Wayfair Records Narrower Q4 Loss and Year-Over-Year Revenue Growth

Wayfair released their financial report for the fourth quarter of 2023, highlighting a non-GAAP loss of 11 cents per share, which is less than the anticipated loss of 23 cents per share, according to Zacks Consensus Estimate. This is a significant improvement from the $1.71 per share loss in the same period the previous year.

The company's net revenues were reported at $3.11 billion, which is slightly higher than expected and reflects a modest year-over-year increase of 0.4 percent.

A key takeaway from Wayfair's report is the growth in its customer base, with a 1.4 percent rise in active customers totaling 22.4 million, slightly exceeding expectations. However, there is a point of concern as well, indicated by a 3 percent decrease in Long-Term net revenues per active customer, which now averages $537, despite slightly beating the estimate.

Revenue Breakdown

Diving deeper into the revenue statistics, domestic revenues in the United States contributed 87 percent of the total, showing a 0.9 percent year-over-year increase to $2.7 billion. Meanwhile, international revenues, accounting for 13 percent of the total, dropped by 2.7 percent to $404 million but still managed to surpass expectations.

Customer Engagement and Order Details

Wayfair customers placed orders at an average of 1.84 times during the quarter, which is a marginal increase from the previous year. Notably, the average order value saw a decline of 2.5 percent, landing at $276. Overall, the total number of orders delivered was 11.3 million, marking a 2.7 percent increase from the prior year. Repeat customers were responsible for 79.4 percent of the total orders, which is a 5.9 percent increase. Mobile devices were used for 62.8 percent of total orders, showcasing the growing trend of mobile shopping.

Operational and Financial Health

Wayfair's gross margin for the quarter was up 150 basis points from the previous year, reaching 30.3 percent. The company also reported an increase in adjusted EBITDA to $92 million, a significant improvement over the EBITDA loss of $71 million in the previous year. Expenses related to customer service, merchant fees, advertising, and administrative costs all decreased year over year, contributing to a reduced GAAP operating loss of $172 million compared to the $330 million loss reported for the same quarter last year.

Financial Position and Outlook

At the end of December 2023, Wayfair's cash reserves, including cash, cash equivalents, and short-term investments, stood at $1.4 billion, an increase from $1.28 billion at the end of September. Long-term debt decreased slightly from the previous quarter to $3.092 billion. The company also saw a robust cash flow, generating $158 million from operations in the fourth quarter and a free cash flow of $62 million.

Currently, Wayfair holds a positive Zacks Rank #2 (Buy), showing optimism in the company's stock among analysts. Other companies in the Retail-Wholesale sector like American Eagle Outfitters, Abercrombie & Fitch, and The Gap also hold high rankings and are expected to announce their quarterly results soon.

Wayfair, Earnings, Revenue