W - Earnings call transcript Q1 2022

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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 First Quarter 2022 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. you. Thank Instructions] [Operator of Treasury Head Corporate Investor Gelfand, and Relations, Development. Jane

begin your may conference. You

Jane Gelfand

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

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

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

Niraj Shah

morning, of the Thank Jane, than to a the swift to glad to good of environment and quarter More years you the everyone. Wayfair's reconnect transition We're ago, you, in share pandemic. with first made we two remote early details results. days the working today

been the most the The months, screens week a a culture. past Being jump computer important enabler a Wayfairiens and excitement thousands we is person has colleagues times Over faces and strong friends together Wayfair's of from and made a collaborative drivers few our reunited in energy back one the behind palpable. of destinates. to in to headquarters success, welcomed new Its of Boston. several corporate many

customers still early spoke speaks active is Our talented, the the nearly generating remained on is signs case, home. focused in for or climbing still retail and XXXX the the world's lives. e-commerce pulled physical million our heavily was billion value period, where of transpired. US a to softer focused the the their lot seeing million customers revenue. Wayfair $X appear $XX were in two they begun spending brings swung of QX, pound XX orders, to next we our and noted even customer to When in admittedly delivered in pendulum this February, out. towards and retail Even in in we that I months we troubling count last in universe over to years, has hard-working This events, and low to the but consumer Consumer response mass XXXX amidst Despite ego see back With steadfast. from their on for had the are as continue building spending understandably has overall. dollar, just normalization rising since prices singularly changes across internationally in behavior destination a the team our goal is we And and retail geopolitical two more euro. rapid this the best

is, earning However, the travel. within experiences with sheet, categories Shoppers are, year relatively luxury strength seeing fashion four to individual seeing balance our even healthy curve. from these our the exact hard successful their more happening Way nondiscretionary and are start larger fact, seasonal reprioritizing trends we wallets share of and two out traction. than slower business, nonetheless, entire a represented like a Factors the read, to our the relative that a spring overall specifics, Day in for pattern stronger while Day playing performance muted but normal the our event seasonal very get most professional the a that curve make mass days Last are I'll week, like of Michael of demand remain just customer's weather for Way typical vis-à-vis ever, gradually positive US building our we that the we say geography. in interested had international to in in is shoppers to into and the but largest expected Wayfair's we history. clear customers in Notably, will Reflecting more category. now, sign

were two other the pandemic. during the context, For

of well XXXX, revenue aided course of growth availability, improving progressively year customer to and normalizing We as comparisons. also speed over ago product value, year-over-year the delivery expect by accelerate as

to and nimble have value core our the of having our with identify macro, of environment and only insights how volatility with enable These customer actionable operates. our a Given suppliers. ability and reinforces in always truly our to moving also but speed, view us agility model have partnership regardless the long-term included approach to be of to the real-time of focus, features data strong our leverage inherent the Wayfair's a to environment. competencies this Wayfair

customer lean quickly us the fine-tune environment access to position well meet These and base. customer a has used which change softer can know periods. quickly in to best are offerings Wayfair. on expectations. solve any our Our suppliers long-term changing and for rate robust Internally, platform pivoting at of Wayfair customers, And their variability, for outcomes elements given loyal in natural empowered Suppliers to P&L for adjusts combined and stronger moving that we they our the and suppliers Wayfair. to to

While availability than low are some as in points a rising on since energy parcels the recovery XX% from are Product biggest prices time areas are seeing year year. times last small trough, and percentage while to Encouragingly, a by XX the around headwind more were of of than the and pain for last large congestion ease. where we since globally steady to they XXXX of logistics parcels, have the delivery has point fulfillment platform shipping continue from costs, for points by more XX% improved this improved dissipating.

