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Item 1. Financial Statements

2025-05-01 compared with 2024-11-01 · 203 added, 208 removed, 311 unchanged (57% of the section changed)

1 unchanged sentence

CONDENSED CONSOLIDATED BALANCE SHEETS

September 30, December 31,

March 31, December 31,

(in millions, except share and per share data)

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Convertible preferred stock, $ 0.001 par value per share:

10,000,000 shares authorized and none issued at September 30, 2024 and December 31, 2023

Class A common stock, par value $ 0.001 per share, 500,000,000 shares authorized, 97,888,601 and 92,457,562 shares issued and outstanding at September 30, 2024 and December 31, 2023, respectively

Class B common stock, par value $ 0.001 per share, 164,000,000 shares authorized, 25,691,295 shares issued and outstanding at September 30, 2024 and December 31, 2023

10,000,000 shares authorized and none issued at March 31, 2025 and December 31, 2024

Class A common stock, par value $ 0.001 per share, 500,000,000 shares authorized, 102,290,399 and 100,762,581 shares issued and outstanding at March 31, 2025 and December 31, 2024, respectively

Class B common stock, par value $ 0.001 per share, 164,000,000 shares authorized, 24,658,295 shares issued and outstanding at March 31, 2025 and December 31, 2024

Additional paid-in capital

Accumulated deficit ( 4,623 ) ( 4,510 )

Accumulated other comprehensive loss ( 8 ) ( 5 )

Accumulated other comprehensive (loss) income ( 7 ) 4

Total stockholders' deficit ( 2,809 ) ( 2,755 )

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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

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

2024 2023 2024 2023

Three Months Ended March 31,

(in millions, except per share data)

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Loss before income taxes ( 110 ) ( 245 )

Provision for income taxes, net 3 2 8 6

Provision for income taxes 3 3

Net loss $ ( 113 ) $ ( 248 )

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CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

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

2024 2023 2024 2023

Three Months Ended March 31,

(in millions)

Net loss $ ( 113 ) $ ( 248 )

Other comprehensive (loss) income:

Other comprehensive loss:

Foreign currency translation adjustments ( 11 ) —

Net unrealized gain on available-for-sale investments — — — 1

Comprehensive loss $ ( 124 ) $ ( 248 )

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Comprehensive

(Loss) Income Total

Stockholders'

(in millions)

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

Net loss — — — ( 163 ) — ( 163 )

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

Issuance of common stock upon vesting of RSUs 3 — — — — —

Equity-based compensation — — 154 — — 154

Balance at September 30, 2023 116 $ — $ 1,142 $ ( 3,844 ) $ ( 6 ) $ ( 2,708 )

Balance at June 30, 2024 122 $ — $ 1,552 $ ( 4,308 ) $ ( 4 ) $ ( 2,760 )

Net loss — — — ( 74 ) — ( 74 )

Other comprehensive loss — — — — ( 4 ) ( 4 )

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

Equity-based compensation — — 105 — — 105

Balance at September 30, 2024 124 $ — $ 1,657 $ ( 4,382 ) $ ( 8 ) $ ( 2,733 )

See notes to unaudited condensed consolidated financial statements.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT

Nine Months Ended

Class A and Class B Common Stock

Shares Amount Additional

Capital Accumulated

Deficit Accumulated

Comprehensive

Stockholders' Deficit

(in millions)

Balance at December 31, 2023

118 $ — $ 1,316 $ ( 4,018 ) $ ( 5 ) $ ( 2,707 )

Net loss — — — ( 248 ) — ( 248 )

Other comprehensive income — — — — 1 1

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

Equity-based compensation — — 130 — — 130

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

Balance at September 30, 2023 116 $ — $ 1,142 $ ( 3,844 ) $ ( 6 ) $ ( 2,708 )

Balance at March 31, 2024

120 $ — $ 1,446 $ ( 4,266 ) $ ( 5 ) $ ( 2,825 )

Balance at December 31, 2024

125 $ — $ 1,751 $ ( 4,510 ) $ 4 $ ( 2,755 )

Net loss — — — ( 113 ) — ( 113 )

2 unchanged sentences

Equity-based compensation — — 70 — — 70

Unwind of capped calls — — 3 — — 3

Balance at September 30, 2024 124 $ — $ 1,657 $ ( 4,382 ) $ ( 8 ) $ ( 2,733 )

Balance at March 31, 2025

127 $ — $ 1,821 $ ( 4,623 ) $ ( 7 ) $ ( 2,809 )

See notes to unaudited condensed consolidated financial statements.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Nine Months Ended September 30,

Three Months Ended March 31,

(in millions)

Cash flows from operating activities:

Cash flows for operating activities:

