Wayfair Inc. 10-Q

Item 1. Financial Statements WAYFAIR INC. CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) March 31, December 31, 2025 2024 (in millions, except share and per share data) Assets: Current assets Cash and cash equivalents $ 1,338 $ 1,316 Short-term investments 30 56 Accounts receivable, net 140 155 Inventories 90 76 Prepaid expenses and other current assets 295 274 Total current assets 1,893 1,877 Operating lease right-of-use assets 912 925 Property and equipment, net 556 603 Other non-current assets 58 54 Total assets $ 3,419 $ 3,459 Liabilities and Stockholders' Deficit: Current liabilities Accounts payable $ 1,123 $ 1,246 Other current liabilities 1,160 1,124 Total current liabilities 2,283 2,370 Long-term debt 3,000 2,882 Operating lease liabilities, net of current 914 929 Other non-current liabilities 31 33 Total liabilities 6,228 6,214 Commitments and contingencies (Note 5) Stockholders’ deficit: Convertible preferred stock, $ 0.001 par value per share: 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 1,821 1,751 Accumulated deficit ( 4,623 ) ( 4,510 ) Accumulated other comprehensive (loss) income ( 7 ) 4 Total stockholders' deficit ( 2,809 ) ( 2,755 ) Total liabilities and stockholders' deficit $ 3,419 $ 3,459 See notes to unaudited condensed consolidated financial statements. 1 Table of Contents WAYFAIR INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) Three Months Ended March 31, 2025 2024 (in millions, except per share data) Net revenue $ 2,730 $ 2,729 Cost of goods sold 1,893 1,910 Gross profit 837 819 Operating expenses: Customer service and merchant fees 107 117 Advertising 344 324 Selling, operations, technology, general and administrative 429 534 Impairment and other related net charges 23 — Restructuring charges 56 79 Total operating expenses 959 1,054 Loss from operations ( 122 ) ( 235 ) Interest expense, net ( 23 ) ( 6 ) Other income (expense), net 10 ( 4 ) Gain on debt extinguishment 25 — Loss before income taxes ( 110 ) ( 245 ) Provision for income taxes 3 3 Net loss $ ( 113 ) $ ( 248 ) Loss per share: Basic $ ( 0.89 ) $ ( 2.06 ) Diluted $ ( 0.89 ) $ ( 2.06 ) Weighted-average number of shares of common stock outstanding used in computing per share amounts: Basic 127 120 Diluted 127 120 See notes to unaudited condensed consolidated financial statements 2 Table of Contents WAYFAIR INC. CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (Unaudited) Three Months Ended March 31, 2025 2024 (in millions) Net loss $ ( 113 ) $ ( 248 ) Other comprehensive loss: Foreign currency translation adjustments ( 11 ) — Comprehensive loss $ ( 124 ) $ ( 248 ) See notes to unaudited condensed consolidated financial statements. 3 Table of Contents WAYFAIR INC. CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT (Unaudited) Three Months Ended Class A and Class B Common Stock Shares Amount Additional Paid-In Capital Accumulated Deficit Accumulated Other Comprehensive (Loss) Income Total Stockholders' Deficit (in millions) Balance at December 31, 2023 118 $ — $ 1,316 $ ( 4,018 ) $ ( 5 ) $ ( 2,707 ) Net loss — — — ( 248 ) — ( 248 ) Issuance of common stock upon vesting of RSUs 2 — — — — — Equity-based compensation — — 130 — — 130 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 ) Other comprehensive loss — — — — ( 11 ) ( 11 ) Issuance of common stock upon vesting of RSUs 2 — — — — — Equity-based compensation — — 70 — — 70 Balance at March 31, 2025 127 $ — $ 1,821 $ ( 4,623 ) $ ( 7 ) $ ( 2,809 ) See notes to unaudited condensed consolidated financial statements. 4 Table of Contents WAYFAIR INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) Three Months Ended March 31, 2025 2024 (in millions) Cash flows for operating activities: Net loss $ ( 113 ) $ ( 248 ) 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 debt discount and issuance costs 3 3 Impairment and other related net charges 23 — Gain on debt extinguishment ( 25 ) — Other non-cash adjustments 12 ( 1 ) Changes in operating assets and liabilities: Accounts receivable, net 16 9 Inventories ( 14 ) ( 7 ) Prepaid expenses and other assets — 34 Accounts payable and other liabilities ( 143 ) ( 152 ) Net cash used in operating activities ( 96 ) ( 139 ) Cash flows for investing activities: Purchase of short- and long-term investments ( 18 ) ( 36 ) Sale and maturities of short- and long-term investments 44 15 Purchase of property and equipment ( 5 ) ( 13 ) Site and software development costs ( 38 ) ( 41 ) Net cash used in investing activities ( 17 ) ( 75 ) Cash flows from financing activities: 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 increase (decrease) in cash, cash equivalents and restricted cash 18 ( 215 ) Cash, cash equivalents and restricted cash Beginning of period $ 1,320 $ 1,326 End of period $ 1,338 $ 1,111 See notes to unaudited condensed consolidated financial statements 5 Table of Contents WAYFAIR INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) Three Months Ended March 31, 2025 2024 (in millions) Supplemental cash flow information: Cash paid for interest on long-term debt $ 16 $ 18 Purchase of property and equipment included in accounts payable and other liabilities $ 7 $ 20 Reconciliation of cash, cash equivalents and restricted cash to condensed consolidated balance sheets Cash and cash equivalents $ 1,338 $ 1,107 Restricted cash included within prepaid expenses and other current assets — 4 Total cash, cash equivalents and restricted cash $ 1,338 $ 1,111 See notes to unaudited condensed consolidated financial statements 6 Table of Contents Wayfair Inc. Notes to Condensed Consolidated Financial Statements (Unaudited) 1. Summary of Significant Accounting Policies Basis of Presentation The accompanying unaudited condensed consolidated financial statements contained in this Quarterly Report on Form 10-Q are those of Wayfair Inc. and its wholly-owned subsidiaries. Unless the context indicates otherwise, “Wayfair,” “the Company" or similar terms refer to Wayfair Inc. 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 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. The information included in this Quarterly Report on Form 10-Q should be read in conjunction with the audited consolidated financial statements and accompanying notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024. Furthermore, interim results are not necessarily indicative of the results for the full year ended December 31, 2025 or future periods. 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 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 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. The amendment is effective for annual periods beginning after December 15, 2024, with early adoption permitted. 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 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. 2. Supplemental Financial Statement Disclosures Accounts Receivable, Net 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 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. 7 Table of Contents Contract Liabilities 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 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. 3. Cash, Cash Equivalents and Restricted Cash, Investments and Fair Value Measurements Investments 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 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 Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value (in millions) Short-term: Investment securities $ 30 $ — $ — $ 30 Total $ 30 $ — $ — $ 30 8 Table of Contents December 31, 2024 Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value (in millions) Short-term: Investment securities $ 56 $ — $ — $ 56 Total $ 56 $ — $ — $ 56 Fair Value Measurements Wayfair's financial assets and liabilities are measured at fair value, which is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). The three levels of inputs used to measure fair value are as follows: ▪ Level 1—Unadjusted quoted prices in active markets for identical assets or liabilities ▪ Level 2—Unadjusted quoted prices in active markets for similar assets or liabilities, unadjusted quoted prices for identical or similar assets or liabilities in markets that are not active, or inputs other than quoted prices that are observable or can be corroborated by observable market data for substantially the full-term of the asset or liability ▪ Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the asset or liability This hierarchy requires Wayfair to use observable market data, when available, and to minimize the use of unobservable inputs when determining fair value. 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 underlying security. Wayfair classifies short-term investments within Level 2 because unadjusted quoted prices for identical or similar assets in markets are not active. 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 March 31, 2025 and December 31, 2024: March 31, 2025 Level 1 Level 2 Level 3 Total (in millions) Cash and cash equivalents: Cash $ 480 $ — $ — $ 480 Cash equivalents 858 — — 858 Total cash and cash equivalents 1,338 — — 1,338 Short-term investments: Investment securities — 30 — 30 Total $ 1,338 $ 30 $ — $ 1,368 9 Table of Contents December 31, 2024 Level 1 Level 2 Level 3 Total (in millions) Cash and cash equivalents: Cash $ 461 $ — $ — $ 461 Cash equivalents 855 — — 855 Total cash and cash equivalents 1,316 — — 1,316 Short-term investments: Investment securities — 56 — 56 Prepaid expenses and other current assets: Certificate of deposit (1) 4 — — 4 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. 4. Debt and Other Financing The following table presents the outstanding principal amount and carrying value of debt and other financing: March 31, 2025 December 31, 2024 Debt Instrument Principal Amount Unamortized Debt Discount Net Carrying Amount Principal Amount Unamortized Debt Discount Net Carrying Amount (in millions) Revolving Credit Facility $ — $ — 2025 Notes 237 ( 1 ) 236 237 ( 1 ) 236 2026 Notes 156 — 156 734 ( 3 ) 731 2027 Notes 690 ( 6 ) 684 690 ( 7 ) 683 2028 Notes 690 ( 8 ) 682 690 ( 9 ) 681 2029 Secured Notes 800 ( 13 ) 787 800 ( 13 ) 787 2030 Secured Notes 700 ( 9 ) 691 — — — Total Debt $ 3,236 $ 3,118 Short-term debt (1) 236 236 Long-term debt $ 3,000 $ 2,882 (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”). 