calls”) are expected generally to reduce the potential dilution and/or offset the cash payments Wayfair is required to make in excess of the principal amount of the Non-Accreting Notes upon conversion of the Non-Accreting Notes if the market price per share of Wayfair’s Class A common stock is greater than the strike price of the applicable Capped Call (which corresponds to the initial conversion price of the applicable Non-Accreting Notes and is subject to certain adjustments under the terms of the applicable Capped Call), with such reduction and/or offset subject to a cap based on the cap price of the applicable Capped Calls (the “Initial Cap Price”).

The Capped Calls can, at Wayfair’s option, remain outstanding until their maturity date, even if all or a portion of the Non-Accreting Notes are converted, repurchased or redeemed prior to such date.

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Collectively, the Capped Calls cover, initially, the number of shares of Wayfair’s Class A common stock underlying the Non-Accreting Notes, subject to anti-dilution adjustments substantially similar to those applicable to the Non-Accreting Notes.

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The initial terms for the Capped Calls are presented below:

Capped Calls Maturity Date Initial Cap Price Cap Price Premium

2024 Capped Calls November 1, 2024 $ 219.63 150 %

2025 Capped Calls October 1, 2025 $ 787.08 150 %

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The premiums paid for the Capped Calls were included as a net reduction to additional paid-in capital within stockholders’ deficit when they were entered.

2024 Capped Calls Unwind

During the year ended December 31, 2024, Wayfair completed an unwind of the 2024 Capped Calls.

The proceeds received from the unwind were included as an increase to additional paid-in-capital within stockholders’ deficit.

Commitments and Contingencies

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Wayfair has entered into purchase obligations that represent enforceable and legally binding software license and freight commitments.

Payments due under these purchase obligations are $ 206 million in 2024, $ 217 million in 2025, $ 28 million in 2026, $ 9 million in 2027 and none thereafter.

Payments due under these purchase obligations are $ 249 million in 2025, $ 33 million in 2026, $ 24 million in 2027, $ 5 million in 2028, none in 2029 or thereafter.

These payments exclude payments for contracts that are able to be canceled, both in full or in part, since they do not represent legally binding arrangements.

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The aggregate assessments received as of December 31, 2024 are not material to Wayfair's business and Wayfair does not expect the Court's decision to have a significant impact on its business.

Wayfair currently collects and remits sales tax based on the locations of its physical operations, as well as locations where it has economic presence.

Legal Matters

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Significant judgment is required to determine both the probability of having incurred a liability and the estimated amount of the liability.

The Company does not record a gain contingency until the period in which the contingency is resolved and the gain is realizable or realized.

Litigation and legal claims are inherently unpredictable and claims cannot be predicted with certainty.

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Canada Border Services Agency

The Canada Border Services Agency (“CBSA”) is examining Wayfair’s payment of duties under the Special Measures Import Act (the “CBSA review”) for goods imported into Canada for the years ended December 31, 2023 and 2022 and part of the year ended December 31, 2021.

As of December 31, 2023, the estimated potential liability for the CBSA review, net of any of any amounts that may be recouped through the appeals process, is approximately $ 20 million, inclusive of duties and interest.

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During the year ended December 31, 2023, approximately $ 17 million of this estimated liability was recorded to cost of sales and $ 3 million was recorded to selling, operations, technology, general and administrative within the consolidated statement of operations.

During the year ended December 31, 2023, Wayfair made payments of approximately $ 11 million of duties and $ 2 million of interest charges based on assessments received related to part of the year ended December 31, 2021.

The Canada Border Services Agency (“CBSA”) is examining Wayfair’s payment of duties under the Special Import Measures Act (the “CBSA review”) for goods imported into Canada for the years ended December 31, 2023 and 2022 and part of the year ended December 31, 2021.

The estimated potential liability for the CBSA review, net of any amounts that may be recouped through the appeals process, is approximately $ 41 million, inclusive of duties and interest.

Related to the CBSA review, during the year ended December 31, 2024, Wayfair incurred approximately $ 18 million to cost of goods sold and approximately $ 4 million to selling, operations, technology, general and administrative within the consolidated statement of operations.

During the year ended December 31, 2024, Wayfair made payments of approximately $ 21 million of duties and $ 5 million of interest charges based on assessments received related to the year ended December 31, 2022 and part of the year ended December 31, 2021.

Wayfair is required to pay all assessed amounts in order to exercise its appeal rights.

Wayfair believes there are substantial factual and legal grounds to appeal and partially recuperate these amounts and is exploring other potential avenues to mitigate exposure.

Wayfair believes there are substantial factual and legal grounds to appeal and partially recuperate these amounts and is exploring other options to mitigate exposure.

As of December 31, 2024, approximately $ 4 million was recorded within other current liabilities in the consolidated balance sheets.