Net loss $ ( 113 ) $ ( 248 )

Adjustments to reconcile net loss to net cash provided by operating activities:

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

Depreciation and amortization 81 104

Equity-based compensation expense 64 119

Amortization of discount and issuance costs on convertible notes 7 6

Amortization of debt discount and issuance costs

Impairment and other related net charges 23 —

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Accounts payable and other liabilities ( 143 ) ( 152 )

Net cash provided by operating activities 155 191

Net cash used in operating activities ( 96 ) ( 139 )

Cash flows for investing activities:

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Cash flows from financing activities:

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

Premiums paid for capped call confirmations — ( 87 )

Payments to extinguish convertible debt — ( 514 )

Other financing activities, net 3 —

Proceeds from issuance of debt, net of issuance costs 691 —

Payments to extinguish debt ( 551 ) —

Net cash provided by financing activities 140 —

Effect of exchange rate changes on cash, cash equivalents and restricted cash ( 9 ) ( 1 )

Net (decrease) increase in cash, cash equivalents and restricted cash ( 26 ) 241

Net increase (decrease) in cash, cash equivalents and restricted cash 18 ( 215 )

Cash, cash equivalents and restricted cash

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Nine Months Ended September 30,

Three Months Ended March 31,

(in millions)

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and its subsidiaries.

In the Company’s opinion, the accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States ("GAAP") and applicable rules and regulations of the United States (“U.S.”) Securities and Exchange Commission ("SEC") regarding interim financial reporting and reflect all adjustments, consisting of normal recurring adjustments, necessary to present fairly the results of the interim periods presented.

In the Company’s opinion, the accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States ("GAAP") and applicable rules and regulations of the United States (“U.S.”) Securities and Exchange Commission ("SEC") regarding interim financial reporting and reflect all adjustments, consisting of normal recurring adjustments, necessary for a fair statement of the results of the interim periods presented.

Certain information and note disclosures normally included in the audited financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations.

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The Company has identified significant accounting policies that are critical to understanding its business and results of operations.

Wayfair believes that there have been no significant changes during the three and nine months ended September 30, 2024 to the items disclosed in Note 1, Summary of Significant Accounting Policies , included in Part II, Item 8, Financial Statements and Supplementary Data , of the Company’s Annual Report on Form 10-K for the year ended December 31, 2023.

Wayfair believes that there have been no significant changes during the three months ended March 31, 2025 to the items disclosed in Note 1, Summary of Significant Accounting Policies , included in Part II, Item 8, Financial Statements and Supplementary Data, of the Company’s Annual Report on Form 10-K for the year ended December 31, 2024.

Recently Issued Accounting Pronouncements

Segment Reporting

In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“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.

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

In December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures, to update reportable income tax disclosure requirements, primarily through enhanced disclosures on the rate reconciliation table and other disclosures, including total income taxes paid by jurisdiction.

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The amendment should be applied prospectively, with retrospective adoption permitted.

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

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

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 of this ASU or retrospectively to any or 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.

In November 2024, the FASB issued ASU 2024-04, Debt - Debt with Conversion and Other Options (Subtopic 470-20):

Induced Conversions of Convertible Debt Instruments , which clarifies the assessment of whether certain settlements of convertible debt instruments should be accounted for as an induced conversion.

The amendment is effective for annual periods beginning after December 15, 2025, with early adoption permitted.

The amendment can be applied either on a prospective or retrospective basis.

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

Accounts Receivable, Net

As of September 30, 2024, accounts receivable was $ 155 million, net of allowance for credit losses of $ 26 million.

As of March 31, 2025, accounts receivable was $ 140 million, net of allowance for credit losses of $ 21 million.

As of December 31, 2024, accounts receivable was $ 155 million, net of allowance for credit losses of $ 18 million.

The changes in the allowance for credit losses were not material for the three and nine months ended September 30, 2024.

Management believes credit risk is mitigated for the three and nine months ended September 30, 2024, as approximately 98.5 % and 99.0 %, respectively, of the net revenue recognized was collected in advance of recognition .

The changes in the allowance for credit losses were not material for the three months ended March 31, 2025.

Management believes credit risk is mitigated for the three months ended March 31, 2025, as approximately 98.6 % of the net revenue recognized was collected in advance of recognition.

Contract Liabilities

Contractual liabilities, included in other current liabilities, were $ 203 million at September 30, 2024 and $ 204 million at December 31, 2023.

During the nine months ended September 30, 2024, Wayfair recognized $ 139 million of net revenue that was included within other current liabilities as of December 31, 2023.

Contract liabilities included in other current liabilities were $ 232 million at March 31, 2025 and $ 224 million at December 31, 2024, respectively.

