Wayfair (W) reported second-quarter 2024 non-GAAP earnings of 47 cents per share, falling short of the Zacks Consensus Estimate by 6% and lower than the 21 cents per share reported in the year-ago quarter.
Net revenues of $3.12 billion missed the consensus mark by 2%, with a 1.7% decrease compared to the previous year.
Despite a decline in LTM net revenues per active customer by 0.9% to $540, the figure surpassed the Zacks Consensus Estimate by 1.5%.
The company witnessed a positive growth in the active customer base, with active customers rising by 0.9% year over year to 22 million, slightly missing the consensus mark by 2.1%.
Quarter Details
Net revenues in the United States, which account for 87.6% of total net revenues, dropped 2% year over year to $2.73 billion, missing the Zacks Consensus Estimate by 2.2%.
On the international front, net revenues (12.4% of total net revenues) showed a slight improvement, growing by 0.3% year over year and 1.3% on a constant currency basis to $387 million, surpassing the consensus mark by 1.8%.
Orders per customer for the quarter stood at 1.85, up from 1.82 reported in the year-ago quarter, surpassing the Zacks Consensus Estimate by 1.1%.
Furthermore, the average order value climbed by 2% year over year to $313, exceeding the consensus mark by 1.9%.
Notably, the total number of orders delivered in the reported quarter witnessed a 2.9% decrease.
Repeat customers placed 8.1 million orders, accounting for 81.7% of total orders, in the second quarter, down 2.4% year over year.
Mobile devices continued to be a prominent channel, with 63.7% of total orders delivered being placed through mobile devices, compared to 61.6% in the year-ago quarter.
Operating Results
Wayfair’s second-quarter gross margin contracted by 90 basis points year over year to 30.2%.
Adjusted EBITDA rose to $163 million from $128 million in the year-ago quarter.
Customer service and merchant fees witnessed a 16% decline year over year to $121 million.
Advertising expenses grew by 3.7% year over year to $365 million, while selling, operations, technology, general, and administrative expenses decreased by 22.4% year over year to $489 million.
Wayfair announced a GAAP operating loss of $35 million in the reported quarter, compared to an operating loss of $142 million in the year-ago quarter.
Balance Sheet & Cash Flow
As of Jun 30, 2024, cash, cash equivalents, and short-term investments totaled $1.34 billion, up from $1.2 billion reported on Mar 31, 2024.
Long-term debt as of Jun 30, 2024, stood at $3.059 billion, compared to $3.095 billion on Mar 31, 2024.
In the second quarter, cash from operations amounted to $245 million, marking a significant improvement from the $139 million used in operations in the first quarter.
Wayfair reported a free cash flow of $183 million in the second quarter.
Wayfair’s Position and Future Prospects
Despite missing expectations in the second quarter, Wayfair remains a significant player in the e-commerce and retail space. Investors may ponder the company’s ability to sustain growth amidst changing consumer behaviors and market conditions.
Conclusion
Wayfair’s Q2 earnings demonstrate a mixed bag of results, with a miss on estimates, revenue decline, but some bright spots like active customer growth. The company faces the challenge of navigating through a competitive market landscape and evolving consumer preferences. Investors would be keen to track how Wayfair adapts and progresses in the upcoming quarters.
