W - Earnings call transcript Q4 2021

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Operator

Good morning. My name is Rob, and I will be your conference operator today. At this time, I would like to welcome everyone to the Wayfair Fourth Quarter 2021 Earnings Release and Conference Call. All line have been placed on mute to prevent any background noise. After the speakers remarks there will be a question and answer session. Instructions]. [Operator you. Thank of Director you begin may Landry Investor conference. your Ngambia, Relations,

Landry Ngambia

Niraj joining thank XXXX we are co-Chairman; Executive and and Officer. Co-Founder morning, Chief Steve us. and results. Co-Founder, Co-Chairman; Officer you me Michael quarter Good and fourth for Today, Conine, Chief our will With Financial Fleisher, Shah, review

future performance, We will like Q&A reasonable will remind be in guidance our that you for that forward-looking to believe XXXX. first call, make prepared quarter we we've and financial statements although accurate, today's that We all following be events statements the for cannot been we regarding will during including any available would remarks. and this of I forward-looking expectations guarantee assumptions.

the is be recorded, GAAP over any non-GAAP X-K cause replay from that obligation law, to descriptions considered certain required refer website. subsequent and obtain update Our forward-looking and should presentation, we our our available filings for measures. to Investor in identify the contain and or of as or no would with to Please of release revise actual otherwise. and as not of be non-GAAP replacements measures including adjusted Niraj. a events our This review note discuss as to our that materially the results. this differ XX-K we made information, could Investor for reconciliations to those will turn please measures the like our flow. earnings be the to margin These projected nearest now Relations will should adjusted statements investor copy financial a any by of non-GAAP undertake non-GAAP we I results together any factors GAAP new section measures, call, Relations these EBITDA call on which a for certain measures webcast result and and Except performance Also company's publicly XXXX free future during comparable being of cash today. financial to website read call our statements, financial company's of EBITDA, whether

Niraj Shah

Thank we talk It's results. what anniversary ourselves share marks great you about published Home. Zillion up Wayfair's everyone. started details to fourth with letter, XXXX and years. doing XX Things today the shareholder a you, XXXX our I since for In of a tagline embraced the also good Landry, we to set quarter that's the home we Steve next and Today, morning, reconnect today, all annual XXth Wayfair, you. for everything to used we're When space we the the launched have business.

find change, Wayfair on one focus has own can of throughout, shopping the remained home. that destination is their a where as thing Even everyone customer expression and unique our consistent building and taglines for

us how of heard selection tens length the model, this about of millions for business possible talk of You've industry bringing together we and of and at tens do suppliers widest platform choice. through the our customers thousands

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home These inflation. As countries but year, widespread category due cascaded around resilient, outsized shortages growth to everywhere inventory swung around strength back physical into reopened economies consumers last global stores the pace port Supply their factory remains sought as return largely old at and and habits. pendulum in own to the part with disruptions in log jams impacted chain to world. closures the world repeated

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to starts with walk through to partners. these When supplier you here what assortment, we moment it all across doing a take me it are our Let comes dimensions.

to enable effortlessly offering as possible succeed the products. house platforms. of success goods Finding with XX available we wide on Wayfair share a user-friendly as brand the and on more whole important, ability kind the variety new onboarded base. maximizing than And U.S., the platform playbook in industry-leading them suppliers is enabled portfolio to competitive to our a has momentum our supplier we more we in buyer are through but healthy extended of of better driving into our In Our same exclusivity, have suppliers. not customers. building Wayfair the XXXX, markets. on is leads is of flagship that selection, strong tension international XXXX, to Wayfair last and this on even also our Through in technology of that assortment more Having offer by in supplier pricing X,XXX then in-person a to just and these year, on our action. catalogs, valuable the survey and through work, suppliers supplier-facing are to innovation million A resumed feedback solutions Within mass items events. than we by not degree core in we following selection for grew meaningful summit improve also communications putting including In engagement interactions, with with Wayfair and other gathering part our that their are including lean experience platform. suppliers, enhanced embolden

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announcements XXXX seen and our have store across about also beyond physical portfolio in of will brands. upcoming You our launches

XX,XXX year Our specialty will later square this debut be retail will feet size. concepts and to in brand XX,XXX

store substantially portion that to visualization be format and larger for open our the and us be TAM and of store-based avenues While are allow marketing, we will the e-commerce. Wayfair tap these in is discovery, in will all valuable complementing XXXX, into spaces doing to will slated first

Now that discovery, gears assortment logistics. let's delivery and we've shift and talked about to

last the that solving as ago, containers is result so expect albeit in in spike, completely this to our volume, to that we Forwarding but significant from equivalent the getting us. remain we an serve to effectively Forwarding. possible us the our in more to started years immune watched had player X we quarter. stood and for zoom in than to likely to grow of was our XXXX. of to of apparent for it for and solution safety Forwarding team nowhere we're began execution XX-foot reliably I thinking a the quite year. CastleGate of increases an our end it faced logistics turns drive to services where to a to Europe, aiming as can global continue and scale recognized a tackle visions for We so, what solve a XXXX In not XX,XXX suppliers several we XXXX. which up referenced of than freight supply the investing as by doing 'XX. which has double opportunity cost did year, ended XXXX, and reality, digital disruption In for will many year it last to becoming is industry even minutes solution aggressive America a products domestic get problem, during container net how customer only the logistics break We are makes more last acute exactly Though ago, supply a CastleGate into instead and roughly planning and is thinking up Forwarding CastleGate This challenges, that's fix, we specifically course as in add I one and they solution of forwarder. as prices onetime more over is there manufactured value the our offered our our was problems term of call in This philosophy long Just come Four forward customers. the industry CastleGate the and as a moved years facilities, over because time, North suppliers how efficiency The the and industry such value want into for suppliers our our now now year. and what years few we're to bulk ocean create this this online back to chain industry. not close