During the three months ended March 31, 2025, Wayfair recognized $ 148 million of net revenue that was included within other current liabilities, as of December 31, 2024.

Net revenue from contracts with customers is disaggregated by geographic region because this manner of disaggregation best depicts how the nature, amount, timing and uncertainty of net revenue and cash flows are affected by economic factors.

Refer to Note 9, Segment and Geographic Information, for additional information.

Impairment and Other Related Net Charges

During the three months ended March 31, 2025, Wayfair recorded net charges of $ 23 million, inclusive of $ 20 million associated with its decision to exit the German market (the “Germany Restructuring”) and weakened macroeconomic conditions in connection with its German operations and $ 3 million associated with changes in sublease market conditions for a technology center in the U.S.

The $ 20 million of charges associated with the Germany Restructuring is inclusive of $ 9 million related to operating lease right-of-use (“ROU”) assets, $ 19 million related to property, plant and equipment, partially offset by a recovery of $ 8 million related to the termination of its office lease in Germany.

Restructuring Charges

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

As a result, during the nine months ended September 30, 2024, Wayfair incurred $ 79 million of charges recorded within restructuring charges on the condensed consolidated statements of operations.

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

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

During the three months ended March 31, 2025, Wayfair incurred $ 56 million of charges consisting primarily of one-time employee severance, benefits, relocation and transition costs.

This is inclusive of $ 40 million related to the Germany Restructuring and $ 16 million related to the March 2025 workforce reduction, which impacted members of the technology team.

As of March 31, 2025, Wayfair expects the total cost to be incurred under both actions to be $ 79 million, of which $ 56 million has been recorded to date.

Wayfair expects to incur the remainder of the charges through the year ended December 31, 2025.

As of March 31, 2025, $ 29 million and $ 6 million, is accrued within other current liabilities, for employee severance benefits for the Germany Restructuring and the March 2025 workforce reduction, respectively.

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

As of September 30, 2024 and December 31, 2023, Wayfair’s marketable securities, which primarily consisted of corporate bonds and other government obligations that are priced at fair value, were classified as available-for-sale investments.

During the three and nine months ended September 30, 2024 and 2023, Wayfair did not have any realized gains or losses.

As of March 31, 2025 and December 31, 2024, Wayfair’s marketable securities, which primarily consisted of corporate bonds and other government obligations that are priced at fair value, were classified as available-for-sale investments.

During the three months ended March 31, 2025 and 2024, Wayfair did not have any realized gains or losses.

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

During the three and nine months ended September 30, 2024, Wayfair recorded $ 13 million and $ 39 million of interest income, respectively, and during the three and nine months ended September 30, 2023, $ 13 million and $ 31 million of interest income, respectively.

During the three and nine months ended September 30, 2024 and 2023, Wayfair did not recognize any credit losses related to its available-for-sale debt securities.

As of September 30, 2024 and December 31, 2023, Wayfair did not have an allowance for credit losses recorded related to its available-for-sale debt securities.

The following table presents details of Wayfair’s investment securities as of September 30, 2024 and December 31, 2023:

September 30, 2024

During the three months ended March 31, 2025 and 2024, Wayfair recorde d $ 10 million and $ 12 million of interest income, respectively.

During the three months ended March 31, 2025 and 2024, Wayfair did not recognize any credit losses related to its available-for-sale debt securities.

As of March 31, 2025 and December 31, 2024, Wayfair did not have an allowance for credit losses recorded related to its available-for-sale debt securities.

The following table presents details of Wayfair’s investment securities as of March 31, 2025 and December 31, 2024:

March 31, 2025

Losses Estimated

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Wayfair does not have assets that are classified as Level 3.

The following tables set forth the fair value of Wayfair's financial assets measured at fair value on a recurring basis as of September 30, 2024 and December 31, 2023:

September 30, 2024

The following tables set forth the fair value of Wayfair's financial assets measured at fair value on a recurring basis as of March 31, 2025 and December 31, 2024:

March 31, 2025

Level 1 Level 2 Level 3 Total

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Investment securities — 30 — 30

Prepaid expenses and other current assets:

Certificate of deposit (1)

Total $ 1,338 $ 30 $ — $ 1,368

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

September 30, 2024 December 31, 2023

March 31, 2025 December 31, 2024

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

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2028 Notes 690 ( 8 ) 682 690 ( 9 ) 681

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

2025 Accreting Notes 38 — 38 38 — 38

2029 Secured Notes 800 ( 13 ) 787 800 ( 13 ) 787

2030 Secured Notes 700 ( 9 ) 691 — — —

Total Debt $ 3,236 $ 3,118

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Long-term debt $ 3,000 $ 2,882

(1) Short-term debt consists of $ 117 million for the 2024 Notes and $ 38 million for the 2025 Accreting Notes, as of September 30, 2024, and $ 117 million for the 2024 Notes as of December 31, 2023.