The CBSA is also examining Wayfair’s valuation of duties under the Customs Act for goods imported into Canada for the years ended December 31, 2024, 2023, 2022, 2021 and 2020.

The examination for the years ended December 31, 2021 and 2020 resulted in a gain of $ 16 million related to an overpayment of duties during those years.

Wayfair considered this realizable during December 2024 and was recorded as a reduction to cost of goods sold within the consolidated statement of operations and a related receivable within Prepaid expenses and other current assets on the consolidated balance sheets.

The refunds from this audit will primarily be used to offset future normal course custom duties payments and payments due under the CBSA Review.

Because loss contingencies are inherently unpredictable, this assessment is subjective and requires judgments about future events.

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The amounts deferred by the employee and the matching amounts contributed by Wayfair both vest immediately.

The amount expensed under the plan totaled approximately $ 35 million, $ 43 million and $ 35 million in the years ended December 31, 2023, 2022 and 2021, respectively.

The amount expensed under the plan totaled $ 22 million , $ 35 million and $ 43 million in the years ended December 31, 2024, 2023 and 2022, respectively.

Stockholders’ Deficit

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As of December 31, 2024, Wayfair had no shares of undesignated preferred stock issued or outstanding.

Wayfair authorized 500,000,000 shares of Class A common stock, $ 0.001 par value per share, and 164,000,000 shares of Class B common stock, $ 0.001 par value per share, of which 92,457,562 and 82,903,862 shares of Class A common stock and 25,691,295 and 25,691,397 shares of Class B common stock were outstanding as of December 31, 2023 and 2022.

Wayfair authorized 500,000,000 shares of Class A common stock, $ 0.001 par value per share, and 164,000,000 shares of Class B common stock, $ 0.001 par value per share, of which 100,762,581 and 92,457,562 shares of Class A common stock and 24,658,295 and 25,691,295 shares of Class B common stock were outstanding as of December 31, 2024 and 2023, respectively.

The rights of the holders of Class A common stock and Class B common stock are identical, except with respect to voting and conversion rights.

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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”).

There is no stated expiration for the Repurchase Programs.

There is no stated expiration date for the Repurchase Programs.

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

During the year ended December 31, 2023, Wayfair did not repurchase any shares of Class A Common stock under the Repurchase Programs.

During the years ended December 31, 2024 and 2023, Wayfair did not repurchase any shares of Class A Common stock under the Repurchase Programs.

During the year ended December 31, 2022, Wayfair repurchased 548,173 shares of Class A common stock for $ 75 million under the 2020 Repurchase Program.

During the year ended December 31, 2021, Wayfair did not repurchase any shares of Class A Common stock under the Repurchase Programs.

Equity-Based Compensation

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As of December 31, 2024, unrecognized equity-based compensation expense related to RSUs expected to vest over time is $ 88 million with a weighted-average remaining vesting term of 0.3 years.

The following table summarizes the weighted average grant date fair value of RSUs vested for the years ended December 31:

The following table summarizes activity for the years ended December 31:

Year Ended December 31,

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Total equity-based compensation expense $ 395 $ 605 $ 513

Equity-based compensation costs capitalized as site and software development costs were $ 61 million, $ 43 million and $ 28 million for the years ended December 31, 2023, 2022 and 2021, respectively.

Equity-based compensation costs capitalized as software costs wer e $ 37 million, $ 61 million and $ 43 million for the years ended December 31, 2024, 2023 and 2022, respectively.

The components of the provision for income taxes, net for the years ended December 31, 2024, 2023 and 2022 are presented below:

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Federal $ — $ — $ —

State 3 9 ( 1 )

Foreign 2 6 3

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Provision for income taxes at the federal statutory rate $ ( 101 ) $ ( 153 ) $ ( 277 )

State income tax expense (benefit), net of federal impact 3 9 ( 1 )

State income tax expense, net of federal impact 4 3 9

Foreign tax rate differential 13 17 28

Intercompany debt adjustment ( 242 ) — —

Uncertain tax positions, net 191 — —

Non-deductible equity-based compensation expense 4 10 16

Windfall (shortfall) benefit (expense) from equity-based compensation 17 41 ( 70 )

Shortfall expense from equity-based compensation 15 17 41

Change in valuation allowance 105 103 214

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As of December 31, 2024, Wayfair also had foreign net operating loss carryforwards available to offset future foreign income of $ 1.8 billion.

Foreign net operating loss of $ 81 million will expire in the year ending December 31, 2038.

The remaining foreign net operating loss carryforwards do not expire.

As of December 31, 2023, Wayfair has not provided for deferred income taxes on outside basis differences in its foreign subsidiaries of approximately $ 332 million since these basis differences are deemed to be indefinitely reinvested, or it is within

the control of Wayfair to recognize these basis differences on a tax-free basis.