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for to created suppliers of highs. pre-pandemic even through to network, a and and XXXX, our our financial tangible we've For operational exceed more and set to product we penetration expect incentives CastleGate then drive return

aspired mindset customers this building all this and and the retail plays effect. cost by of a year. today, of each we we to began fast future. that benefits will how continuing and just As solid thousands of I reached through commercial a the backing of think be the Wayfair growth, delivery. convenience ambitious a inevitably empowering sheet, the quarterly to suppliers flywheel the challenges, because our the point Wayfair gains. this cost durable of a volatility same ahead. also in the quarters. and and invest into how has focused At on opportunity about lot lower choice self-reinforcing on macro disruptive of conversion through business and continuous profitability accrue the today's win years Wayfair there more from accelerating journey, had our while flavor speed is and decades. to we're focus is accomplished sustainably where to and so work had of about time, marry we're aspects We matured efficiencies what Though you XXXX. remain the we I'm Wayfair, out, Wayfairians there's long advantages the term. and much the Steve we comfortable will prices thinking. not win and and longer Wayfair will term, goals for also this in with a some lot and investment X think noise These plethora across Participating translate advantages platform With navigating can has balance think customer When could results already, to giving

Before announced transition, our month. I on I hand it over want last to we to CTO touch Steve, which upcoming

a succession has who into highly Customer plan, until Global member transform invaluable role. that dedication of our step capable for Wayfair. organization contributions June, and partner will is will his technology Tan, of the it to for will our Fiona dynamic that, part Jim doubt Officer, He the has prior hands, Head And take stay and Chief is Technology helped current and our Board Supplier him in no better. we thank as on have very part also to and the height. a an an Fiona time even and higher Jim to Miller, retiring. leaves longstanding As an leader of adviser Jim we our Technology, business pivotal many and during a CTO long-time been

now area developments do, financing let's to about reinforces the is across Steve typically that Wayfair. going attention our specific turn and to consumer customer within loyalty. a latest business we talk how As

Steven Conine

everyone. Thank and and customer pay they around good payments choose of how they you, when is evolving, world Niraj, as expectations to when financing rapidly morning, The shop. and our

of make to their underwriting structures a also possible, is responsibly recent to payment options so, Across benefits in the is households customers, to needs. attract various financially most which X our our spend frequency. fee To to many of for professionals. and as space, do competitive with We're incorporating purchase Wayfair. both Our for financing portfolio, the this financing accessible increase Wayfair and for offer and compelling goal customers we in cater loyalty we have increase of types arena new our solutions offering and into menu as solutions

brand Each and Financing pay can of customize On later, the deals we often specific now, affinity consumer types. cases, is cover a use wide Wayfair drive platform our networks project financing of programming. and built-in customer In options all side, we with solution to have and coming and profiles we customer offer different, leverage. credit its own can that cases, cards, range we buy financing many Wayfair which

Let's talk about these in turn.

payment credit be you've BXB with account begin and what like taking with compelling is account and to It will with out flexible terms, partnership partnered of expect Customers First, and used both complex a tracking roll for be options. the project, year. and already to a sizable have of big a us to a multiple access Credit into customer it We're very later to Wayfair apply business-specific a by sure out too have Capital built their for excited process credentials continues momentum, suite flex provisioning our for multidimensional of which credit, they to or we able we enjoy employees. professional business We're this consolidating about spend the Wayfair. a and features, with have single build and customers rewards in past Trade business. offering and strong talk part making heard exciting loyalty to to flywheel shoppers with professional financing One card business Wayfair professional

can today, Turning card the Wayfair choice else. have Card also label back to on offer or combine X options Wayfair members sites, Wayfair and Wayfair credit U.S. Mastercard both across through Mastercard we in rewards the X% purchases These side, for earn our Card the with in rewards financing Wayfair which shoppers and private made discounts Wayfair loyalty co-branded of a BXC are can offers. that members purchases Wayfair everywhere on rewarding Credit financing. major earn

a been hundreds new first a dollars per than of members X.Xx response their they the fall card now it every XXX,XXX Wayfair we partnership customer card that improvement a spending in Wayfair, these of of month. strong of have members year. millions on with of shoppers, Citi, with might We've customer. seen we tens Since year average during member and more card adding in you launched that major over of from thousands spend our the represented options as introduction, benefits. Some recall in XXXX and And

the to available prefer Financing see shopper. the native our apply Wayfair each to of of who For and menu options once in needs pay, meet application, and consumers them. to just we an leasing accessible provides financing eligible applicants ways Wayfair which other Customers have platform. a