demand meets the it begins And While seeing we've is time. management generally not about important to thinking close. the two are returned Suppliers they will we as to yet supply than the inventory supply business demand, we last does are that excels exceeds of accrue this believe to fully when most gap as improvement years to more the have accelerate. a Wayfair's model supply our chain pace or normal of environment, between and note benefit. strategically over It

started in XXXX pressures. the is Seeing share had represented in has responsible ahead. XXXX significant these This runway cost a poor of for resulted and opposite. availability, factors that taking earlier a long the speed reverse However, and degradation delivery

consolidation We strong ocean nearly way We've are XXXX. fulfillment, suppliers mile freight the part large in selling Wayfair, all that of since the last on logistics. and seeing the CastleGate, the in Asia from selling can interest from to value due and forwarding, number storage suppliers on doubled to platform derive to

facilitate it cost unlock can value to benefits, expect the well their for of So efficiency, reliable range increased CastleGate. business, Over speed, and should now lead last bundling advantage as a and and to which simplifying across Wayfair. the many services more as our CastleGate delivery of higher the this customers, year better a onboarding to suppliers more as conversion logistics on. capacity, of take education, time, suppliers only of add easier make for all ever improved goes that and mile we wide process than to of like this, ocean our newer driving uptake them supplier are are and services all discovering true To win we

deeper while and ways down technology weeks, brands next Wayfair, of our these lean can and into enhancing dimensions. is of a know teams and live we offering begin best new We're because our business, feedback. augmented Over We're ability experience the met our modern of we is with interest what specialty Suppliers the double value business. out on example journey. where about and excited few are Wayfair of leaning They're the into of showcase excited of for merchandising partners of we're series dedicated across to business the on past lot formats. where focused a of invest are they this their model an their services around we drive in we are seeing increasingly to partnership to best with all supplier Suppliers spectrum Wayfair have to because set Suppliers optimizing all their creativity over stage their grow we And they're consumer, solutions. term, the on thousands helping to have simultaneously excited CastleGate the across stand of support, media our an growing to doing just bring bring, full through customers. of include opening key with of all by multiple needs. these the of into long industry for This retail events, entirely in a and out BXB ecosystem across to as shoppers near in set as months, the in online, participating retail, sophisticated stands the brands Wayfair geared physical of several them of the first platforms integration, the our sell set thought state we've a to them store. into consistent place shopping aligned. in-store integrate Wayfair's the just heard our looking omnichannel run. each as put are One new ways promotional tools, in-house presence the interests events

we main the in and store launch the Wayfair open excited later banner next year, first joust store this will under especially first are Our to year.

have is our run and continuing is a Financial Even the complementing being for online always named with the gears, is today, are us sharing will infrastructure Switching both, another next and locations this been be this yet our Administrative gateway capabilities that environment, of between the tenure. retail our year. and with Michael taking Wayfair our Wayfair you talent, into example CFO only employee Wayfair's we has have have that of into succession of building decade-long weathered business exponentially role expanded November the ecosystem, view leader He's of broader dynamic eight be stronger. corporate from looks planning as $X the visible will transition early a currently also past from logistics well. physical the who less from We've Steve that the business. which and and and Chief list our the been of the sophisticated, the being world-class nearly part shoppers Michael that revenue has Fleisher for Michael in company Gulliver, underlying retiring we approximately has incoming our Michael of conviction morning, next legal, experience and may richness today, his long top-tier what the know the And which made thinking all in of growth At students business together, suppliers. of Chief on XX,XXX focus alongside Our as and you in to a have it the all of the affairs. and that future, to we Wayfair for today. will Kate top remains is uncertainty he to lead That today. and years, Gulliver differentiated parts of maintain more January. Michael oversees, thoughtful been Under today, XXXX grown partner to overseen Officer is best for share and of perhaps customers environment, company the whole runway less the IPO worked industry considerable to Michael's environment, than our And the me uniquely of Officer. the when nimble nurtured seen long Many the its in sorts the that Michael's all X,XXX population outside to about is real talent have Kate the we to less run. having delicate has that capture yet organization. than as forward estate Kate across will balance seeing trusted capabilities. positioned we It's watch CAO manage the had the to joined because billion are includes the of responsive in have set retirement command She therefore finance, we and areas loyalty shopping customers

