Wayfair Inc. 10-Q

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Forward-Looking Statements This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). All statements other than statements of historical fact contained in this Quarterly Report on Form 10-Q are forward looking statements, including statements regarding our investment plans and anticipated returns on those investments; our plans for growth, including customer and revenue growth and growth rates; our future results of operations and financial position ; available liquidity and access to financing sources; performance across our brands and segments; anticipated cost-cutting and liability and dilution management exercises and the expected results of such exercises; our business strategy; anticipated benefits of our strategic initiatives; plans and objectives of management for future operations, including regarding our physical retail stores and omni-channel strategy; investment in our logistics network; consumer activity and behaviors; developments in our technology and systems, including our use of artificial intelligence and machine learning technologies and the anticipated results of those developments; and the impact of macroeconomic events, including interest rates, tariffs and inflation, and our response to such events. In some cases, you can identify forward-looking statements by terms such as “aim,” “may,” “will,” “should,” “expects,” “plans,” “anticipates,” “continues,” “could,” “intends,” “goals,” “target,” “projects,” “contemplates,” “believes,” “estimates,” “predicts” or “potential” or the negative of these terms or other similar expressions. Forward-looking statements are based on current expectations of future events. We cannot guarantee that any forward-looking statement will be accurate, although we believe that we have been reasonable in our expectations and assumptions. Investors should realize that if underlying assumptions prove inaccurate or that known or unknown risks or uncertainties materialize, actual results could vary materially from Wayfair’s forward-looking statements, including our expectations and projections. Investors are therefore cautioned not to place undue reliance on any forward-looking statements. These forward-looking statements speak only as of the date of this Quarterly Report on Form 10-Q and, except as required by applicable law, we undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of any new information, future events or otherwise. 22 Table of Contents Factors that could cause or contribute to differences in our future results include, without limitation, the following: • adverse macroeconomic conditions, including: economic instability; changes in laws and regulations and other governmental actions or policies, including those related to taxes and new or increased tariffs, and the uncertainty surrounding potential changes in such laws and regulations or other potential governmental actions or policies; export controls; sustained higher interest rates and inflation; slower growth or the potential for recession; disruptions in the global supply chain and other conditions affecting the retail environment for products we sell; geopolitical disturbances and conflicts, or threats of such actions and related uncertainty, which could exacerbate other risks such as shipment disruptions or fuel shortages; and other matters that influence consumer spending and preferences, as well as our ability to plan for and respond to the impact of these conditions; • risks relating to our liability and dilution management exercises; • risks relating to achieving the anticipated benefits of strategic initiatives and investments in our technology and systems, including generative AI • our ability to manage the impacts of our restructurings and workforce reductions; • our ability to acquire and retain customers in a cost-effective manner; • our ability to increase our net revenue; • our ability to curate, market, grow and maintain strong brands and to grow our customer base; • our ability to manage our growth initiatives; • our ability to expand our business and compete successfully; • disruptions, capacity constraints or inefficiencies in our information systems network, or any potential cybersecurity incident; • geopolitical events, natural disasters, public health emergencies, civil disturbances and terrorist attacks; and • developments in, and the outcome of, legal and regulatory proceedings and investigations to which we are a party or are subject, and the liabilities, obligations and expenses, if any, that we may incur in connection therewith. A further list and description of risks, uncertainties and other factors that could cause or contribute to differences in our future results include the cautionary statements herein and in our other filings with the Securities and Exchange Commission, including those set forth under Part I, Item 1A, Risk Factors , in our Annual Report on Form 10-K for the year ended December 31, 2025. We qualify all of our forward-looking statements by these cautionary statements. Overview Wayfair is the destination for all things home. Through our omni-channel strategy, we offer visually inspired browsing, compelling merchandising, easy product discovery and attractive prices for over 40 million products from approximately 20 thousand suppliers. We believe an increasing portion of the dollars spent on home goods will be spent online and that there is an opportunity to acquire more market share. Our business model is designed to grow our net revenue by acquiring new customers as well as stimulating repeat purchases from our existing customers. Through increasing brand awareness as well as paid and unpaid advertising, we attract new and repeat customers to our family of sites. We aim to turn these customers into recurring shoppers by creating a seamless shopping experience across their entire journey — offering best-in-class product discovery, purchasing, fulfillment and customer service. We complement our e-commerce experience with a growing physical retail presence, designed to strengthen our brands, deepen customer engagement, and enhance the end-to-end shopping experience During the three months ended June 30, 2026, net revenue increased by 7.5% compared to the same period in 2025. As of June 30, 2026, we had 22 million active customers and during the three months ended June 30, 2026, 80.2% of orders came from repeat buyers. The increased sales represents our ongoing execution of business initiatives amid persistent macroeconomic pressures on consumers. We also continued to manage our advertising spend according to a return on investment-oriented approach that carefully tracks and monitors the results of advertising campaigns as we seek to maintain appropriate return targets. Global Considerations Starting in early 2025, the U.S. government announced changes to U.S. trade policy affecting imported goods. Multiple nations have announced tariffs and other actions in response. While some trade deals have been reached and trade negotiations are 23 Table of Contents ongoing, overall the global trade environment remains fluid and highly uncertain. Despite this uncertainty, we believe the structural characteristics of our retail platform position us to capture incremental market share within a category, home goods, that is largely unbranded and highly substitutable. We have and will continue to partner with our suppliers to help them strategize and deliver value for our customers. We continue to closely monitor additional macroeconomic conditions, including, but not limited to, general economic instability, changes in tax laws or regulations or other governmental actions or policies, sustained higher interest rates and inflationary pressures on our business, results of operations and financial results. These types of developments have and may continue to negatively impact global economic activity and consumer behavior, which have and may continue to adversely affect our business and our results of operations. As our customers react to these global economic conditions, we may take precautionary measures to limit or delay expenditures and preserve