they The Our best menu half from Wayfair providers. us. marketplace maximizes past are a gateway credit model outcome application That and an our success. while drive providing embracing the customers a as our leaders platform buy using you, through quarter, to again. approved, Michael to out new review as payment back the buy for their loyalty turn this in how customers. the more fits can And choose payment are and later our such came a important the in a Citizens now to will of costs offerings from the without Thank multiple good able half our customers reward This new and are experience, we solutions, of again Klarna. use most XXX,XXX platform we technology-first Katapult, investments our choose best. future partnerships creating minimizes dynamics smart their prefer providers, Financing for to introduce for Pay than shoppers. leverage North customers availability enthusiastically our now locations. as pay of increasingly shoppers it pay in I'll customer retail more We to experience be building, over and rewarding approved shop, Rounding is from Once solutions a to programs, than of year, time for options letting Consumers customers. make want we that see grow of Across and served than from benefits these for brand-name at dozen accessible Once to again, they through more competitive the financials. and solution we've to are Star offerings set their online format eligible a later wherever this come or is orders competitiveness physical even shopping includes which personalizing sure is over benefits. checkout call example customers, a such of last want loyalty who customers and over them you pay their and extending now

Michael Fleisher

everyone. Steve, good morning, and you, Thank

take Let's financial the at a the fourth outlook. discussing details quarter look the for before

X basis. U.S. time. a while total press line chain QX during QX declined net last XX.X% throughout our of Even constant in we the on with representing net net in in from played earlier basis, promotional XX.X% On out currency to the holiday X.X% largely decline mitigate the performance industry bottlenecks in November. to potential normal the measure across period, was precisely billion, year, XX% this though quarter-to-date in to morning, saw It's you international an a commentary challenges As our declined release difficult $X.X persist the season year-over-year. revenue online did QX and Cyber segment revenue revenue market supply continue begin quarter. the order back revenue year-over-year by than real

we believe trends our in do period. However, e-commerce largely the mirrored broader softness

case the was a U.S. U.S. the in remained As outperformed in for the quarter, business the specialty retail the Wayfair.com while drag. brands full in QX, back consolidated the

more of negative international comps in that stringent in year-over-year reminder, large through specialty faced of part place lockdowns more last QX tightly these curating period business retail catalogs in declines. and The were the due a to are process in difficult therefore year. a As going we're

these, outsized lower In customers, the months last QX prices. Order XX than hold down X.XX, over frequency. quarters are the These about XX but $XXX the inflation a economy, net KPIs times moderate on to increases comparison. year-over-year. This is in over trend the these more LTM had higher somewhat decline to decline consolidated AOVs. down pervasive in year. couple the also pass XX% grew seeing where revenue last ago we frequency customer I'll to to some now necessary trailing put the on AOV, level. by further months, with when than XX.X% continuations the like is driven slight the to what of year by extent upward you're move seen offset given million same cost Turning active In P&L. was pressure retail last per of active and year-over-year we a suppliers work XX at the we've increases order possible, of

I'll the comment I depreciation well. non-GAAP labor on in use guidance service remaining a well lower note includes was fees outlook stock-based in and a I'll Customer related of Lower our fourth remain a same but gross year-over-year guidance range. amortization, the of the were please As line. basis, supply driven and points slightly referencing compensation, with just to gross non-GAAP and margin quarter, QX and that of on net when volumes be as it taxes do, bottlenecks end pressure was as that excludes revenue adjustments. compensation margin financials would increased XX%, discussing market line XX.X%. towards the which the basis XX% our net X.X% chain land merchant as XX.X%, our to as due by our percent the of above costs. revenue inflation tight and Advertising other

seeing staying various ROI advertising marketing our our channels. some also digital markets While adhering price framework disciplined by inflation, across we are are to

innovate to the efficiencies. continue marketing funnel very are where channels best around and deliberate being to the new with invest also We across unlock we

technology G&A Our just and $XXX or outlook. our selling, top on OpEx million, landing expenses of operations, totaled

compensation As effect we adjustments of to starting is previewed last a quarter, step-up sequential of result QX. the the in magnitude take

legacy a segment In of also booked we for team QX made which our Our this center $XX to EBITDA EBITDA moved of cloud, U.S., $XX spend adjusted OpEx. breakeven X.X% a or was million guidance to our adjusted while hiring International the margin, with was all CapEx essentially the plan, million. adjusted line against transition in Putting roughly was data our This and some million. $X negative negative EBITDA together, our progress result. some continued the

activities and from quarter $XX net $XX the expenditures. In cash was flow QX, million, of We cash liquid Moving and flow. the billion in was capital highly free on operating million cash factoring to million cash ended $X.X $XX after balance and investments. of with sheet

you to environment turn me outlook, remains dynamic difficult that. within our I macro managing the we're let candidly, thinking extremely the for and, latest on Before the The frame and macro details how to our read. of business

household that remain again and pressure lives Although They demand its have consumer inflation their we their pandemic to also more the believe their visible and of impact widespread e-commerce state to healthy. seeing interest closely, for our we our patient wallets. have later savings We watching choices are customers earlier the are as structural to pendulum remain category for this this around and that be year. at for more described equilibrium Wayfair ease. behavior where just Niraj dollars restrictions point, tailwinds Though for become the reach to of robust, and direct