McKinsey. our Prior know you leader, Relations Wayfair's to build is of Kate Chief Kate at went to organization after People Investor Wayfair was Some on and she Bain Officer. out first which Capital talent as

and already leadership missed, tremendous Kate Wayfair in even confidence as partner new Steve her I ability capacity be invaluable and further broader her team come. the the will in years view to to an Michael in elevate While have and very

over remains into you quarters, excited the Even to summer. as Michael fully coming the we're more engaged we as get with for Kate time spend

to take years recently and who tandem working after organization Miller. Wayfair us Chief Tan, with became what I'm to Officer our the predecessor, scale. our discuss tech of next joining building to level X.X to Jim next in we're her now very of She's Turning to introduce today Fiona happy speaker, Technology

Fiona Tan

create important as and then consists of scientists, whole most the competitive product engineers, some X,XXX CTO, a and to everyone. of function we and develop all experience the on stack To experiences in build of run to Technology it's at and Head brief specifically the those managers, today recently, to that for manner consistent. the discuss Niraj, you we you other the and do support myself, years areas Oracle, at evolved about tech I'm of interface our join software scalable, designers you, and Wayfair. background building talk and Thank worked technology products the we the driving underlying I of Ariba good I technology excited and Wayfair. team organization organization and To our is morning, Walmart, this, durable, joined full and give where an suppliers future MIT recent data and US studied advantage hand-in-hand as user Technology by help technology and Global how Software, grow level, TIBCO Wayfair I are overview the is that working Stanford to was a that and deliver the Wayfair’s highest of most every At I to for to host you than prior resilient fall and sustain spent Customer where experiences from last Jim enables $XX setting a years to of technology roles a us Wayfair’s under how Head Wayfair with a for our start platform. of $XXX billion Miller, division. in see Supply up of more XXXX we the began to X.X shoppers, as user billion and mission in Wayfair Jim want giving world-class the employees. globally.

can think each dedicated functional teams of unique major stakeholders our about You group. across each solving in of broadly organization for needs to each the these with area

such technology, marketing, as have stack. In internal working tech our our we all addition enterprise people to on the proprietary,

on and platform dedicated and Wayfair a time, what customer focus have have our supplier still merchandising, At We diverse the the set more. and working experience. we self-service chain such of These like best building a to for partners elements teams on call front, we making span tools. supply service groups possible customer better same

out in thought a to we we that cloud. grow Wayfair to pleasure readying our evolve our we growth. $XXX with facilitate to billion to very into set business, about to ways As say organization several the nearly finished are specific that move a And

services. technology nimble platform path the cloud-native a ability These to scalability in We build stack preserving also our legacy from on the while continue the to micro give future. us we how will replatforming in of out work be clear

taking stack, of progression also the the level. technology side, our team other the to we've On next been our

growing One and team talent. has building as brought leaders focus in expertise been of in scale. expertise companies domain of the experiencing other magnet which of world talent and We’ve products big seniority has technology with for the from most functions some in critical our our in areas respected senior on a the at acts bringing the deepened

driving team to that back, of that we figure We've now had As ability years started our less two the two has XX% than at of than XX% retain top talent new flipped and and A opening evolution today. years this professional less centers. force ratio sits of four development been members track experience. and

office and suppliers than Francisco Since to new North America. itself Wayfair. think as automation some our and the we driving like the and have on to New locations deeply in as machine centers, in business. experiences for I'd Austin, XXX particular, and sell top influences the Toronto. In Area, San it now the markets work talent underlying members Bay across about are we focused turn technology and announced the we to on buy how these the customers technology across we Seattle benefits that of more learning hired of scale they team have

Let a catalog marketing, are you of me logistics. walk examples through how and few across these applied

biggest in scientists. engineers made up marketers, leverage organization, the more marketing data areas our is quantitative is XXX itself technology of of One and we than which

big with on Our automation. team drives billions of customer week interactions focus every a

optimization. engine leveraged over search in three machine keywords across creation search million drive XX as As of we example, we the an languages learning

product in and across enrich with and filters use machine to customers area highlight making respond logistics catalog the can in to find is customer search, ensure applying marketing, our to we enhanced and complete into to of well to for right as One This them. sure price as confidence points and learning enables needs the augment, shop last items machine network. accurate style curate us and are are Beyond information. learning that we tens millions to products how our

to higher We Doing significantly not of are closer in are travel, search products distance and can dynamically curating but the parameters damage products and show reducing their centers to driving also the them. cut customer located so only prices, fit conversion. fulfillment that costs lowering search

thinking about shop strong also mean from teams We it years now. the have home what for to will

our future Nexus Wayfair Internet on For the focused R&D team instance, [ph] and specifically and exploring e-commerce. the of