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

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

Wayfair’s indebtedness includes unsecured 0.625 % Convertible Senior Notes due 2025 (the “2025 Notes”), unsecured 1.00 % Convertible Senior Notes due 2026 (the “2026 Notes”), unsecured 3.25 % Convertible Senior Notes due 2027 (the “2027 Notes”), unsecured 3.50 % Convertible Senior Notes due 2028 (the “2028 Notes”, and together with the 2025 Notes, 2026 Notes and 2027 Notes, the “Convertible Notes”), 7.250 % Senior Secured Notes due 2029 (the “2029 Secured Notes”) and 7.750 % Senior Secured Notes due 2030 (the “2030 Secured Notes”, together with the 2029 Secured Notes, the “Senior Secured Notes” and together with the Convertible Notes, the “Notes”).

Revolving Credit Facility

Wayfair has a five-year senior secured revolving credit facility (the “Revolver”), which matures on March 24, 2026, and provides for non-amortizing revolving loans in an aggregate amount of $ 600 million.

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

Wayfair had $ 72 million in outstanding letters of credit as of September 30, 2024, primarily as security for lease agreements.

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

On March 13, 2025, Wayfair and certain of its subsidiaries (together, the “Guarantors”) and Wayfair LLC, a subsidiary of Wayfair, as borrower (the “Borrower”), entered into an amended and restated credit agreement (the “Amended and Restated Credit Agreement”) among Wayfair, the Borrower, the lenders and letter of credit issuers parties thereto and Citibank, N.A., in its capacity as administrative agent, collateral agent and a letter of credit issuer.

The Amended and Restated Credit Agreement amends and restates and replaces that certain credit agreement, dated as of March 24, 2021 (as amended, amended and restated, supplemented and/or otherwise modified from time to time prior to entry into the Amended and Restated Credit Agreement), by and among the Borrower, Wayfair, each other credit party from time to time party thereto, each lender from time to time party thereto, Citibank N.A.

as the administrative agent for the lenders and letter of credit issuer, and each other letter of credit issuer from time to time party thereto.

The Amended and Restated Credit Agreement provides for a $ 500 million senior secured revolving credit facility (the “Revolver”) with a maturity of March 13, 2030, subject to a springing earlier maturity in certain circumstances.

Debt issuance costs for the Revolver are included in other non-current assets and are amortized to interest expense over the Revolver’s term.

As of March 31, 2025, there were no revolving loans outstanding under the Revolver.

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

Wayfair had $ 71 million outstanding letters of credit as of March 31, 2025, 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.

The proceeds of the Revolver may be used to finance working capital, to refinance existing indebtedness and to provide funds for permitted acquisitions, repurchases of equity interests and other general corporate purposes.

The Borrower’s obligations under the Revolver are guaranteed by the Guarantors.

The obligations of the Borrower and the Guarantors are secured by first-priority liens on substantially all of the assets of the Borrower and the Guarantors, including, with certain exceptions, all of the capital stock of Wayfair’s domestic subsidiaries and 65 % of the voting capital stock and 100 % of the non-voting capital stock of Wayfair’s first-tier foreign subsidiaries.

The Revolver borrowings bear interest through maturity at a variable rate based upon, at the Borrower’s option, (i) with respect to loans denominated in U.S.

dollars, either (x) the Adjusted Term SOFR (as defined in the Amended and Restated Credit Agreement) rate or (y) the base rate (which is the highest of (x) the prime rate, (y) one-half of 1.00 % in excess of the federal funds effective rate and (z) 1.00 % in excess of the one-month Adjusted Term SOFR rate), (ii) with respect to loans denominated in an alternative currency (other than Pounds Sterling), the Adjusted Eurocurrency Rate (as defined in the Amended and Restated Credit Agreement) or (iii) with respect to loans denominated in Pounds Sterling, the RFR (as defined in the Amended and Restated Credit Agreement) rate, plus, in each case, an applicable margin.

As of March 31, 2025, the applicable margin for Adjusted Term SOFR and Adjusted Eurocurrency Rate loans is 1.25 % per annum, the applicable margin for base rate loans is 0.25 % per annum and the applicable margin for RFR loans is 1.2826 % per annum.

The applicable margin is subject to specified changes depending on Wayfair’s Consolidated Senior Secured Debt to Consolidated EBITDA Ratio, as defined in the Amended and Restated Credit Agreement.