than working recently XXXX. the and suggests are Like in stringent what performance for relative are towards of you, XXXX. presents an both Let's through positive also our gross QX we the e-commerce we all revenue are various crosswinds, better today, tracking Anecdotal and growth feedback the are stimulus which more orders than basis the high Wayfair, by with year we macro supplier now the quarter and which year-over-year. also low placed bolstered QX. turn the period Besides in is On to comparison a consolidated early quarter-to-date, QX, in modestly CAGRs teens teens ago down difficult the stronger end of lockdowns is internationally. implied encouraging. quarter-to-date versus saw These

mirror revenue this pre-pandemic in that a seasonal sequential play it's Though in move far curves, early, versus revenue due what planning dollars QX implying to we're QX sized quarter. QX, for so we're we timing. forward, this larger holiday out seeing similar a and is trends QX and greater QX As

margins. gross QX to now Turning

We range view the for the in above margin range to years. drive XX% XX% expansion to being, place coming as over to with a clear gross this sustainable continue plans time

now, dealing the be in is continues QX, most end to industry For the whole of of to the appropriate inflationary low however, light particularly range target with. pressures for this

million we far, percent and assume revenue and is mix. reasonable customer the forecast service around the or opportunities as We revenues fees P&L. thus percentage the will as at the what in a of down channel for on top merchant our net typical move drivers XX% minus. compensation seeing OpEx a to X.X%, net dollars, QX. main range excluding $XXX to here, Moving The depending Advertising million QX. taxes, and should $XXX primarily both or is existing year-over-year our compensation-related in stock-based for approximately quarter-over-quarter, SOTG&A be team, new as headcount but planned of the part in attrition also trends, of to of plus for Net great resignation. half so-called additions we're resulting back period were the due employees than slower see the to on all XXXX economy-wide well. Based XX% end of

and have However, now steady good here. from more hiring we momentum in a net expect pace

quarter. seen to we've trends single-digit line continue, would the for top the this quarter-to-date Assuming translate a low negative margin adjusted EBITDA

normal expense any a and million; to cadence to compensation year full Touching million assume please million; weighted seasonal on million; of be tax million expect depreciation in year above, basis. $XX the following on for $XXX the outstanding to provided shares that few handle amortization shares. equal items, EBITDA approximately $X approximately great to for interest profitable are to $XX expense approximately of million And to of million related approximately now I $XXX a QX: quarterly average the adjusted equity-based XXX $X revenue an volatility. to We we modestly housekeeping mentioned shape

retail we to Finally, formats we $XX overall and new as million full the continue out forecast for store range QX. higher CapEx footprint. in in do a $XXX CapEx We year to our logistics expect invest the build million in

and be to supplier with period in, relative larger payments in with holiday typical post QX. Specifically, we QX holiday This working is expect fulfillment smaller net will of has capital to QX timing given period dynamics opening seasonally have a the cash XXXX. a enhanced X new us. for All U.S.-based is outflow to do and centers the

Over quarterly attractive last bottom of accept clearly have inherent question. even be to consciously not volatility some line. the on couple our years, choose we demonstrated the the of we as economics This in should business.

full year organization, down the mention our From XXXX to profitability net slightly infrastructure scalability team talent Just of speaks a to more to of a our in to XXXX. this way ongoing normalized time. and greater over people was in growth not tremendous and period in our we years and technology, we is made And things than that in of our XX% our perspective, that to put the and headcount This over long-term add resiliency is both the have near-term to and investments achievement many yet, intend initiatives. point, support revenue process.

at them onboard a we success are initiatives many the organization. ROI another is on executing years putting that set Our to to way, efficiently get order over know Put to us for deliberately continuing come. reasonable up pace without stress high to we goal pursue people undue in will

Even if referenced adjusted terms. same play do and EBITDA profitable be expect This so, ability we out, time. XXXX a top the and our to in our line is be assumptions as he what modestly described grow, at invest Niraj year Wayfair when we for profitable to

if if plans expect we form build think slow to typical at take materialize, to us more course and a should look a correct of seasonal in However, is the revenue our quarter-over-quarter normalization necessary. you close

Wayfair, balance sheet the be. the much. for Importantly, Thank benefit very of long macro striking the all right we focused on us strong balance the may and to term have a you on keep whatever environment

questions. this for joining to Now take and everyone, your you, morning. Thank will I Niraj, be Steve us happy

very here of of what large. and take you difficult us and say us in want to is this couple also Ukraine so morning. thank to world at difficulties, a we're, a the queue to day for talk the I are technical and operator events compile what but your second the for far happy The joining a obviously, We having just minds are and our in the first question. outweigh take But we're the here ask to Thanks. questions, I'll course, on about to get obviously

Operator

comes Your Keith Instructions] from of line Sandler. Peter from Piper the [Operator first question

is line open. Your

Peter Keith

sales near-term about of I the about the want high to two in to Michael, talked year ask a performance. period just improving some teens quarter-to-date CAGR. guys you

to goal of running you're kind $XXX XXXX. get Number of part at longer-term kind So billion a over two to by high-teens question. a one, below rate, your

So near-term are on driving think here? could a, you elaborate sequential seeing you level then And you're that maybe running below acceleration? just why so you secondarily, that improvement, what's some do

Michael Fleisher

sorry. we're to currently and Peter, having We're unmute And Niraj still technical It's Difficulty] him. some [Technical muted, Michael. trying so difficulties,

that. for apologies So

Let your in me answer me. and jump then try question, after can Niraj to

couple I think a there's of things here.