The experimenting been and applications of decorate in imagery, home features. many real have is an of through for before opportunity in home space novel on, the it a to We their world. and shop Wayfair by in long already digitizing digital of backbone XD creation innovation the VR customers early for become this and customers experiential proprietary this the they cloud, early be as to and And XD the long made their time in future into models photography a virtual which third-party how space in AR modeling. believe We a home, how homes. will a they decorate we’ve for can have these integrating lifestyle complement long-led won't content industry space. scale saw the and rendition their in around steps has

for Thank of let now future the turn over very a so positioned financials. to review excited We holds. the are about to you. what do me to continue And and Michael are it

Michael Fleisher

Thank and good you, morning, everyone. Fiona,

Before just thank been of the over eight-plus Niraj I lifetime. build this has the want for tremendous the last words. years, company to Niraj Steve I and with Working kind a dive privilege to in,

smooth of say and bullish behind purely work over is board in me to to so that anywhere has inside and several Wayfair's Wayfair. a team made commitment going It do leader excited fulfillment transition facilitate in not partner I to with not CAO. her decision Kate a prospects years family on very to capable talented and last quarters to future am reintroduce proven, been a personal over my Kate's the sounding quarters, nor the and I'm to all coming a and to inspirational could several the constant you I as more and CFO this years over coming myself Kate is of the back. While I want it, and be the process. the

first I take quarter, the look move the Now before a outlook. on details let's at financial to for the

our QX to We quarter-to-date $X February. in typical this was a saw net morning, commentary some a year-over-year. shopping you release total in billion, our XX% event. quarter more with encouraging back began, suggesting decline As landed the revenue strong behavior revenue as representing Day trends QX below President's saw press a return somewhat revenue

the last net US Wayfair.com segment consolidated international XX% lapped The comparison again We events year, headwinds the customer would exacerbate While and be XX% in as quarter, served a in difficult the of in some we from stimulus last single once particularly March On to new saw QX over net we comps, high that declined with the revenue a also year, XX% year-over-year. difficult sentiment, segment knew XXXX. added down subdued again macroeconomic year-over-year saw for International revenue Europe. inflationary as faced in basis, while year-over-year. more outperformed digits pressures growth business geopolitical declined we US develop, QX full from once the

KPIs reflected drop back We towards macro the war outlined between the the trends and Russia also unfolded. sentiment Ukraine customer of QX saw earlier. as that European Niraj quarter, the broadly

year-over-year. customers, P&L. the right year-over-year, active trailing Order line XX% now we with net For pandemic. a AOVs. grew was customer revenue levels last frequency of the we before down months, year-over-year by million the saw had move about driven months decline I'll per onset more further but to the higher $XXX, over LTM XX lower was XX than which XX% active the XX X.XX, in

margin a same as remaining non-GAAP basis and gross use discussing but I'll excludes XX.X% was compensation the taxes the non-GAAP outlook related will As do, XX% that to basis, financials depreciation our note please and XX%. includes well. which adjustments. I stock-based -- be when other QX amortization referencing on I

and In is is which to were revenue quarter-over-quarter as take service due the to lower year-over-year. as of net was opportunities X.X% compensation mentioned increased of the we taking periods. coming merchant deal advantage our costs XX.X%. energy quarter, order brand revenue and of a and in of the of particularly and funnel base we on and offset higher and first hold, penetrate will wide in with fulfillment higher seeing Advertising something part bit classes of quarter, labor percent of expenses. over top ROI that with weighing a We these, sell net inflation household wallet have a shipping we're February, good of particularly leveraging driving cost We're back array Customer home as Wayfair's higher we the the revenue smart to cost sales, saw across status awareness brand-based well fees in on As in in advertising. share.