capital and liquidity. While it is difficult to quantify and predict the impacts on our business of these global and domestic economic events, including fluctuating interest rates, inflationary pressures and changes in global trade policy, and to predict consumer spending in the near term, we believe the long-term opportunity we see for shopping for the home online remains unchanged. We will continue to monitor economic conditions as we work to manage our business to meet the evolving needs of our customers, employees, suppliers, partners, stockholders and communities. Factors Affecting our Performance We believe that our performance and future success depend on a number of factors that present significant opportunities for us but also pose risks and challenges, including those discussed in Part I, Item 1A, Risk Factors, in our Annual Report on Form 10-K for the year ended December 31, 2025. Key Financial Statement and Operating Metrics We measure our business using the key financial statement, operating metrics and non-GAAP financial measures that are reflected in the below table. See “Non-GAAP Financial Measures” below for more information regarding our use of Adjusted Gross Profit, Adjusted Gross Margin, Contribution Profit, Contribution Margin, Adjusted EBITDA, Adjusted EBITDA Margin, Free Cash Flow and Adjusted Diluted Earnings or Loss per Share and a reconciliation of these non-GAAP financial measures to the most directly comparable financial measure that is prepared in accordance with accounting principles generally accepted in the United States of America or “GAAP.” Our Adjusted Gross Profit, Adjusted Gross Margin, Contribution Profit, Contribution Margin, Free Cash Flow and Adjusted Diluted Earnings or Loss per Share are measured on a consolidated basis, while our Adjusted EBITDA and Adjusted EBITDA Margin is measured on a consolidated and reportable segment basis. All other key financial statement and operating metrics are derived and reported from our consolidated net revenue. 24 Table of Contents We use the following metrics to assess the performance of our overall business: Three Months Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 (in millions, except LTM net revenue per active customer, average order value and per share data) Key Financial Statement Metrics: Net revenue $ 3,519 $ 3,273 $ 6,450 $ 6,003 Gross profit $ 1,054 $ 984 $ 1,934 $ 1,821 Income (loss) from operations $ 104 $ 17 $ 93 $ (105) Net (loss) income $ (1) $ 15 $ (106) $ (98) (Loss) earnings per share Basic $ (0.01) $ 0.11 $ (0.81) $ (0.77) Diluted $ (0.01) $ 0.11 $ (0.81) $ (0.77) Net cash provided by operating activities $ 360 $ 273 $ 308 $ 177 Key Operating Metrics: Active customers (1) 21.7 21.0 21.7 21.0 LTM net revenue per active customer (2) $ 596 $ 572 $ 596 $ 572 Orders delivered (3) 10.6 10.0 20.0 19.1 Average order value (4) $ 332 $ 328 $ 322 $ 315 Non-GAAP Financial Measures: Adjusted Gross Profit $ 1,056 $ 986 $ 1,937 $ 1,825 Contribution Profit $ 539 $ 497 $ 979 $ 888 Adjusted EBITDA $ 242 $ 205 $ 393 $ 311 Free Cash Flow $ 301 $ 230 $ 195 $ 91 Adjusted Diluted Earnings per Share $ 0.95 $ 0.87 $ 1.22 $ 1.02 (1) The number of active customers represents the total number of individual customers who have purchased at least once directly from our sites during the preceding twelve-month period. The change in active customers in a reported period captures both the inflow of new customers as well as the outflow of existing customers who have not made a purchase in the last twelve months. We view the number of active customers as a key indicator of our growth. (2) Last twelve months (“LTM”) net revenue per active customer represents our total net revenue in the last twelve months divided by our total number of active customers for the same preceding twelve-month period. We view LTM net revenue per active customer as a key indicator of our customers’ purchasing patterns, including their initial and repeat purchase behavior. (3) Orders delivered represent the total orders delivered in any period, inclusive of orders that may eventually be returned. As we ship a large volume of packages through multiple carriers, actual delivery dates may not always be available; in those cases, we estimate delivery dates using historical data. We recognize net revenue when an order is delivered, and therefore orders delivered, together with average order value, is an indicator of the net revenue we expect to recognize for the period. We view orders delivered as a key indicator of our growth. (4) We define average order value as total net revenue in a given period divided by the orders delivered in that period. We view average order value as a key indicator of the mix of products on our sites, the mix of offers and promotions and the purchasing behavior of our customers. 25 Table of Contents Results of Consolidated Operations Comparison of the three months ended June 30, 2026 and 2025 Net revenue During the three months ended June 30, 2026, net revenue increased by $246 million, or 7.5%, compared to the same period in 2025, which reflects our ongoing execution of business initiatives amid persistent macroeconomic pressures on consumers. The increase in net revenue is due primarily to higher order volume in addition to higher average order value, compared to the same period in 2025. During the three months ended June 30, 2026, our U.S. net revenue increased by 8.7% compared to the same period in 2025. During the three months ended June 30, 2026, our International net revenue decreased by 1.3% compared to the same period in 2025. During the three months ended June 30, 2026, International Net Revenue Constant Currency Growth was (2.0)% (see “Non-GAAP Financial Measures” below for more information regarding our use of Net Revenue Constant Currency Growth). Three Months Ended June 30, 2026 2025 % Change (in millions) U.S. net revenue $ 3,125 $ 2,874 8.7 % International net revenue 394 399 (1.3) % Net revenue $ 3,519 $ 3,273 7.5 % For more information on our segments, see Note 9, Segment and Geographic Information , included in Part I, Item 1, Financial Statements , in this Quarterly Report on Form 10-Q. Cost of goods sold Cost of goods sold is sensitive to many factors, including quarter-to-quarter variability in product mix, pricing strategies, changes in wholesale, shipping and fulfillment costs, including associated applicable customs duties and fees earned for supplier services rendered. During the three months ended June 30, 2026, cost of goods sold increased by $176 million, or 7.7%, compared to the same period in 2025. The increase in cost of goods sold is driven by higher net revenue, compared to the same period in 2025. As a percentage of net revenue, cost of goods sold increased to 70.0% for the three months ended June 30, 2026 compared to 69.9% in the same period in 2025, due to investments in the customer experience, partially offset by the growth of our supplier services. Three Months Ended June 30, 2026 2025 % Change (in millions) Cost of goods sold $ 2,465 $ 2,289 7.7 % As a percentage of net revenue 70.0 % 69.9 % 26 Table of Contents Operating expenses Operating expenses consist of customer service and merchant fees; advertising; selling, operations, technology, general and administrative expenses; impairment and other related net charges and restructuring and other charges, net. We disclose separately the equity-based compensation and related taxes that are included in customer service and merchant fees and selling, operations, technology, general and administrative expenses. Three Months Ended June 30, 2026 2025 % Change (in millions) Customer service and merchant fees (1) $ 128 $ 121 5.8 % Advertising 392 372 5.4 % Selling, operations, technology, general and administrative (1) 428 465 (8.0) % Impairment and other related net charges 2 — 100.0 % Restructuring and other charges, net — 9 (100.0) % Total operating expenses $ 950 $ 967 (1.8) % As a percentage of net revenue: Customer service and merchant fees (1) 3.6 % 3.7 % Advertising 11.1 % 11.4 % Selling, operations, technology, general and administrative (1) 12.2 % 14.2 % Impairment and other related net charges 0.1 % — % Restructuring and other charges, net — % 0.3 % 27.0 % 29.6 % (1) Includes equity-based compensation and related taxes as follows: Three Months Ended June 30, 2026 2025 (in millions) Customer service and merchant fees $ 3 $ 4 Selling, operations, technology, general and administrative $ 67 $ 95 During the three months ended June 30, 2026, equity-based compensation and related taxes included in customer service and merchant fees and selling, operations, technology, general and administrative decreased by $29 million, or 29.3%, compared to the same period in 2025, due to variability in our stock price on the grant dates of the restricted stock units granted during the three months ended June 30, 2025, partially offset by the expense recognized during the three months ended June 30, 2026 related to the PSUs. The following table summarizes operating expenses as a percentage of net revenue, excluding equity-based compensation and related taxes: Three Months Ended June 30, 2026 2025 Customer service and merchant fees 3.6 % 3.6 % Selling, operations, technology, general and administrative 10.3 % 11.3 % Customer Service and Merchant Fees During the three months ended June 30, 2026, excluding the impact of equity-based compensation and related taxes, our expenses for customer service and merchant fees increased by $8 million, or 6.8%, compared to the same period in 2025. The increase in customer service and merchant fees is due primarily to increased net revenue. 27 Table of Contents As a percentage of net revenue, total customer service and merchant fees decreased to 3.6% for the three months ended June 30, 2026 compared to 3.7% in the same period in 2025 due to increased net revenue and decreased compensation costs. Advertising During the three months ended June 30, 2026, advertising expenses increased by $20 million, or 5.4%, compared to the same period in 2025. The increase reflects our response to changing market conditions and changes in our advertising channel mix, as we seek to maintain our return targets across various channels. As a percentage of net revenue, advertising expenses decreased to 11.1% for the three months ended June 30, 2026 compared to 11.4% in the same period in 2025 due to changes in our advertising channel mix as we seek to maximize returns on advertising spend within our efficiency parameters. Selling, operations, technology, general and administrative During the three months ended June 30, 2026, excluding the impact of equity-based compensation and related taxes, our expenses for selling, operations, technology, general and administrative activities decreased by $9 million, or 2.4%, compared to the same period in 2025. The decrease is due primarily to amortization expenses and capitalized labor costs, partially offset by increases in technology spend. As a percentage of net revenue, total selling, operations, technology, general and administrative expenses decreased to 12.2% for the three months ended June 30, 2026, compared to 14.2% in the same period in 2025, primarily due to decreased compensation costs and increased net revenue. Impairment and other related net charges During the three months ended June 30, 2026, impairment and other related charges increased by $2 million, or 100.0%, compared to the same period in 2025. The increase is due to the exit of a customer service center in the U.S. No impairment charges were recorded during the three months ended June 30, 2025. Restructuring and other charges, net During the three months ended June 30, 2026, restructuring and other charges, net decreased by $9 million, or 100.0%, compared to the same period in 2025. As a percentage of net revenue, restructuring and other charges, net decreased by 0.30% compared to the same period in 2025. During the three months ended June 30, 2026, we incurred no charges related to restructuring and other charges, net. During the three months ended June 30, 2025, we incurred $9 million of charges consisting primarily of one-time employee severance, benefits, relocation and transition costs. This is inclusive of $6 million related to the Germany Restructuring and $3 million related to the March 2025 workforce reduction. Interest expense, net During the three months ended June 30, 2026, interest expense, net increased by $10 million compared to the same period in 2025, primarily driven by the issuances of the 2032 Secured Notes in November 2025 and of the 2034 Secured Notes in May 2026, partially offset by redemptions of the 2027 Notes in March 2026 and all of the 2028 Notes in June 2026. Three Months Ended June 30, 2026 2025 % Change (in millions) Interest expense, net $ (39) $ (29) 34.5 % Other (expense) income, net During the three months ended June 30, 2026, we incurred $4 million of other (expense), net primarily driven by foreign currency translation losses. During the three months ended June 30, 2025, we recognized $23 million of other (expense) income, net, primarily attributable to fluctuations between the U.S. Dollar and the Canadian Dollar. Included in other (expense) income, net are changes in foreign currency transaction gains and losses and long-term investment income or losses. 28 Table of Contents Three Months Ended June 30, 2026 2025 % Change (in millions) Other (expense) income, net $ (4) $ 23 NM Loss on debt extinguishment During the three months ended June 30, 2026, loss on debt extinguishment increased by $65 million compared to the same period in 2025. During the three months ended June 30, 2026, we recorded a $59 million loss on debt extinguishment, representing the difference between the cash paid for principal, plus accrued and unpaid interest and transaction fees of $148 million and the net carrying value of the 2028 Notes of $89 million. Refer to Note 4, Debt and Other Financing , included in Part I, Item 1, Financial Statements , in this Quarterly Report on Form 10-Q for additional information. Three Months Ended June 30, 2026 2025 % Change (in millions) (Loss) gain on debt extinguishment $ (59) $ 6 NM NM - Not Meaningful Provision for income taxes, net During the three months ended June 30, 2026, our provision for income taxes, net increased by $1 million, or 50.0% compared to the same period in 2025. Three Months Ended June 30, 2026 2025 % Change (in millions) Provision for income taxes, net $ 3 $ 2 50.0 % Results of Consolidated Operations Comparison of the six months ended June 30, 2026 and 2025 Net revenue During the six months ended June 30, 2026, net revenue increased by $447 million, or 7.4%, compared to the same period in 2025, which reflects our ongoing execution of business initiatives amid persistent macroeconomic pressures on consumers. The increase in net revenue is due primarily to higher order volume in addition to higher average order value, compared to the same period in 2025. During the six months ended June 30, 2026, our U.S. net revenue increased by 8.2% and International net revenue increased by 1.9% compared to the same period in 2025. During the six months ended June 30, 2026, International Net Revenue Constant Currency Growth was (0.3)% (see “Non-GAAP Financial Measures” below for more information regarding our use of Net Revenue Constant Currency Growth). Six Months Ended June 30, 2026 2025 % Change (in millions) U.S. net revenue $ 5,737 $ 5,303 8.2 % International net revenue 713 700 1.9 % Net revenue $ 6,450 $ 6,003 7.4 % 29 Table of Contents For more information on our segments, see Note 9, Segment and Geographic Information , included in Part I, Item 1, Financial Statements , in this Quarterly Report on Form 10-Q. Cost of goods sold Cost of goods sold is sensitive to many factors, including quarter-to-quarter variability in product mix, pricing strategies, changes in wholesale, shipping and fulfillment costs, including associated applicable customs duties and fees earned for supplier services rendered. During the six months ended June 30, 2026, cost of goods sold increased by $334 million, or 8.0%, compared to the same period in 2025. The increase in cost of goods sold is driven by higher net revenue, in addition to the absence of a one-time benefit of $38 million related to a resolution on the