We First, as this very We seeing on seeing -- pattern we're basis. a right? want seeing in now. clear, and February. weekly on are we're to improvement, normal sequential we are mentioned ourselves and I are I seeing in a murky we sequential before, watch that be environment, January a

QX so pattern are of very coming seeing we how to out much into performance sequential And QX of the going. is more normal

#X. I say And that's so piece would

to hard just of I sort that the goal, be else perform. XXXX going the to everything the term, going we consumer of inflation about it terms sort like on is That between of longer makes when et a and think in world that's cetera, understand -- right In think you post-COVID now. exactly when to how in continue the period

you what of And we term, over think we're just XXXX murky your measured pretty though, I -- I Maybe think CAGR to teens that's to to order environment. to it to we're we in I'll tech there. that if if running pass in where will be in need of point, the trying to get tough the close would say, on we're the thoughtful the long to and problem. and really Niraj sort basis, solved believe sort so high

Niraj Shah

hear guys now? you me Can

Michael Fleisher

Yes.

Niraj Shah

sure not what it. the was I'm Great. Okay. issue

the of think, comes runs site, We're most is this grown a forwarding interest to out, a year. ocean leg. high. That's year. flywheel. is some it place, pretty I of transportation ocean problems. our think That one what mile the what traffic will will of new of rate repeat degree scale. so the gains channel lot in that freight, that answer the there of that show the kind things which to things have also That But that big last what Michael's it's how I've of is out. I suppliers to on out on the is. at macro kind in is say badging part frankly, mix talk always see leading lot lot about because about is retail April you traffic the talk we on there. current a as positioning we a that think business the playing new things play which you that -- is lot think forward up a May is drives obviously are of back get but plans and midyear, that growth growth because talk mid as the are be conversion. on you is expensive cost lot are tips that One basically, the on the to And a forward. we have lower But very headed the we technical macro of of classes. network, because that in what speed in these And goods there's want, what hand, prices about very investing I in drive aware, transportation been driver has what in we there's of as they business the improvements is and setting because then CastleGate through a seeing to And one you're sequentially, when seeing, which on the suppliers working the flow drives you're that, don't need And of indicator you progress customers missed drives nicely continued going some Peter, when When we've -- look we've the capacity is other to stable network a year through we doing of goods specific well seen flow about, we rate to will

bringing worked small a managers, has we're luxury the accelerant. huge headway nicely. We've that there. Perigold an still our what example, right account the is there goods to do a helping delivery operate products. in through and find There's with opportunity only there players as the breadth But now really from carry huge customers out customers of logistics of so job with category red great we and incredible the there. business obviously, the brands, of the the couple selection amount offering. of matters. the space, are channels the online done increasingly service the as growing progress a business. BXB very small really an There's interior really with Vertical is there's there quite few very direct And building great vertical a The dollar large with it oligopoly That's an somewhat we're and available typically increasingly experiences and there. in focus complexity, with business. design manner, is a nicely, goods, carpet Well, in making And a billion business, to storytelling, BXB them appliances it, we've the number available player that The designers a that hundred trade is customization of is nice share those brands lot selection of that we're technical flagship those matters, were the of progressing well. taking that's we've customers exclusive, that's of increased a having there. grown merchandising

but of drive going then macro So there's rate will specific to will think, to help. us also the things lot growth that the a stop the continue rambling, we macro, and up outside I'm of to

Peter Keith

And maybe I'll just pivot to margin.

come about financial advantage, on volume about a notable yet through talked dollar operational Specifically, providing basis. has CastleGate, I some we suppliers. think a incentives X-year to and competitive would which ask Niraj, CastleGate down the has you

so, doing inventory? order margin suppliers in get some in that the will in dilution to provide near more to commit So term

Niraj Shah

about Here's to think that. the way

approached cost The freight which that, So very depending charge that, the the the what by brokerage I and technically Well, do was on but why? way insurance ocean was this, it correct, is this, complicated, suppliers fees historically is drayage is cargo induction the it fee with clinical we x it is the that. mean? very consolidation it location is cost, the the was are

upstream. very basically operation. it. we was goods What costing. your So Induct into it did CastleGate the them "Hey, We complicated look. said, our Move simplified consolidation into to is understand we

freight drayage, as what to pay," and it's ocean that And pay, inbound it, of even have cost offer to would someone the else. Here's that are covering and today's to still access paid willing you're pretty in if even compelling. that that it they we you're rates world, hard they going think otherwise

a like to opportunity what is. done is we doing paid, understand price it that the easy what cost that for there's suppliers basis it So of kind And bundled the make ownership because we're total that's them shipping. we've outbound But a in one we we're very easy ask. fees is of different charges pay to the on what managing to never

paying simple suppliers benefits I we for bundling cost. And basically and margin is the our and that's are but paying so in for the getting, services, the as we And mentioned, What making that's easier way end-to-end we're doing is this obviously, us, own of logistic at it look complexity. sure not what for the reflected that lot do taking the dilutive. lean suppliers logistics then suppliers We a out. basically end-to-end we're we to cost. costs it what in, actually manage total we're costs a versus by The are making some but a are the we're manner. us And in way,

don't trying So it than the think as simplify margin to offering. of being dilutive more