The Amended and Restated Credit Agreement contains affirmative and negative covenants customarily applicable to senior secured revolving credit facilities, including covenants that, among other things, limit or restrict our ability, subject to negotiated exceptions, to incur additional indebtedness and additional liens on our assets, engage in mergers or acquisitions or dispose of assets, pay dividends or make other distributions, voluntarily prepay other indebtedness, enter into transactions with affiliated persons, make investments, or change the nature of our businesses.

The Revolver also contains customary events of default, subject to thresholds and grace periods, including, among others, payment default, covenant default, cross default to other material indebtedness and judgment default.

In addition, the Amended and Restated Credit Agreement requires Wayfair to maintain a Consolidated Senior Secured Debt to Consolidated EBITDA Ratio (as defined in the Amended and Restated Credit Agreement) of 4.00 to 1.00, subject to a 0.50 step up following certain permitted acquisitions.

Wayfair does not expect any of these restrictions to affect or limit the ability to conduct business in the ordinary course.

As of March 31, 2025, Wayfair was in compliance with all covenants.

Senior Secured Notes

On October 8, 2024, Wayfair 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.

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

On March 13, 2025, Wayfair LLC (the “Issuer”), a subsidiary of Wayfair, issued $ 700.0 million aggregate principal amount of 2030 Secured Notes.

The 2030 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 2030 Secured Notes will be senior secured obligations of the Issuer.

Interest on the 2030 Secured Notes is payable semi-annually, in arrears, on March 15 and September 15 of each year, commencing on September 15, 2025, at a rate of 7.750 % per annum.

The annual effective interest rate of the 2030 Secured Notes is 7.90 %.

Transaction costs to issue the 2030 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 2030 Secured Notes.

The 2030 Secured Notes will mature on September 15, 2030, unless earlier redeemed, in accordance with their terms or repurchased.

The following table summarizes certain terms related to the Company’s current outstanding Senior Secured Notes:

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

2029 Secured Notes October 31, 2029 7.250 % 7.50 % April 15 and October 15

2030 Secured Notes September 15, 2030 7.750 % 7.90 % March 15 and September 15

Convertible Notes

The following table summarizes certain terms related to the Company’s current outstanding Convertible Notes:

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

Convertible Accreting Notes

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

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

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 Convertible 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.

Wayfair will settle any conversions of the Non-Accreting Notes in cash, shares of Wayfair’s Class A common stock or a combination thereof, with the form of consideration determined at Wayfair’s election.

The holders of the Non-Accreting Notes may convert all or a portion of such Notes prior to certain specified dates (each, a “Free Convertibility Date”) under the following circumstances (in each case, as applicable to each series of Non-Accreting Notes):

Wayfair will settle any conversions of the Convertible Notes in cash, shares of Wayfair’s Class A common stock or a combination thereof, with the form of consideration determined at Wayfair’s election.

The holders of the Convertible Notes may convert all or a portion of such Notes prior to certain specified dates (each, a “Free Convertibility Date”) under the following circumstances (in each case, as applicable to each series of Convertible Notes):

• during any calendar quarter (and only during such calendar quarter), if the last reported sale price of Wayfair’s Class A common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter is greater than or equal to 130 % of the conversion price on each applicable trading day;

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

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 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.

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).

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.

Conversions of Notes

During the three and nine months ended September 30, 2024, there were no conversions of the Notes.

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 Convertible Notes may convert their Convertible Notes at any time.

The conditional conversion features of the 2025 Notes, 2026 Notes, 2027 Notes and 2028 Notes were not triggered during the calendar quarter ended March 31, 2025, therefore, the 2025 Notes, 2026 Notes, 2027 Notes and 2028 Notes are not convertible during the calendar quarter ended June 30, 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 Convertible 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 Convertible 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.

Wayfair may not redeem the Convertible 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 Convertible 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 Convertible Notes upon receiving notice of redemption.

Partial Extinguishment of Convertible Notes

On March 14, 2025, in connection with the issuance of the 2030 Secured Notes, Wayfair repurchased $ 578 million aggregate principal amount of the 2026 Notes.

In accounting for the repurchases, Wayfair recorded a $ 25 million gain on debt extinguishment, representing the difference between the cash paid for principal, plus accrued and unpaid interest and transaction fees of $ 551 million and the net carrying value of the 2026 Notes of $ 576 million.

Conversions of Convertible Notes

During the three months ended March 31, 2025, there were no conversions of the Convertible Notes.

Interest Expense

During the three months ended September 30, 2024, Wayfair recognized contractual interest expense and debt discount amortization of $ 17 million and $ 2 million, respectively, and during the nine months ended September 30, 2024, contractual interest expense and debt discount amortization of $ 48 million and $ 7 million, respectively.

During the three months ended September 30, 2023, Wayfair recognized contractual interest expense and debt discount amortization of $ 15 million and $ 3 million, respectively, and during the nine months ended September 30, 2023, contractual interest expense and debt discount amortization of $ 40 million and $ 6 million, respectively.