valuation of duties, partially offset by $5 million of expense related to duties assessments recognized during the three months ended March 31, 2025. As a percentage of net revenue, cost of goods sold increased to 70.0% for the six months ended June 30, 2026 compared to 69.7% in the same period in 2025, due to investments in the customer experience and a one-time benefit recognized during the three months ended March 31, 2025, related to the resolution on the valuation of duties, partially offset by growth of our supplier services. Six Months Ended June 30, 2026 2025 % Change (in millions) Cost of goods sold $ 4,516 $ 4,182 8.0 % As a percentage of net revenue 70.0 % 69.7 % Operating expenses Operating expenses consist of customer service and merchant fees; advertising; selling, operations, technology, general and administrative expenses; impairment and other related net charges; and restructuring and other charges, net. We disclose separately the equity-based compensation and related taxes that are included in customer service and merchant fees and selling, operations, technology, general and administrative expenses. Six Months Ended June 30, 2026 2025 % Change (in millions, except percentages) Customer service and merchant fees (1) $ 242 $ 228 6.1 % Advertising 721 716 0.7 % Selling, operations, technology, general and administrative (1) 852 894 (4.7) % Impairment and other related net charges 2 23 (91.3) % Restructuring and other charges, net 24 65 (63.1) % Total operating expenses $ 1,841 $ 1,926 (4.4) % As a percentage of net revenue: Customer service and merchant fees (1) 3.8 % 3.8 % Advertising 11.2 % 11.9 % Selling, operations, technology, general and administrative (1) 13.2 % 14.9 % Impairment and other related net charges — % 0.4 % Restructuring and other charges, net 0.4 % 1.1 % 28.6 % 32.1 % 30 Table of Contents (1) Includes equity-based compensation and related taxes as follows: Six Months Ended June 30, 2026 2025 (in millions) Customer service and merchant fees $ 5 $ 7 Selling, operations, technology, general and administrative $ 135 $ 158 During the six months ended June 30, 2026, our equity-based compensation and related taxes included in customer service and merchant fees and selling, operations, technology, general and administrative decreased by $25 million, or 15.2%, compared to the same period in 2025, due to variability in our stock price on the grant dates of restricted stock units granted during the six months ended June 30, 2025, partially offset by the expense recognized during the six months ended June 30, 2026 related to the PSUs. The following table summarizes operating expenses as a percentage of net revenue, excluding equity-based compensation and related taxes: Six Months Ended June 30, 2026 2025 Customer service and merchant fees 3.7 % 3.7 % Selling, operations, technology, general and administrative 11.1 % 12.3 % Customer Service and Merchant Fees During the six months ended June 30, 2026, excluding the impact of equity-based compensation and related taxes, our expenses for customer service and merchant fees increased by $16 million, or 7.2% compared to the same period in 2025. The increase in customer service and merchant fees is due primarily to increased net revenue. As a percentage of net revenue, total customer service and merchant fees remained relatively constant at 3.8% for the six months ended June 30, 2026 compared to the same period in 2025. Advertising During the six months ended June 30, 2026, our advertising expenses increased by $5 million, or 0.7%, compared to the same period in 2025. The increase reflects our response to changing market conditions and changes in our advertising channel mix, as we seek to maintain our return targets across various channels. As a percentage of net revenue, advertising expenses decreased to 11.2% for the six months ended June 30, 2026 compared to 11.9% in the same period in 2025 due to changes in our advertising channel mix as we seek to maximize returns on advertising spend within our efficiency parameters. Selling, operations, technology, general and administrative During the six months ended June 30, 2026, excluding the impact of equity-based compensation and related taxes, our expenses for selling, operations, technology, general and administrative activities decreased by $19 million, or 2.6% compared to the same period in 2025. The decrease is due primarily to amortization expenses and compensation costs, partially offset by increases in technology spend. As a percentage of net revenue, total selling, operations, technology, general and administrative expenses decreased to 13.2% for the six months ended June 30, 2026, compared to 14.9% in the same period in 2025, due to increased net revenue and decreased compensation costs. Impairment and other related net charges During the six months ended June 30, 2026, impairment and other related charges decreased by $21 million compared to the same period in 2025. As a percentage of net revenue, impairment and other related net charges decreased by 0.4% compared to the same period in 2025. 31 Table of Contents During the six months ended June 30, 2026, we recorded net charges of $2 million to impairment and other net charges related to the exit of a customer service center in the U.S. During the six months ended June 30, 2025, we recorded net charges of $23 million, inclusive of $20 million associated with the Germany Restructuring and weakened macroeconomic conditions in connection with our Germany 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 , included in Part I, Item 1, Financial Statements, in this Quarterly Report on Form 10-Q for additional information. Restructuring and other charges, net During the six months ended June 30, 2026, restructuring and other charges, net decreased by $41 million, or 63.1%, compared to the same period in 2025. As a percentage of net revenue, restructuring and other charges, net decreased to 0.4% from 1.1% in the same period in 2025. During the six months ended June 30, 2026, Wayfair incurred $24 million of charges related to a loss on termination of an operating lease for a logistics facility. During the six months ended June 30, 2025, Wayfair incurred $65 million of charges consisting primarily of one-time employee severance, benefits, relocation, and transition costs. This is inclusive of $46 million related to the Germany Restructuring and $19 million related to the March 2025 workforce reduction. Interest expense, net During the six months ended June 30, 2026, interest expense, net increased to $78 million, compared to $52 million in the same period in 2025, driven by the issuances of the 2030 Secured Notes in March 2025, the issuances of the 2032 Secured Notes in November 2025 and of the 2034 Secured Notes in May 2026, partially offset by redemptions of the 2027 Notes in March 2026 and all of the 2028 Notes in June 2026. Six Months Ended June 30, 2026 2025 % Change (in millions) Interest expense, net $ (78) $ (52) 50.0 % Other (expense) income, net During the six months ended June 30, 2026, we incurred $15 million of other (expense), net primarily driven by foreign currency translation losses. During the six months ended June 30, 2025, we recognized $33 million of other (expense) income, net primarily attributable to fluctuations between the U.S. Dollar and the Canadian Dollar. Included in other (expense) income, net are changes in foreign currency transaction gains and losses and long-term investment income or losses. Six Months Ended June 30, 2026 2025 % Change (in millions) Other (expense) income, net $ (15) $ 33 NM NM - Not Meaningful Loss on debt extinguishment During the six months ended June 30, 2026, loss on debt extinguishment increased by $133 million compared to the same period in 2025. During the six months ended June 30, 2026, Wayfair recorded a $102 million loss on debt extinguishment upon repurchase of $145 million in aggregate principal amount of the 2028 Notes. Refer to Note 4, Debt and Other Financing , included in Part I, Item 1, Financial Statements , in this Quarterly Report on Form 10-Q for additional information. 