Operator

question comes the next Co. line Oppenheimer & Your Brian of from from Nagel

Brian Nagel

together. you a questions, the going COVID, to So backdrop. I'm couple back. consumers them merge comments, the just talked in about of shifting prepared going Post But

extent, more on pre-pandemic made there I I may comment back think to mean, a certain their to the shopping ways, you physical stores. as have going

better there presence? all And disposal, to but part that second, of say, But potential at the more is this something we see the about testing context Wayfair of look at within looking talked normalization recognition -- pulling the that very, you to I on as So underway some a you the you I even are physical very the the term, and still model then is that time once more are or could type stores. now? business in consumers is happening? Wayfair gravitating know the time that small tools sort physical model is as questions -- you your towards And nearer have, you item. Wayfair the again drive of here in you of there levers could at as you pull consumer are

Niraj Shah

Sure. Yes. Thanks, Brian.

I of -- behavior So to reverting it pendulum. of COVID, pre-pandemic COVID, on Beginning sort about online. a in strongly when don't you move that your is other I remind middle But question, repeat. it way. can now just and business XX% think the of it's think quicker. And of swinging are it's pull middle. very the very, as towards there our to back that you, coming the way the we customers to know on back of we out swung first over business, our will specifically talk We levers it any

very engaged. base customers. of a last year. we So They X visits very have They're made large billion

direct have interested in what we're communicate whether We a way them, very or with e-mail that's through app. to the doing. They're

mass well. It's be And pendulum affected to the QX. now than middle Wayfair business. It's The more is what our pretty mid-single with business. in pendulum digits well. you're helpful with to the And The doing Wayfair.com at It's so well. getting nicely. swing Perigold, some And are high we Obviously, down different business is end going seeing are But drive of business quite the we resilient. is and like. right as inflation to by growing have those doing able BXB back very segments. this a the it's

very we're really fast tighter well-performing the international the So availability in swinging. and building brands, momentum that curated then where, is seeing really progress that the is we've though, of there. a catalogs. specialty geographies, those we part obviously, specialty end SKUs then of finished low very seeing time nearing because curation, We're really where taking growth. that's retail we're assortment negative, that's comp the out you're same curation. to to plan but repositioning That moving where some quality, a The And all tightly where you'll to see are frankly, nice the pendulum get

set a of of buffering things mixed kind it So around. are you that have

for anyways about working kind if stores. so of you on this just to get we're we could the is -- fairly to headed don't want physical are quickly. would physical there stores, And we've been just to years. say I I think do know on I And we're highlight, I faster. there talked levers something end

Then we have So that. and not role our X a outside a in what Mall saw couple about tested for really we to pandemic stores we square really years. had foot does and play in years how good really on each a we About there, build decided X,XXX think to the ago, pop-ups we Natick of to concepts. learned we a the store a Boston, effort an of then of performance lot that. very think embark from were We the optimal for

And year. so specialty to the brands that end, our retail some for of opening we've this stores got

that Wayfair larger for next ago. started years work We format about long year. ago, time that excited open X.X started we're the But for have up a will much a

way the advantage we the And of next step creating have. is takes in to that this that an everything omnichannel is just think about experience so

have We a network. distribution

can very deliver delivery We have goods a that quickly. network

great a have We offering.

that customer We communicate we list large the supply with. We've the for chain. have sitting got that inventory a very can in

So you basically than about we network, think you themselves. stores the physical everything a if other stores building have need

just with we as another customers. the our So engage to build way it's stores,

tactile or way were another a experience great us. to things services design can just Some as of having complex more some a customers engage the just or add we with provide, it it's products categories, thing whether be customers with

a as time more. lots of -- and it network. And optimize It them then our slowly in something because will addition there's it of underway really deal, be so them it before things, have just over It's how play plays out we're you like kind open we to exciting earlier. can I another be thing to logistics about it's time But will but out. build big mentioned pretty excited other

So where we're we're headed. excited about

Operator

of question from Cowen. comes the John next Blackledge Our from line

open. is line Your

John Blackledge

questions. Two

on First, competitive the environment.

Wayfair? And could hopefully you will some Could discuss second, competitive think Michael current and you facilities you mentioned comps, in And then lingering pandemic, the the U.S. on in just past few add do ground have those on more X XXXX. from opening you. are? discuss timing we the emerge on of Wayfair Aside years where that the -- from COVID gained CastleGate, as landscape? over Thank CastleGate facilities the that competitors the

Niraj Shah

Yes. Sure, the John. Thanks for questions.

pandemic. competitive as in household have last And built say more I would We've front, happened home. the even I it's the I customers the of would during position had it. years, our it firmly brand couple has think that's a period advance able of the the I accelerated been for already that into is, kind leader we've that. We known all there. say On But going time what to think us during