Fair Value of Notes

As of September 30, 2024, the estimated fair value of the 2024 Notes, 2025 Notes, 2026 Notes, 2027 Notes, 2028 Notes and 2025 Accreting Notes was $ 117 million, $ 722 million, $ 887 million, $ 830 million, $ 1.0 billion and $ 30 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 September 30, 2024, the if-converted value of the 2028 Notes exceeded the principal value by $ 156 million, respectively.

As of September 30, 2024, 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 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.

Each of the Capped Calls has an initial cap price per share of Wayfair’s Class A common stock, which represented a premium over the last reported sale price (or, with respect to the 2025 Capped Calls, the volume-weighted average price) of Wayfair’s Class A common stock on the date the corresponding Non-Accreting Notes were priced (the “Cap Price Premium”), and is subject to certain adjustments under the terms of the corresponding agreements.

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.

During the three months ended March 31, 2025, Wayfair recognized contractual interest expense and debt discount amortization of $ 32 million and $ 3 million, respectively.

During the three months ended March 31, 2024, Wayfair recognized contractual interest expense and debt discount amortization of $ 15 million and $ 3 million, respectively.

Fair Value of the Notes

As of March 31, 2025, the estimated fair value of the 2025 Notes, 2026 Notes, 2027 Notes, 2028 Notes, 2029 Secured Notes and 2030 Secured Notes was $ 231 million, $ 147 million, $ 678 million, $ 737 million, $ 768 million and $ 677 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 March 31, 2025, the if-converted value of the 2025 Notes, 2026 Notes, 2027 Notes and 2028 Notes did not exceed the principal value.

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 Convertible Notes upon conversion of the Convertible 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 Convertible 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 Convertible Notes are converted, repurchased or redeemed prior to such date.

Each of the Capped Calls has an initial cap price per share of Wayfair’s Class A common stock, which represented a premium over the last reported sale price (or, with respect to the 2025 Capped Calls, the volume-weighted average price) of Wayfair’s Class A common stock on the date the corresponding Convertible Notes were priced (the “Cap Price Premium”), and is subject to certain adjustments under the terms of the corresponding agreements.

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

The initial terms for the Capped Calls are presented below:

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2028 Capped Calls November 15, 2028 $ 73.28 100 %

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

Similarly, holders of the Non-Accreting Notes do not have any rights with respect to the Capped Calls.

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

Similarly, holders of the Convertible Notes do not have any rights with respect to the Capped Calls.

The Capped Calls do not meet the criteria for separate accounting as a derivative as they are indexed to Wayfair's stock and meet the requirements to be classified in equity.

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 nine months ended September 30, 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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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.

The estimated potential liability for the CBSA review, net of any amounts that may be recouped through the appeals process, is approximately $ 33 million, inclusive of duties and interest.

Related to the CBSA review, during the three and nine months ended September 30, 2024, Wayfair incurred approximately $ 2 million and $ 11 million, respectively, to cost of goods sold and incurred approximately $ 2 million during the nine months ended September 30, 2024, to selling, operations, technology, general and administrative within the condensed consolidated statement of operations.

During the three and nine months ended September 30, 2024, Wayfair made payments of approximately $ 3 million and $ 13 million, respectively, of duties and $ 1 million and $ 3 million, respectively, 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.

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.

Periodically, Wayfair receives assessments from the CBSA and 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 options to mitigate exposure.

As of September 30, 2024, approximately $ 5 million was recorded within other current liabilities in the condensed consolidated balance sheets.

During the three months ended March 31, 2025, Wayfair incurred approximately $ 5 million to cost of goods sold within the condensed consolidated statements of operations and made payments of approximately $ 5 million of duties based on assessments received during the current period, related to the years ended December 31, 2023 and 2022 and part of the year ended December 31, 2021.

As of March 31, 2025, approximately $ 4 million was recorded within other current liabilities in the condensed 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 part of the year ended December 31, 2024 and the years ended December 31, 2023 and 2022 resulted in a benefit of $ 38 million recorded during the three months ended March 31, 2025 to cost of goods sold within the condensed consolidated statement of operations.

This was related to an overpayment of duties during those years, and 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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Stockholders’ Deficit

Since Wayfair's initial public offering through September 30, 2024, 56,347,119 shares of Class B common stock were converted to the same number of shares of Class A common stock.

Since Wayfair's initial public offering through March 31, 2025, 57,380,119 shares of Class B common stock were converted to Class A common stock.

Stock Repurchase Programs

During the three and nine months ended September 30, 2024 and 2023, Wayfair did not repurchase any shares of Class A common stock under its stock repurchase programs.