32 Table of Contents Six Months Ended June 30, 2026 2025 % Change (in millions) (Loss) gain on debt extinguishment $ (102) $ 31 NM NM - Not Meaningful Provision for income taxes, net During the six months ended June 30, 2026, our provision for income taxes, net decreased by $1 million, or 20.0% compared to the same period in 2025. Six Months Ended June 30, 2026 2025 % Change (in millions) Provision for income taxes, net $ 4 $ 5 (20.0) % Liquidity and Capital Resources Sources of Liquidity As of June 30, 2026, our principal source of liquidity was cash and cash equivalents and short-term investments totaling $1.1 billion. Additionally, we have a $500 million senior secured revolving credit facility that matures on March 13, 2030 (the “Revolver”). As of June 30, 2026, there were no revolving loans outstanding under the Revolver. We had outstanding letters of credit, primarily as security for certain lease agreements, for $82 million as of June 30, 2026, which reduced the availability of credit under the Revolver. Excluding liquidity available through our Revolver, the following table shows sources of liquidity for the periods presented: June 30, December 31, 2026 2025 (in millions) Cash and cash equivalents $ 1,065 $ 1,476 Short-term investments 78 66 Total liquidity $ 1,143 $ 1,542 We believe that our existing cash and cash equivalents and investments, cash generated from operations and the borrowing availability under our Revolver will be sufficient to meet our anticipated cash needs for at least the next twelve months from the date of the filing of this report including planned capital expenditures, contractual obligations and other requirements. However, our liquidity assumptions may prove to be incorrect, and we could exhaust our available financial resources sooner than we currently expect. We may elect to raise additional funds at any time through equity, equity-linked or debt financing arrangements. Further, we have and may from time to time seek to retire, restructure, repurchase or redeem, or otherwise mitigate the equity dilution associated with our outstanding convertible debt through cash purchases, stock buybacks of some or all of the shares underlying convertible notes and/or exchanges for equity or debt in open-market purchases, privately negotiated transactions or otherwise (including through 10b5-1 plans). Such repurchases, exchanges or liability and dilution management exercises, if any, will be upon such terms and at such prices and sizes as we may determine, and will depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors. The amounts involved may be material. Our future capital requirements and the adequacy of available funds will depend on many factors, including those described herein and in our other filings with the SEC, including those set forth in Part I, Item 1A, Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2025. In addition, macroeconomic events have caused disruption in the capital markets, including increased inflation and interest rates, which could make obtaining financing more difficult and/or expensive. As a consequence, we may not be able to secure additional financing to meet our operating requirements or strategic goals on acceptable terms, in a timely manner, or at all. If we raise additional funds through the issuance of equity, equity-linked or debt financing arrangements, those securities and instruments may have rights, preferences or privileges senior to the rights of our common stock, and the holders of our equity securities may experience dilution. We will continue to monitor our liquidity during this time of historic disruption and volatility in the global capital markets. 33 Table of Contents Credit Agreement and Debt Arrangements As of June 30, 2026, we had $2.9 billion principal amount of indebtedness outstanding. Our indebtedness includes: • unsecured 1.00% Convertible Senior Notes due 2026 (the “2026 Notes”); • unsecured 3.25% Convertible Senior Notes due 2027 (the “2027 Notes”); and, together with the 2026 Notes, the “Convertible Notes”); • 7.250% Senior Secured Notes due 2029 (the “2029 Secured Notes”); • 7.750% Senior Secured Notes due 2030 (the “2030 Secured Notes”); • 6.750% Senior Secured Notes due 2032 (the “2032 Secured Notes”); and • 7.125% Senior Secured Notes due 2034 ( the “2034 Secured Notes” and, together with the 2029 Secured Notes, 2030 Secured Notes, and 2032 Secured Notes, the “Senior Secured Notes”, and the Senior Secured Notes, together with the Convertible Notes, the “Notes”). Under the terms of our Revolver, we may use proceeds to finance working capital and for other general corporate purposes. Any amounts outstanding under the Revolver are due at maturity. Between February 25, 2026 and March 4, 2026, we repurchased $56 million in aggregate principal amount of the unsecured 3.50% Convertible Senior Notes due 2028 (the “2028 Notes”). Between April 1, 2026 and May 1, 2026, we repurchased $89 million in aggregate principal amount of the 2028 Notes. See Note 4, Debt and Other Financing , included in Part I, Item 1, Financial Statements , in this Quarterly Report on Form 10-Q for additional information on debt and other financing transactions. On February 6, 2026, we issued a notice to holders of the Company’s 2027 Notes calling for redemption of $250 million principal amount of the outstanding 2027 Notes on March 23, 2026 (the “2027 Notes Redemption Date”). On May 14, 2026, we issued a notice to holders of the Company’s 2028 Notes calling for redemption of the remaining $444 million principal amount of the outstanding 2028 Notes on June 29, 2026 (the “2028 Notes Redemption Date”). See Note 4, Debt and Other Financing , included in Part I, Item 1, Financial Statements , in this Quarterly Report on Form 10-Q for additional information on debt and other financing transactions. On May 18, 2026, Wayfair LLC (the “Issuer”), a subsidiary of Wayfair Inc., issued $400 million aggregate principal amount of 2034 Secured Notes. The 2034 Secured Notes will mature on May 31, 2034, unless earlier redeemed, in accordance with their terms or repurchased. The indenture contains covenants that restrict the Issuer’s ability and the ability of its restricted subsidiaries to, among other things, incur additional indebtedness, declare or pay dividends, redeem stock or make other distributions or restricted payments, make certain investments, create certain liens, enter into certain transactions with affiliates, agree to certain restrictions on the ability of the Issuer’s restricted subsidiaries to make certain payments, sell or transfer certain assets and consolidate, merge, sell or otherwise dispose of all or substantially all of the Issuer’s or its restricted subsidiaries’ assets. The conditional conversion features of the 2026 Notes and 2027 Notes were not triggered during the calendar quarter ended June 30, 2026, therefore, the 2026 Notes and 2027 Notes are not convertible during the calendar quarter ending September 30, 2026 pursuant to the applicable last reported sales price conditions. There were no conversions during the six months ended June 30, 2026 other than the conversion of the 2027 Notes and 2028 Notes on or prior to the 2027 Notes Redemption Date and 2028 Notes Redemption Date, respectively. Whether any of the Convertible Notes will be convertible in future quarters will depend on the satisfaction of the applicable last reported sales price condition or another conversion condition in the future. If one or more holders elect to convert their Convertible Notes at a time when any such Convertible Notes are convertible, unless we elect to satisfy our conversion obligation by delivering solely shares of our Class A common stock (other than paying cash in lieu of delivering any fractional share), we would be required to settle a portion or all of our conversion obligation through the payment of cash, which could adversely affect our liquidity. The credit agreement and indentures governing our convertible notes contain restrictions and covenants that may limit our operating flexibility. Specifically, the Revolver contains affirmative and negative covenants customarily applicable to senior secured 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 