Upon realization of the outside basis differences in the form of dividends or otherwise, Wayfair could be subject to income taxes as well as withholding taxes.

Foreign net operating loss carryforwards of $ 107 million will begin to expire in the year ending December 31, 2038.

Foreign net operating loss carryforwards of $ 1.7 billion do not expire.

As of December 31, 2024, Wayfair has not provided for deferred income taxes on outside basis differences in its foreign subsidiaries of approximately $ 346 million since these basis differences are deemed to be indefinitely reinvested, or it is within the control of Wayfair to recognize these basis differences on a tax-free basis.

Upon realization of the outside basis differences in

the form of dividends or otherwise, Wayfair could be subject to income taxes as well as withholding taxes.

The amount of taxes attributable to the outside basis differences, if realized, is expected to be immaterial.

Wayfair establishes reserves for uncertain tax positions based on management's assessment of exposures associated with tax deductions, permanent tax differences and tax credits.

The tax reserves are analyzed periodically and adjustments are made as events occur to warrant adjustment to the reserve.

Reserves for uncertain tax positions as of December 31, 2023 and 2022 are not material and would not impact the effective tax rate if recognized as a result of the valuation allowance maintained against the net deferred tax assets.

Wayfair's policy is to recognize interest and penalties related to unrecognized tax benefits and penalties as a component of the provision for income taxes, net.

A reconciliation of the beginning and ending amounts of gross unrecognized tax benefits (excluding interest and penalties) is as follows:

Year Ended December 31,

2024 2023 2022

(in millions)

Beginning balance $ — $ — $ —

Increases as a result of tax positions taken in the current period 306 — —

Ending balance $ 306 $ — $ —

As of December 31, 2024, $ 1 million of the $ 306 million of unrecognized tax benefits would affect our effective tax rate, if recognized, and the remaining $ 305 million would affect our deferred tax accounts and our valuation allowance.

In the disclosure of the components of the provision for income taxes above, in the year ended December 31, 2024, $ 1 million of the expense related to uncertain tax positions impacts current tax expense, and $ 305 million impacts deferred tax expense.

Wayfair's policy is to recognize interest and penalties related to unrecognized tax benefits as a component of the provision for income taxes, net.

Related to the unrecognized tax benefits noted above, Wayfair did not accrue any penalties and interest during 2024, 2023 or 2022 because it is believed that such additional interest and penalties would be insignificant.

Wayfair's tax jurisdictions include the U.S., the UK, Germany, Ireland, Canada, Hong Kong and the British Virgin Islands.

Wayfair's tax jurisdictions include the U.S., the United Kingdom, Germany, Ireland, Canada, Hong Kong and the British Virgin Islands.

The statute of limitations with respect to U.S.

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Although the model rules provide a framework for applying the minimum tax, countries may enact Pillar 2 slightly differently than the model rules and on different timelines and may adjust domestic tax incentives in response to Pillar 2.

Accordingly, Wayfair is still evaluating the potential consequences of Pillar 2 on longer-term financial positions.

Wayfair has estimated the impact of Pillar 2 on our 2024 tax expense to be immaterial.

Our deferred tax assets and liabilities are calculated based on the statutory tax rates in the various jurisdictions in which we operate.

Our deferred tax assets and liabilities do not reflect the potential impact of Pillar 2 top-up taxes or any other minimum tax regimes for future periods.

These taxes will be in-period items if they are realized.

As of December 31, 2024, the impact of a top-up tax on our deferred tax assets and liabilities would be immaterial net, due to our full valuation allowance.

Wayfair is still evaluating the potential consequences of Pillar 2 on longer-term financial positions.

Loss per Share

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

Wayfair will settle conversions of the 2025 Accreting Notes in shares of Wayfair’s Class A common stock.

T he Capped Calls are generally expected to reduce the potential dilution of Wayfair's Class A common stock upon any conversion of the Notes and/or offset the cash payments Wayfair is required to make in excess of the principal amount of the Notes upon conversion of the Notes to the extent the market price per share of Wayfair’s Class A common stock is greater than the strike price of the Capped Calls (which corresponds to the initial conversion prices of the Non-Accreting Notes, subject to certain adjustments under the terms of the Capped Calls), with such reduction and/or offset capped at the Initial Cap Price.

T he Capped Calls are generally expected to reduce the potential dilution of Wayfair's Class A common stock upon any conversion of the Non-Accreting Notes and/or offset the cash payments Wayfair is required to make in excess of the principal amount of the Notes upon conversion of the Non-Accreting Notes to the extent the market price per share of Wayfair’s Class A common stock is greater than the strike price of the Capped Calls (which corresponds to the initial conversion prices of the Non-Accreting Notes, subject to certain adjustments under the terms of the Capped Calls), with such reduction and/or offset capped at the Initial Cap Price.