During the three months ended March 31, 2025 and 2024, Wayfair did not repurchase any shares of Class A Common stock under the authorized repurchase programs.

Equity-Based Compensation

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The Incentive Plans are administered by the Board for awards to non-employee directors and by the compensation committee of the Board for other participants and provide for the issuance of equity-based awards including stock options, stock appreciation rights, restricted stock, restricted stock units (“RSUs”), performance awards and stock payments.

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

As of September 30, 2024, 11,582,421 shares of Class A common stock remained available for future grant under the 2023 Plan.

The following table presents activity relating to RSUs for the nine months ended September 30, 2024:

As of March 31, 2025, 8,856,478 shares of Class A common stock remained available for future grant under the 2023 Plan.

The following table presents activity relating to RSUs for the three months ended March 31, 2025:

Shares Weighted-Average

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RSUs forfeited/canceled ( 130,838 ) $ 79.38

Unvested at September 30, 2024

Unvested at March 31, 2025

2,339,376 $ 51.90

As of September 30, 2024, unrecognized equity-based compensation expense related to RSUs expected to vest over time is $ 116 million with a weighted-average remaining vesting term of 0.4 years.

The following table summarizes activity for the nine months ended September 30, 2024 and 2023:

Nine Months Ended September 30,

As of March 31, 2025, unrecognized equity-based compensation expense related to RSUs expected to vest over time is $ 57 million with a weighted-average remaining vesting term of 0.2 years.

The following table summarizes activity for the three months ended March 31, 2025 and 2024:

Three Months Ended March 31,

Weighted average grant date fair value of RSUs $ 31.72 $ 65.40

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Intrinsic value of RSUs vested (in millions) $ 70 $ 129

As of September 30, 2024, the aggregate intrinsic value of unvested RSUs was $ 168 million.

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

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

2024 2023 2024 2023

As of March 31, 2025, the aggregate intrinsic value of unvested RSUs was $ 75 million.

Equity-based compensation was classified as follows in the condensed consolidated statements of operations for the three months ended March 31, 2025 and 2024:

Three Months Ended March 31,

(in millions)

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Total equity-based compensation expense $ 64 $ 119

Equity-based compensation costs capitalized as software costs were $ 10 million and $ 29 million for the three and nine months ended September 30, 2024, respectively, and $ 15 million and $ 45 million for the three and nine months ended September 30, 2023, respectively.

The provision for income taxes, net recorded during the three and nine months ended September 30, 2024 is primarily related to income tax benefits for tax losses earned in the U.S.

and certain foreign jurisdictions and U.S.

state income taxes, as well as related changes in increases in the Company’s valuation allowance on deferred tax assets, as well as some U.S.

state minimum and foreign taxes.

Wayfair had no material unrecognized tax benefits as of September 30, 2024 and December 31, 2023.

The Organization for Economic Co-operation and Development (“OECD”) has proposed a global minimum tax of 15% of reported profits (“Pillar 2”) that has been agreed upon in principle by over 140 countries.

Many non- U.S.

tax jurisdictions have either recently enacted legislation to adopt certain components of the Pillar 2 model rules beginning in 2024 or announced their plans to enact legislation in future years.

The currently enacted Pillar 2 model rules did not have a material impact on our provision for income taxes for the three and nine months ended September 30, 2024.

Equity-based compensation costs capitalized as software costs wer e $ 6 million and $ 11 million for the three months ended March 31, 2025 and 2024, respectively.

Loss per Share

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The dilutive effect of these common stock equivalents is reflected in diluted earnings or loss per share by application of the treasury stock method.

The dilutive effect of shares issuable upon conversion of the convertible debt instruments is included in the calculation of diluted earnings or loss per share under the if-converted method.

The dilutive effect of shares issuable upon conversion of the convertible debt instruments are included in the calculation of diluted earnings or loss per share under the if-converted method.

For periods in which Wayfair has reported net losses, diluted loss per share is the same as basic loss per share, as the effects of common stock equivalents outstanding and shares issuable upon conversion of convertible debt instruments are antidilutive and therefore excluded from the calculation of diluted loss per share.

Wayfair allocates undistributed earnings between the classes on a one-to-one basis when computing earnings or loss per share.

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

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

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

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

2024 2023 2024 2023

Three Months Ended March 31,

(in millions, except per share data)

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

123 116 122 113

Loss per share

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

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

2024 2023 2024 2023

Three Months Ended March 31,

(in millions)

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Shares related to convertible debt instruments 28 36

Total 39 42 39 42

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.

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

T he Capped Calls are generally expected to reduce the potential dilution of Wayfair's Class A common stock upon any conversion of the Convertible 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 Convertible 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 Convertible 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 4, Debt and Other Financing .