requires us to maintain certain levels of performance in order to maintain our access to the Revolver. For instance, we are required to maintain a Consolidated Senior Secured Debt to Consolidated EBITDA Ratio (as defined in the credit agreement governing the Revolver) of no more than 4.0 to 1.0, subject to a 34 Table of Contents 0.5 step-up following certain permitted acquisitions. For information regarding our credit agreement and debt agreements, see Note 4, Debt and Other Financing , included in Part I, Item 1, Financial Statements , in this Quarterly Report on Form 10-Q and Note 6, Debt and Other Financing , included in Part II, Item 8, Financial Statements and Supplementary Data , in our Annual Report on Form 10-K for the year ended December 31, 2025. As of June 30, 2026 we were in compliance with all the terms and conditions of our debt agreements. Stock Repurchase Program On August 21, 2020, the board of directors (the “Board”) authorized the repurchase of up to $700 million of our Class A common stock in the open market, through privately negotiated transactions, or otherwise, including pursuant to a Rule 10b5-1 plan (the “2020 Repurchase Program”). On August 10, 2021, the Board authorized a new $1.0 billion share repurchase program on the same terms (the “2021 Repurchase Program” and, together with the 2020 Repurchase Program, the “Repurchase Programs”). We will begin repurchasing shares under the 2021 Repurchase Program upon the completion of the 2020 Repurchase Program. The Repurchase Programs do not obligate us to purchase any shares of our Class A common stock and have no expiration date, but may be suspended or terminated by the Board at any time. The actual timing, number and value of shares repurchased under the Repurchase Programs in the future will be determined by us in our discretion and will depend on a number of factors, including market conditions, applicable legal requirements, our capital needs and whether there is a better alternative use of capital. As of June 30, 2026, we have repurchased 2,354,491 shares of Class A common stock for approximately $612 million under the Repurchase Programs. Trends and Historical Cash Flows Six Months Ended June 30, 2026 2025 (in millions) Net loss $ (106) $ (98) Net cash provided by operating activities $ 308 $ 177 Net cash used in investing activities $ (125) $ (83) Net cash used in financing activities $ (599) $ (60) Operating Activities Cash flows in connection with operating activities consisted of net (loss) income adjusted for certain non-cash items including depreciation and amortization, equity-based compensation and certain other non-cash expenses, as well as the effect of changes in working capital and other activities. Operating cash flows can be volatile and are sensitive to many factors, including changes in working capital and our net (loss) income. Cash flows provided by operating activities increased by $131 million during the six months ended June 30, 2026, compared to the same period in 2025, due to an increase of $131 million for cash changes in operating assets and liabilities. The increase in cash flows provided by operating activities was primarily driven by higher net revenue, and lower impairment and other restructuring costs from the prior year workforce reductions. Investing Activities Cash flows used in investing activities increased by $42 million during the six months ended June 30, 2026, compared to the same period in 2025, due to decreases in sales and maturities of short- and long-term investments of $27 million and increases in purchases of property and equipment and site and software development costs of $27 million, partially offset by decreases in purchases of short- and long-term investments of $12 million. Purchases of property and equipment and site and software development costs (collectively, “Capital Expenditures”) were 1.8% of net revenue for the six months ended June 30, 2026 and related primarily to equipment purchases and improvements for leased warehouses within our expanding logistics network and ongoing investments, including our physical retail store expansion, proprietary technology and operational platform. 35 Table of Contents Financing Activities Cash flows used in financing activities increased by $539 million during the six months ended June 30, 2026, compared to the same period in 2025. The increase in cash used is due primarily to increases in settlement of long-term debt of $701 million, decreases in proceeds from the issuance of debt of $296 million and increases in payments of taxes related to net share settlement of equity awards of $39 million. These increases are partially offset by decreases in payments to extinguish debt of $497 million. Off-Balance Sheet Arrangements We do not engage in any off-balance sheet activities. We do not have any off-balance sheet interest in variable interest entities, which include special purpose entities and other structured finance entities. Contractual Obligations During the six months ended June 30, 2026, we issued $400 million aggregate principal amount of the 2034 Secured Notes, repurchased $145 million in aggregate principal amount of the 2028 Notes and called for the redemptions of $250 million in aggregate principal of the 2027 Notes and $444 million in aggregate principal of the 2028 Notes. See Note 4, Debt and Other Financing , included in Part I, Item 1, Financial Statements , in this Quarterly Report on Form 10-Q for additional information. During the three and six months ended June 30, 2026, we entered into contractual obligations of $91 million for future minimum lease payments under non-cancellable operating leases that have not yet commenced. See Note 2, Supplemental Financial Statement Disclosures included in Part I, Item 1, Financial Statements , in this Quarterly Report on Form 10-Q for additional information. Other than these financing transactions, there have been no material changes to our contractual obligations and estimates as compared to the contractual obligations described in Contractual Obligations included in Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations , in our Annual Report on Form 10-K for the year ended December 31, 2025. Non-GAAP Financial Measures To provide investors with additional information regarding our financial results, we have disclosed in this Quarterly Report on Form 10-Q the following non-GAAP financial measures: Adjusted Gross Profit, Adjusted Gross Margin, Contribution Profit, Contribution Margin, Adjusted EBITDA, Adjusted EBITDA Margin, Free Cash Flow, Adjusted Diluted Earnings or Loss per Share and Net Revenue Constant Currency Growth. Adjusted Gross Profit and Adjusted Gross Margin We define Adjusted Gross Profit as gross profit plus equity-based compensation and related taxes included in cost of goods sold. Gross profit is defined as net revenue minus cost of goods sold. Gross margin is defined as gross profit as a percentage of net revenue for the same period. Adjusted Gross Margin is defined as Adjusted Gross Profit as a percentage of net revenue for the same period. We disclose Adjusted Gross Profit and Adjusted Gross Margin because we believe these measures are important indicators of our business performance. They provide visibility into our underlying gross profitability by excluding the impact of non-cash equity-based compensation expense and related taxes, which can vary meaningfully from period to period. Accordingly, we believe that Adjusted Gross Profit and Adjusted Gross Margin provide useful information to investors and others in understanding and evaluating our operating results in the same manner as our management and the Board. Adjusted Gross Profit and Adjusted Gross Margin, however, have limitations as analytical tools because they omit certain costs included in cost of goods sold and therefore do not reflect all expenses that impact gross profit under GAAP. Further, other companies, including companies in our industry, may calculate these non-GAAP measures differently. Accordingly, you should not consider Adjusted Gross Profit or Adjusted Gross Margin in isolation or as substitutes for analysis of our results as reported under GAAP. Because of these limitations, these metrics should be considered alongside other financial performance measures, including gross profit, cost of goods sold, and our other GAAP results. 