Target, us. cost clear The it's logistics, that the e-commerce think hard about a lot inputs. other And And providing that's plays very provide that has Home I advanced that are happened thing you optimal of what you logistics it's become experience. key very a that very and hear hard is companies the kind to Walmart, experience. Depot, talk because logistics, major advanced of frankly, point Amazon one the And control to that, without an talk role think hear optimal in companies it I only really it's about

things have lot matters of convenient at reverse deliveries a great And experience, a competitive same-day I the putting start a and delivery when you, about and, logistics a customer talking so or talking think them and about you're bedroom delivery, expectations kind X-person delivery costs or backyard case, to you of assembly our one-day what with that great scheduled in lot. putting in in and

say open about our opened. fulfillment actually And ability centers, just has question one CastleGate the think strong. we very will in in to be is play Baltimore outside these to of the winner I we just answer outsized of the the I going Chicago guess. the on And keep And going outside competitively, year. in later is in cities, that So to outside out, where On we in locations, the Baltimore just as are. of category results X good is an would is or see feel you're your Baltimore Chicago. -- being of very kind one the the and One just recently one one about

development So in you the where we at of question, are footprint not And we didn't out build I CastleGate it comment building want that, just do locations. evolution need of the think and point, specific out fulfillment this, John. that to ask, the on the center then was thing this but I is sort to for

at for So point we're out it capacity. this building

we have capacity. them capacity an of So we're handle -- we're we estimate how much in need, and out order building that to

over out should So the going will time. amount that over actually on of fact to you we're see time things open is network despite grow, percentage the our one of facilities more that the should utilization play

Michael Fleisher

Yes.

do network. think let The to of one we Niraj. add clearly I goods penetration Just is me thing sort flowing don't on increasing of that point, our we've said expect have through CastleGate

warehouses So volume flowing is that because we're Niraj opening the incremental of mentioned.

freight. have visibility on We forward with ocean that

penetration gross more grows, sort XX% through run we over more building targets the and CastleGate what gives us the XX% as as our run -- obviously, that we're forward. to going so we confidence in how time business margin of And of part

Operator

Forbes comes from the line Guggenheim. from question of Your next Steven

open. is line Your

Steven Forbes

think, fourth down I digits Niraj, you was mentioned Wayfair.com, mid-single in the quarter.

business color specific sort more the on within provide when the the will changes quarter-to-date and specialty you I then just the can Wayfair.com catalog quarter cycle first provide So in during, on of guess, banners? specifics

Niraj Shah

Steven. Sure,

to try me little add a Let color.

and better first statements and total the then doing in kind what Wayfair.com Perigold described are the drags SRBs, growing nicely, the international those So I of and quarter. than BXB true being still

SRBs, actually of you're down happen you And substantially. very half want because is That's provide And comping of you'll as numbers flip. as -- a see the grow, actually into business, we're get will I all the them of makes to that making, those, total be for things year, one possibly. that of repositioning But see those comps then half the don't year going really you the happening I and the where should is for So the and don't make you in each up difficult half in a you the what the first have positive back last half, but to of they And a exact this pattern, right changes if true. of even all are tailwinds COVID of relatively things small comps the share the forward specific account think Michael the those year statements are but they're they're that doing we're hey, nice that this roll actually have the look comps normalization they shape now second this outsized has said, just second in performance, unusual. the drive you year. actually normal year get seasonal to specifically of very

And have first away you months things is we're et when you're rounds of but so that of talk you year two all that us. anniversary-ing is, not from behind comps the one steep stimulus, the about from COVID these quarter many that where cetera, last

Steven Forbes

just then follow-up. And a

planning with pressures? the the you're demand and you of these cohort coming of As inflationary about into categories? your challenges about customer you and among that price how forth, pressures? mitigating and seeing Are how any elasticity thinking you inflationary challenges sort so on think inflationary are color come back pressures may managing for along Or sort inflation sort groups of any of

Niraj Shah

a great that's Yes, question.

is have what suppliers it we it on has to happened that on has and The customers. magnitude in acute passed enough have turn been passed far to us, the so large So enough. inflation

magnitude You would happen. to that up. degree. be have seen some held not Conversion to we has expect To demand of inflation that honest,

savings think more with at their we in is, trillion if is that? look pre-pandemic. can The like it, America, do we in what you did than example, so thing And for they folks only come now $X driving accounts up have

in a the of of future, the on look When this is we of different of and to benefit we digestible. one sheer have we that's inflation of do suppliers. money, platform the So amount we amount have a causing having is out lot our believe, be things

them. a And is between there so competitive tension

not advantage to the So inflation. of they're take looking

When some. In thinking expense. We've how through. ocean we a don't we opportunity cost, want about fact, talked about a and move play but, to I position we're their lot start that at goods there. time, the other of They out advantaged We we only they're take position. lose Not competitive out loaded to an last transportation a can think relative to over about it talked pass this will month, leg. reliably frankly, lot in freight

And so that retail. lower actually drives

to a So talked as that's times, the ramp CastleGate pass about to be going penetration customers. be few And to we advantage we're we able expect going year. nicely to through an to through this

forward some inflation. fighting when have customers nice that, going for that's on and actually talk We you about boon a visibility to be

we then think back to did is for XX% gross say, on exciting. last and we margin this So years, our just specific call which XX% from as logistics to And Those benefit margin this a basically to when not but the wholesale a XX% X suppliers pillars I that's would lot other thing was and was that benefits, pretty about, we about talked X,XXX-plus in range. inflation, could talked lot volume. savings one and unlock big and of gross we economics the XX%, basis pillars, was runway that the X point from

gains, was the which that services, on gains our carpet to we our brands. the with and logistics sell runway was And as things and advertising, is, is growing fourth suppliers. can long supplier third we what of still plan merchandising flagship merchandising those we The gross our to merchandising the keep the some. is red And we margin the that ahead services make those services Well, us said as unlock there's a well.