10 Table of Contents Revolving Credit Facility 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 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 11 Table of Contents 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 2026 Notes August 15, 2026 1.000 % 1.2 % February 15 and August 15 2027 Notes September 15, 2027 3.250 % 3.6 % March 15 and September 15 2028 Notes November 15, 2028 3.500 % 3.8 % May 15 and November 15 Conversion and Redemption Terms of the Notes 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 2025 Notes October 1, 2025 July 1, 2025 2.3972 $ 417.15 October 4, 2022 2026 Notes August 15, 2026 May 15, 2026 6.7349 $ 148.48 August 20, 2023 2027 Notes September 15, 2027 June 15, 2027 15.7597 $ 63.45 September 20, 2025 2028 Notes November 15, 2028 August 15, 2028 21.8341 $ 45.80 May 20, 2026 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 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; • during the five -business day period after any ten consecutive trading day period (the “measurement period") in which the trading price (as defined in the applicable indenture) per $ 1,000 principal amount of the notes for each trading day of the measurement period was less than 98 % of the product of the last reported sale price of Wayfair’s Class A common stock and the conversion rate on each such trading day; 12 Table of Contents • if Wayfair calls the notes for redemption, at any time prior to 5:00 p.m. (New York City time) (“the close of business”) on the second scheduled trading day immediately preceding the redemption date; and • 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 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 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. 13 Table of Contents Capped Calls 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: Capped Calls Maturity Date Initial Cap Price Cap Price Premium 2025 Capped Calls October 1, 2025 $ 787.08 150 % 2026 Capped Calls August 15, 2026 $ 280.15 150 % 2027 Capped Calls September 15, 2027 $ 97.62 100 % 2028 Capped Calls November 15, 2028 $ 73.28 100 % 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. 5. Commitments and Contingencies Legal Matters From time to time, Wayfair is involved in litigation matters and other legal claims that arise during the ordinary course of business. The Company records a liability when it believes that it is both probable that a liability has been incurred and the amount of loss can be reasonably estimated. 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. An unfavorable resolution of one or more of these matters could have a material adverse effect on the Company’s results of operations or financial condition, and regardless of the outcome, these matters can be costly and time consuming, as it can divert management's attention from important business matters and initiatives, negatively impacting Wayfair's overall operations. In addition, Wayfair may also find itself at greater risk to outside party claims as it increases its operations in jurisdictions where the laws with respect to the potential liability of online retailers are uncertain, unfavorable, or unclear. However, Wayfair does not currently believe that the outcome of any legal matters will have a material adverse effect on Wayfair’s results of operations or financial condition. 14 Table of Contents Canada Border Services Agency 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. 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. As a result, it is at least reasonably possible that this estimate may change in the near term and the effect of the potential change could be material. 6. Stockholders’ Deficit 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 months ended March 31, 2025 and 2024, Wayfair did not repurchase any shares of Class A Common stock under the authorized repurchase programs. 7. Equity-Based Compensation In April 2023, Wayfair’s stockholders approved the 2023 Incentive Award Plan (the “2023 Plan”) to replace Wayfair’s 2014 Incentive Award Plan, as amended (the “2014 Plan” and, together with the 2023 Plan, the “Incentive Plans”). The Incentive Plans were adopted by the board of directors (the “Board”) to grant cash and equity incentive awards to eligible participants in order to attract, motivate and retain talent. 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. 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 Grant Date Fair Value Unvested at December 31, 2024 2,455,486 $ 72.11 RSUs granted 1,542,600 $ 31.72 RSUs vested ( 1,527,872 ) $ 61.65 RSUs forfeited/canceled ( 130,838 ) $ 79.38 Unvested at March 31, 2025 2,339,376 $ 51.90 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. 15 Table of Contents The following table summarizes activity for the three months ended March 31, 2025 and 2024: Three Months Ended March 31, 2025 2024 Weighted average grant date fair value of RSUs $ 31.72 $ 65.40 Total fair value of vested RSUs (in millions) $ 94 $ 172 Intrinsic value of RSUs vested (in millions) $ 70 $ 129 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, 2025 2024 (in millions) Cost of goods sold $ 2 $ 2 Customer service and merchant fees 3 5 Selling, operations, technology, general and administrative 59 112 Total equity-based compensation expense $ 64 $ 119 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. 