36 Table of Contents The following table provides a reconciliation of gross profit to Adjusted Gross Profit: Three Months Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 (in millions, except percentages) Reconciliation of Adjusted Gross Profit: Gross profit $ 1,054 $ 984 $ 1,934 $ 1,821 Gross margin 30.0 % 30.1 % 30.0 % 30.3 % Add: Equity-based compensation and related taxes included in cost of goods sold 2 2 3 4 Adjusted Gross Profit $ 1,056 $ 986 $ 1,937 $ 1,825 Adjusted Gross Margin 30.0 % 30.1 % 30.0 % 30.4 % Contribution Profit and Contribution Margin We define Contribution Profit as Adjusted Gross Profit less customer service and merchant fees and less advertising expense, plus equity-based compensation and related taxes included in customer service and merchant fees. Contribution Margin is defined as Contribution Profit as a percentage of net revenue for the same period. We use Contribution Profit and Contribution Margin to evaluate our operating performance and trends. We believe these measures are useful indicators of the economic impact of orders fulfilled through our omni-channel platform because they take into account the direct expenses associated with generating and servicing customer demand. These measures provide additional visibility into unit-level performance by isolating key cost drivers, including customer service and merchant fees, and advertising. Accordingly, we believe Contribution Profit and Contribution Margin provide useful information to investors and others in understanding and evaluating our operating results in the same manner as our management and the Board. However, Contribution Profit and Contribution Margin have important limitations as analytical tools. They omit various expenses that impact our results under GAAP, and they are not intended to represent measures of overall company profitability or to imply that our business is profitable at the company level. Other companies, including those in our industry, may calculate Contribution Profit and similarly titled measures differently. Accordingly, you should not consider Contribution Profit or Contribution Margin in isolation or as substitutes for analysis of our results as reported under GAAP. Because of these limitations, these metrics should be evaluated alongside other financial performance measures, including gross profit and our other GAAP results. 37 Table of Contents The following table provides a reconciliation of Adjusted Gross Profit to Contribution Profit: Three Months Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 (in millions, except percentages) Reconciliation of Contribution Profit: Net revenue $ 3,519 $ 3,273 $ 6,450 $ 6,003 Less: Cost of goods sold 2,465 2,289 4,516 4,182 Gross profit 1,054 984 1,934 1,821 Gross margin 30.0 % 30.1 % 30.0 % 30.3 % Add: Equity-based compensation and related taxes included in cost of goods sold 2 2 3 4 Adjusted Gross Profit 1,056 986 1,937 1,825 Adjusted Gross Margin 30.0 % 30.1 % 30.0 % 30.4 % Less: Customer service and merchant fees 128 121 242 228 Less: Advertising 392 372 721 716 Add: Equity-based compensation and related taxes included in customer service and merchant fees 3 4 5 7 Contribution Profit $ 539 $ 497 $ 979 $ 888 Contribution Margin 15.3 % 15.2 % 15.2 % 14.8 % Adjusted EBITDA and Adjusted EBITDA Margin We calculate Adjusted EBITDA 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 that we believe are not indicative of our core operating performance. We have provided a reconciliation below of Adjusted EBITDA to net income or loss, the most directly comparable GAAP financial measure. Adjusted EBITDA Margin is calculated by dividing Adjusted EBITDA by Net Revenue. We disclose Adjusted EBITDA because it is a key measure used by our management and the Board to evaluate our operating performance, generate future operating plans and make strategic decisions regarding the allocation of capital. In particular, we believe the exclusion of certain expenses in calculating Adjusted EBITDA facilitates operating performance comparisons on a period-to-period basis as these costs may vary independent of business performance. For instance, we exclude the impact of equity-based compensation and related taxes as we do not consider this item to be indicative of our core operating performance. Investors should, however, understand that equity-based compensation and related taxes will be a significant recurring expense in our business and an important part of the compensation provided to our employees. Accordingly, we believe that Adjusted EBITDA provides useful information to investors and others in understanding and evaluating our operating results in the same manner as our management and the Board. Adjusted EBITDA has limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of our results as reported under GAAP. Some of these limitations are: • Although depreciation and amortization are non-cash charges, the assets being depreciated and amortized may have to be replaced in the future, and Adjusted EBITDA does not reflect cash capital expenditure requirements for such replacements or for new capital expenditure requirements; • Adjusted EBITDA does not reflect equity-based compensation and related taxes; • Adjusted EBITDA does not reflect changes in our working capital; • Adjusted EBITDA does not reflect income tax payments that may represent a reduction in cash available to us; • Adjusted EBITDA does not reflect interest expenses associated with our borrowings; • Adjusted EBITDA excludes other items that we believe are not indicative of our core operating performance; • We may in the future modify how we calculate Adjusted EBITDA; and 38 Table of Contents • Other companies, including companies in our industry, may calculate Adjusted EBITDA differently, which reduces its usefulness as a comparative measure. Because of these limitations, you should consider Adjusted EBITDA alongside other financial performance measures, including various cash flow metrics, net income or loss and our other GAAP results. The following table reflects the reconciliation of net (loss) income to Adjusted EBITDA for each of the periods indicated: Three Months Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 (in millions, except percentages) Reconciliation of Adjusted EBITDA: Net (loss) income $ (1) $ 15 $ (106) $ (98) Depreciation and amortization 64 78 131 159 Equity-based compensation and related taxes 72 101 143 169 Interest expense, net 39 29 78 52 Other expense (income), net 4 (23) 15 (33) Provision for income taxes, net 3 2 4 5 Other: Impairment and other related net charges (1) 2 — 2 23 Restructuring and other charges, net (2) — 9 24 65 Loss (gain) on debt extinguishment (3) 59 (6) 102 (31) Adjusted EBITDA $ 242 $ 205 $ 393 $ 311 Net revenue $ 3,519 $ 3,273 $ 6,450 $ 6,003 Net (loss) income margin — % 0.5 % (1.6) % (1.6) % Adjusted EBITDA Margin 6.9 % 6.3 % 6.1 % 5.2 % (1) During the three and six months ended June 30, 2026, we recorded $2 million impairment associated with our decision to exit a customer service center in the U.S. During the six months ended June 30, 2025, we recorded net charges of $23 million, inclusive of $20 million associated with the Germany Restructuring and weakened macroeconomic conditions in connection with our Germany operations and, $3 million related to changes in sublease market conditions for a technology center in the U.S. (2) During the six months ended June 30, 2026, we incurred $24 million of charges related to a loss on termination of an operating lease for a logistics facility. During the three and six months ended June 30, 2025, we incurred $9 million and $65 million, respectively, of charges consisting primarily of one-time employee severance, benefits, relocation and transition costs. This is inclusive of $46 million related to the Germany Restructuring and $19 million related to the March 2025 workforce reduction. We do not expect to incur any further material charges related to this workforce reduction. (3) During the three and six months ended June 30, 2026, we recorded a $59 million and $102 million, respectively, loss on debt extinguishment upon repurchase of $145 million in aggregate principal amount of the 2028 Notes. During the three and six months ended June 30, 2025, we recorded a $6 million and $31 million, respectively, gain on debt extinguishment upon repurchase of $80 million in aggregate principal amount of the 2025 Notes and $696 million in aggregate principal amount of the 2026 Notes. Free Cash Flow We calculate Free Cash Flow as net cash provided by or used in operating activities less capital expenditures. We have provided a reconciliation below of Free Cash Flow to net cash provided by or used in operating activities, the most directly comparable GAAP financial measure. We disclose Free Cash Flow because it is an important indicator of our business performance as it measures the amount of cash we generate. Accordingly, we believe that Free Cash Flow provides useful information to investors and others in understanding and evaluating our operating results in the same manner as our management. 