And rise back. lower included. offer we services So what would prices you means give back is gives see customers would that some see gross and margin or value-added some

out play well. as other going thing And so momentum that seeing to good and that's on time, that's the over we're

Operator

from from question the Anna Needham. next comes Andreeva line Your of

is Your open. line

Anna Andreeva

quick questions. two have We

So of down from buying terms the margins, pretty margin about and range for big in the implied adjusted 'XX? growth and And step first of retention your think quarter. for a gross active your cohorts for appropriate you took number you in the customers what seeing EBITDA the XXXX as And you guidance follow-up How new the customer the profitable? fourth in of on do year gross XX%, What's low the mentioned end a XX% quarter. behavior? slightly for are

Niraj Shah

Great.

question. Anna, -- start me the for thanks Let

yet. I'll with start and Michael then maybe answers me let Let additional jump in thoughts any with

that any On an just I the active customer customer the last count XX clarify active to would who the count, be have customers placed want order within months.

So when visits, that of even But X if of we out number of engaged. in a in customer active from haven't customers they excess a coming large number. talk they drop purchase that's number billion if they're made very that they're period, the about the large,

the COVID. of peak you're And so the happening seeing the from customer active still number, normalization

what XX it's just we million QX XXXX, is in quarter in So I'll COVID, as down before. entered million of you, that had XX noting remind number, million. you're the XX we from

total. So million from it's It's billion then. is in the a again, X XX%. X the the up larger number. number made far are And then visits engaged that That's up that number

of the not their from come you shareholder different. I likelihood back who that the resulting to about and from -- for people already, annual awareness that have understand we us. good I as that, We that. amongst active more very, their which us, there's work when talk don't just then So and is we customer count, say the customers customer awareness that things just in thing about read one about high. count, purchase letter, is is pretty to things well, one who very the than -- you today of get far their to us have growing talked is And we the purchased released incredibly feel of preference the if trajectory. would The know next us do The yet we awareness regularly and survey that from those just

And type lot so of cookie. CPG, new trial. talk people in a about There's a

want out try the you someone it. little it, to so decide And they might on you pre-COVID, like if try you have they packages street you corner handing because Because sample a it.

us, create it over item. it, where site, then If it, And they get buy you find they really that of back back something -- so they're try like, that you so on much where the they And the like as visit so you'll flywheel opportunity over there's we That they side. know, is of that's have X go folks and we they buy repeats over reason and the runway this the again. the grow repeat and quarters again. then over the just business, beginning it's quickly. coming And over as

people think lot the customers. there's conversion to as grows, traffic will just of keep we're with enhancements as rising. the a keep new that all macro going are room site, we the we're So getting And just making visiting

at playing over time. is that risky. think we think don't that, that all We keeps just out So

margin for asked quite the and which time. same some the the that on The range and were guide that And XX%. for to quick while, XX% was a XX% I we highlighted, for quarter, second time, range you gross go it over will question we've a part, from up to is at first rate as XX% had up about the

let we generally going what year of actually is What Michael it give what is was going has the will to nicely. correct. on fact pass over because keep inflation, what we pass it right year. we that we are rising do transitory don't will is we the to question now lot the to I it's discussion. where even a costs is it were Your for But field highlighting, is on do with is time I'm and that quite what think for what is don't say though that we

Michael, of And so for number why time, in end of to the range. can on we that that sit in do that quarter, a absorb want the times we bit, that a of chime you at some is hit short year? which But this where low little period

Michael Fleisher

for And Niraj, question. Yes, the thanks, Anna,

and to guide already quarter, of think is current end the I only low that We've which question. we and clear, be answered appropriate. the that to the XX% to Just range, range that's with XX%

certainly perspective to give happen year. do trying year, it's we've we've that one, tied highly of with you the lot we we're of what's sort that year some away we the far the and year of to think and think anticipate, to end But murky; it's towards of described, the anything towards confidence is it how towards throughout as that or nature. play any comfortable all of back out way work been what XX% we're do of -- from half two, out. we've be about think what as the the to this of way term will but In we'll range I the based line think specific I that upper do way right? about sort seeing. obviously, the giving on top But going the to we're revenue or range XX% year, the that I that's XX% our got we'll the guidance long we our a throughout think that -- terms people if already plays on It's do XX% dependent,

Operator

the call end session. closing Wayfair some the we back turn our of And reached the for team question-and-answer over have I remarks. to

Niraj Shah

And everyone excited you Wayfair. just such we're say doing for I to thank to much. excited we're this your to to everything just you in very tackle Thank continue about just We're it. interest there's you, you be and large to telling with journey opportunity. want Well, a

Operator

This your concludes conference Thank call. for participation. today's you

disconnect. now may You

Wayfair (W) 24 Feb 222021 Q4 Earnings call transcript