For more information on the structure of the Notes and the Capped Calls, see Note 6, Debt and Other Financing .

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These charges are excluded from the evaluation of segment performance because it facilitates reportable segment performance comparisons on a period-to-period basis as these costs may vary independent of business performance.

T he CODM uses Adjusted EBITDA to assess segment performance while deciding how to allocate resources as a benchmark to evaluate operating performance, generate future operating plans and make strategic decisions regarding the allocation of capital.

The accounting policies of the segments are the same as those described in Note 1, Summary of Significant Accounting Policies .

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provided greater than 10% of consolidated net revenue.

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

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

Year Ended December 31,

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(in millions)

International Total U.S.

International Total

Net revenue $ 10,373 $ 1,478 $ 11,851 $ 10,482 $ 1,521 $ 12,003 $ 10,464 $ 1,754 $ 12,218

International net revenue 1,521 1,754 2,459

Total net revenue $ 12,003 $ 12,218 $ 13,708

Year Ended December 31,

Cost of goods sold (1)

7,122 1,095 8,217 7,146 1,129 8,275 7,385 1,348 8,733

(in millions)

Adjusted EBITDA:

Advertising 1,292 180 1,472 1,234 163 1,397 1,277 196 1,473

Other segment items (2)

1,388 321 1,709 1,658 367 2,025 1,900 528 2,428

International ( 138 ) ( 318 ) ( 168 )

Total reportable segments Adjusted EBITDA 306 ( 416 ) 614

Adjusted EBITDA $ 571 $ ( 118 ) $ 453 $ 444 $ ( 138 ) $ 306 $ ( 98 ) $ ( 318 ) $ ( 416 )

reconciling items (3)

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Net loss $ ( 492 ) $ ( 738 ) $ ( 1,331 )

Cost of goods sold excludes costs that are excluded from Wayfair's evaluation of segment performance.

Excluded from Wayfair's evaluation of segment performance and from cost of goods sold are depreciation and amortization and equity-based compensation and related taxes.

Other segment items include customer service and merchant fees and selling, operations, technology, general and administrative, and exclude any costs that are excluded from Wayfair's evaluation of segment performance.

Excluded from Wayfair's evaluation of segment performance and from other segment items are 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 ongoing operating performance.

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

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Total reconciling items $ 945 $ 1,044 $ 915

During the year ended December 31, 2024, Wayfair recorded net charges of $ 37 million, inclusive of $ 34 million associated with weakened macroeconomic conditions in connection with our German operations , $ 2 million related to changes in sublease market conditions and $ 1 million related to construction in progress assets at identified U.S.

During the year ended December 31, 2023, Wayfair 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, Wayfair 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.

During the year ended December 31, 2022, we recorded net charges of $ 39 million, inclusive of $ 31 million of lease impairment and other net 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.

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

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

During the year ended December 31, 2023, Wayfair 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, Wayfair 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, 2024, Wayfair recorded a $ 29 million gain on debt extinguishment upon repurchase of $ 518 million in aggregate principal amount of the 2025 Notes, $ 215 million in aggregate principal amount of the 2026 Notes and the remaining $ 39 million in aggregate principal amount of the 2025 Accreting Notes.

During the year ended December 31, 2023, Wayfair recorded a $ 100 million gain on debt extinguishment upon repurchase of $ 83 million in aggregate principal amount of the 2024 Notes and $ 535 million in aggregate principal amount of the 2025 Notes.

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See “Non-GAAP Financial Measures” in Part II, Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations in this Annual Report on Form 10-K for more information regarding the use of Adjusted EBITDA.

The following table presents long-lived assets attributable to Wayfair's reportable segments reconciled to the amounts:

The following table presents long-lived assets attributable to Wayfair's reportable segments reconciled to the consolidated amounts:

Year Ended December 31,

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and International long-lived assets consist of property and equipment, net and operating lease ROU assets.

Corporate long-lived assets consist of property and equipment, net and operating lease ROU assets at corporate facilities.

Corporate long-lived assets consist of property and equipment, net, including capitalized internal-use software and website development costs, and operating lease ROU assets at corporate facilities.

The following table presents total assets attributable to Wayfair's reportable segments reconciled to consolidated amounts:

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Subsequent Events

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

As a result, Wayfair expects 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 of 2024.

On January 10, 2025, Wayfair announced its decision to exit the German market, herein referred to as the Germany Restructuring, including a workforce reduction impacting approximately 730 employees, although Wayfair expects approximately half of these positions to relocate to other corporate offices.

Wayfair recorded partial non-cash charges during the year ended December 31, 2024 and expects to incur the remainder of the aggregate charges during the first quarter of 2025.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

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 8. Financial Statements and Supplementary Data