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These segments reflect the way the CODM allocates resources and evaluates financial performance, which is based upon each segment's Adjusted EBITDA.

Adjusted EBITDA is defined as net income or loss before depreciation and amortization, equity-based compensation and related taxes, interest income or expense, net, other income or expense, net, provision or benefit for income taxes, net, non-recurring items, and other items not indicative of ongoing operating performance.

Adjusted EBITDA is defined as net income or loss before depreciation and amortization, equity-based compensation and related taxes, interest income or expense, net, other income or expense, net, provision or benefit for income taxes, non-recurring items and other items not indicative of ongoing operating performance.

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.

The accounting policies of the segments are the same as those described in Note 1, Summary of Significant Accounting Policies , included in Part II, Item 8, Financial Statements and Supplementary Data , of the Company’s Annual Report on Form 10-K for the year ended December 31, 2023.

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, included in Part II, Item 8, Financial Statements and Supplementary Data, of Wayfair’s Annual Report on Form 10-K for the year ended December 31, 2024.

Wayfair allocates certain operating expenses to the operating and reportable segments, including customer service and merchant fees and selling, operations, technology, general and administrative expenses based on the usage and relative contribution provided to the segments.

It excludes from the allocations certain operating expense lines, including depreciation and amortization, equity-based compensation and related taxes, impairment and other related net charges and restructuring charges, as well as interest income or expense, net, other income or expense, net, gain or loss on debt extinguishment and provision or benefit for income taxes, net.

There are no net revenue transactions between Wayfair's reportable segments.

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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:

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

2024 2023 2024 2023

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

Three Months Ended March 31,

(in millions)

International Total U.S.

International Total

Net revenue $ 2,429 $ 301 $ 2,730 $ 2,391 $ 338 $ 2,729

International net revenue 372 372 1,097 1,117

Total net revenue $ 2,884 $ 2,944 $ 8,730 $ 8,889

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

Cost of goods sold (1)

1,686 193 1,879 1,634 260 1,894

(in millions)

Adjusted EBITDA:

Advertising 306 38 344 286 38 324

Other segment items (2)

342 59 401 350 86 436

International ( 22 ) ( 23 ) ( 104 ) ( 99 )

Total reportable segments Adjusted EBITDA 119 100 357 214

Adjusted EBITDA $ 95 $ 11 $ 106 $ 121 $ ( 46 ) $ 75

reconciling items (3)

( 193 ) ( 263 ) ( 721 ) ( 778 )

Net loss $ ( 113 ) $ ( 248 )

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:

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

2024 2023 2024 2023

Three Months Ended March 31,

(in millions)

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Other (income) expense, net ( 10 ) 4

Provision for income taxes, net 3 2 8 6

Provision for income taxes 3 3

Impairment and other related net charges (a)

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Gain on debt extinguishment (c)

— — — ( 100 )

Total reconciling items $ 219 $ 323

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

Subsequent Events

Senior Secured Notes

On October 8, 2024, Wayfair 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.

Maturity of 2024 Notes

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.

During the three months ended March 31, 2025, Wayfair recorded net charges of $ 23 million, inclusive of $ 20 million associated with the Germany Restructuring and weakened macroeconomic conditions in connection with its German operations and $ 3 million associated with changes in sublease market conditions for a technology center in the U.S.

Refer to Note 2, Supplemental Financial Statement Disclosures , for additional information.

During the three months ended March 31, 2025, Wayfair incurred $ 56 million of charges consisting primarily of one-time employee severance, benefits, relocation and transition costs.

This is inclusive of $ 40 million related to the Germany Restructuring and $ 16 million related to the March 2025 workforce reduction.

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

During the three months ended March 31, 2025, Wayfair recorded a $ 25 million gain on debt extinguishment upon repurchase of $ 578 million in aggregate principal amount of the 2026 Notes.

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

2025 December 31,

(in millions)

Geographic long-lived assets:

International 287 279

Total reportable segment long-lived assets 1,057 1,068

reconciling corporate long-lived assets 411 460

Total long-lived assets $ 1,468 $ 1,528

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, 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:

2025 December 31,

(in millions)

Assets by segment:

$ 1,242 $ 1,245

International 340 328

Total reportable segment assets 1,582 1,573

reconciling corporate assets 1,837 1,886

Total assets $ 3,419 $ 3,459

and International segment assets consist primarily of accounts receivable, net, inventories, prepaid expenses and other current assets, property and equipment, net and operating lease ROU assets.

Corporate assets include cash and cash equivalents, short-term investments, long-lived assets at corporate facilities, capitalized internal-use software and website development costs and other non-current assets.

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

What changed 10-Q

Item 1. Financial Statements