8. Loss per Share Wayfair follows the two-class method when computing earnings or loss per share for its two issued classes of common stock - Class A and Class B. Basic earnings or loss per share is computed using the weighted-average number of shares of common stock outstanding during the period. Diluted earnings or loss per share is computed using the weighted-average number of shares of common stock outstanding during the period plus, if dilutive, common stock equivalents outstanding during the period and stock issuable upon conversion of the convertible debt instruments. Wayfair's common stock equivalents consist of shares issuable upon the release of restricted stock units. 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 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 share per Class A and Class B shares are equivalent. 16 Table of Contents The following table presents the calculation of basic and diluted loss per share: Three Months Ended March 31, 2025 2024 (in millions, except per share data) Numerator: Numerator for basic and diluted loss per share - net loss $ ( 113 ) $ ( 248 ) Denominator: Denominator for basic and diluted loss per share - weighted-average number of shares of common stock outstanding 127 120 Loss per share Basic $ ( 0.89 ) $ ( 2.06 ) Diluted $ ( 0.89 ) $ ( 2.06 ) 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 March 31, 2025 2024 (in millions) Unvested restricted stock units 2 4 Shares related to convertible debt instruments 28 36 Total 30 40 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 . 9. Segment and Geographic Information Operating segments are defined as components of an enterprise for which separate financial information is available that is evaluated on a regular basis by the Chief Operating Decision Maker (“CODM”) in deciding how to allocate resources to an individual segment and in assessing performance. Wayfair’s CODM is its Chief Executive Officer. Wayfair's operating and reportable segments are the U.S. and International. 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, 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. 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. 17 Table of Contents 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. There are no net revenue transactions between Wayfair's reportable segments. U.S. The U.S. segment primarily consists of amounts earned through product sales through Wayfair's family of sites in the U.S. International The International segment primarily consists of amounts earned through product sales through Wayfair's international sites. Net revenue from external customers for each group of similar products and services are not reported to the CODM. Separate identification of this information for purposes of segment disclosure is impractical, as it is not readily available and the cost to develop it would be excessive. No individual country outside the U.S. provided greater than 10% of consolidated net revenue. 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, 2025 2024 (in millions) U.S. International Total U.S. International Total Net revenue $ 2,429 $ 301 $ 2,730 $ 2,391 $ 338 $ 2,729 Less: Cost of goods sold (1) 1,686 193 1,879 1,634 260 1,894 Advertising 306 38 344 286 38 324 Other segment items (2) 342 59 401 350 86 436 Adjusted EBITDA $ 95 $ 11 $ 106 $ 121 $ ( 46 ) $ 75 Less: reconciling items (3) 219 323 Net loss $ ( 113 ) $ ( 248 ) (1) 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. (2) 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. 18 Table of Contents (3) The following adjustments are made to reconcile total reportable segments Adjusted EBITDA to consolidated net loss: Three Months Ended March 31, 2025 2024 (in millions) Depreciation and amortization $ 81 $ 104 Equity-based compensation and related taxes 68 127 Interest expense, net 23 6 Other (income) expense, net ( 10 ) 4 Provision for income taxes 3 3 Other: Impairment and other related net charges (a) 23 — Restructuring charges (b) 56 79 Gain on debt extinguishment (c) ( 25 ) — Total reconciling items $ 219 $ 323 (a) 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. (b) 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. (c) 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: March 31, 2025 December 31, 2024 (in millions) Geographic long-lived assets: U.S. $ 770 $ 789 International 287 279 Total reportable segment long-lived assets 1,057 1,068 Plus: reconciling corporate long-lived assets 411 460 Total long-lived assets $ 1,468 $ 1,528 U.S. 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. 19 Table of Contents The following table presents total assets attributable to Wayfair's reportable segments reconciled to consolidated amounts: March 31, 2025 December 31, 2024 (in millions) Assets by segment: U.S. $ 1,242 $ 1,245 International 340 328 Total reportable segment assets 1,582 1,573 Plus: reconciling corporate assets 1,837 1,886 Total assets $ 3,419 $ 3,459 U.S. 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.