39 Table of Contents Free Cash Flow has limitations as an analytical tool because it omits certain components of the cash flow statement and does not represent the residual cash flow available for discretionary expenditures. Further, other companies, including companies in our industry, may calculate Free Cash Flow differently. Accordingly, you should not consider Free Cash Flow in isolation or as a substitute for analysis of our results as reported under GAAP. Because of these limitations, you should consider Free Cash Flow alongside other financial performance measures, including net cash provided by or used in operating activities, capital expenditures, and our other GAAP results. The following table presents a reconciliation of net cash provided by or used in operating activities to Free Cash Flow for each of the periods indicated: Three Months Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 (in millions) Net cash provided by operating activities $ 360 $ 273 $ 308 $ 177 Purchase of property and equipment (26) (13) (51) (18) Site and software development costs (33) (30) (62) (68) Free Cash Flow $ 301 $ 230 $ 195 $ 91 Adjusted Diluted Earnings or Loss per Share We calculate Adjusted Diluted Earnings or Loss per Share as net income or loss plus equity-based compensation and related taxes; provision or benefit for income taxes, net; non-recurring items; other items that we believe are not indicative of our core operating performance; and, if dilutive, interest expense associated with convertible debt instruments under the if-converted method; divided by the weighted-average number of shares of common stock used in the computation of diluted earnings or loss per share. Accordingly, we believe that these adjustments to our diluted earnings or loss per share provide a more meaningful comparison between our operating results from period to period. Adjusted Diluted Earnings or Loss per Share has limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of our results as reported under GAAP. For example, Adjusted Diluted Earnings or Loss per Share, by their nature, excludes equity-based compensation and related taxes; provision or benefit for income taxes, net; non-recurring items; other items that we believe are not indicative of our core operating performance; and, if dilutive, interest expense associated with convertible debt instruments under the if-converted method. Because of these limitations, you should consider Adjusted Diluted Earnings or Loss per Share alongside other financial performance measures, including diluted earnings or loss per share and our other GAAP results. 40 Table of Contents A reconciliation of the numerator and denominator for diluted earnings or loss per share, the most directly comparable GAAP financial measure, to the numerator and denominator for Adjusted Diluted Earnings or Loss per Share in order to calculate Adjusted Diluted Earnings or Loss per Share, is as follows: Three Months Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 (in millions, except per share data) Numerator: Numerator for basic and diluted (loss) earnings per share - net (loss) income $ (1) $ 15 $ (106) $ (98) Adjustments to net (loss) income Interest expense associated with convertible debt instruments 4 13 11 27 Equity-based compensation and related taxes 72 101 143 169 Provision for income taxes, net 3 2 4 5 Other: Impairment and other related net charges 2 — 2 23 Restructuring and other charges, net — 9 24 65 Loss (gain) on debt extinguishment 59 (6) 102 (31) Numerator for Adjusted Diluted Earnings per Share - Adjusted net (loss) income $ 139 $ 134 $ 180 $ 160 Denominator: Denominator for basic (loss) earnings per share - weighted-average number of shares of common stock outstanding 132 128 131 127 Effect of dilutive securities: Restricted stock units — 1 — — Denominator for diluted (loss) earnings per share - weighted-average number of shares of common stock outstanding after the effect of dilutive securities 132 129 131 127 Adjustments to effect of dilutive securities: Restricted stock units 1 — — — Convertible debt instruments 14 27 16 30 Denominator for Adjusted Diluted Earnings per Share - Adjusted weighted-average number of shares of common stock outstanding after the effect of dilutive securities 147 156 147 157 Diluted (loss) earnings per share $ (0.01) $ 0.11 $ (0.81) $ (0.77) Adjusted Diluted Earnings per Share $ 0.95 $ 0.87 $ 1.22 $ 1.02 Net Revenue Constant Currency Growth We calculate Net Revenue Constant Currency Growth by translating the current period local currency net revenue by the currency exchange rates used to translate our financial statements in the comparable prior-year period. We disclose Net Revenue Constant Currency Growth because it is an important indicator of our operating results. Accordingly, we believe that Net Revenue Constant Currency Growth provides useful information to investors and others in understanding and evaluating trends in our operating results in the same manner as our management. Net Revenue Constant Currency Growth has limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of our results as reported under GAAP. For example, Net Revenue Constant Currency Growth rates, by their nature, exclude the impact of foreign exchange, which may have a material impact on net revenue. 41 Table of Contents Critical Accounting Policies and Estimates Our financial statements are prepared in accordance with accounting principles generally accepted in the U.S. The preparation of our financial statements and related disclosures requires us to make estimates, assumptions and judgments that affect the reported amount of assets, liabilities, net revenue, costs and expenses and related disclosures. We believe that the estimates, assumptions and judgments involved in the accounting policies described below have the greatest potential impact on our financial statements and, therefore, we consider these to be our critical accounting policies. Accordingly, we evaluate our estimates and assumptions on an ongoing basis. Our actual results may differ from these estimates under different assumptions and conditions. There have been no material changes to our critical accounting policies and estimates since December 31, 2025. See Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, in our Annual Report on Form 10-K for the year ended December 31, 2025 for a description of our critical accounting policies and estimates. Recent Accounting Pronouncements For information about recent accounting pronouncements, see Note 1, Summary of Significant Accounting Policies , included in Part I, Item 1, Financial Statements , in this Quarterly Report on Form 10-Q. Item 3. Quantitative and Qualitative Disclosures About Market Risk There have been no significant changes in our exposures to market risk since December 31, 2025. See Part II, Item 7A, Q uantitative and Qualitative Disclosures about Market Risk included in our Annual Report on Form 10-K for the year ended December 31, 2025 for a discussion on our exposures to market risk.