operations, existing context and expenses quarter-over-quarter The growing quarter, end some for headcount adjustments approximately and merchant lines. teams, lion's compensation selling, cost came and increase I accounted QX. which get chain additions the share supply technology magnitude is and Our of and the from growth. provide customer for headcount the customer this combination want XX,XXX in G&A totaled to employees, a of service our to this service of jump goods or of fees for net million. OpEx total of The to the $XXX by

together, negative is all adjusted increase revenue. for a negative the or described. this ranks a of have negative adjusted negative pace X.X% million X.X% previously to $XX XX.X% was $XX adjusted International negative EBITDA we $XXX EBITDA Putting of intent While million OpEx In was million more these business, to US, employee QX margin. the at the our a our margin, or also segment net as count while booked is negative measured growing EBITDA support

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

turn the progresses. our the reminder, negative as working typically swing revenue in a at net tends quarter-over-quarter And is to positive As its capital year builds from business to as QX. QX most

outlook. to now turn Let's the

influencing see moving mentioned and and but War days. Niraj lot should relatively healthy As spending, the still today. inflation consumer of a earlier, behavior widespread consumer place consumer weigh parts on are in sentiment a we there these

also conditions in towards remain XXXX. in exactly and as will thus are We XXXX believe pandemic adjusting to progressively watching is year-over-year difficult we shifting that very a the and is the encouraging it's continue. As necessary. will driving equilibrium restrictions and also accelerate expect business this the share monitor things. ease, nimble US All the we capture We truly between on, changing in will Said the here of swing to carefully. as when very and goes far expecting closely very and are It said, this to over to that we are and normalize. brick-and-mortar simply, revenue e-commerce pinpoint pendulum things in course and way there growth year experiences still data-based

the place are We operating. and which balance to our appropriate properly on plans in of we in shorter-term realities the massive have environment market focus opportunity the long-term

the gross our we quarter, XX% low to trending teens and believe chain here, range is conditions have last segment. and As far for line we the the we as is product range the will managing labor. of XX% are these in our in inflation strongly not particularly seeing and improving mid instead our for year-over-year. do cost We supply energy from normalize within most for state to The Wayfair.com, target while we quarters, few start higher where than on cost US down we Comps structure. to likely we costs Once QX. revenue provide again, also transparency margin, availability. current the on and appropriate, more to International Similar high remain what gross a quarter-to-date guidance is last focused have continue in the remainder are basis, with we formal top five own passing a through last quarters, opt over our QX. transportation, seeing end to the will On and thus of

to a should as in now, For choosing a of short-term net in customer where as top with X% line we to disciplined a model fees volatility ROI-based is merchant range. our not percentage overreact and XX% Advertising revenue once revenue line net item in remain customer X.X% a are to of a of high on a keep percentage service land an example experience. XX% approach. to and please range. again We bar This

opportunities or resulting in mix. range million to SOTG&A $XXX So million should the OpEx second in the stock-based we end depend taxes, channel related on will where and approximately in the equal $XXX and dollars, this compensation period, quarter. up we excluding see the

As driver be to the line Wayfair. resourcing of continue here EBITDA employees long-term on top to between the We balance actively will monitor manage adjusted the hiring remain ultimately our continue and new and our joining quarter, quickly progresses. mindful too existing delicate last with will opportunities and closely. this QX main team depend for extremely the how compensation and

that margin trends this However, a to seen similar that is QX we've to EBITDA levels. assuming I continue, top quarter-to-date translate will note would line the adjusted QX

to remain $XXX $XXX of average QX. opportunity million for for related $XXX in few touch weighted million, on profitably. approximately shares; approximately business Equity-based long-term QX. the now million, approximately of me depreciation we a finally, equal focused to and $XXX and compensation our XXX million to Please forecast to million; million tax $X We and a running of interest both following CapEx housekeeping million amortization approximately million our range $XX shares on assume outstanding expense items. Let expense $XX

line. our to now, and play with the how environment that difficult top will right However, is macro the so XXXX consumer murky is know out it

higher, we run we such, cannot focused adjusted resourcefulness on based and supplier I decade-long to have balanced seen entire sight do is profitable no my to much. in Needless are have business began. in thoughtful long-term best Niraj smart keeping to bringing best plays some returning want remain between strike balance complete capable and sheet in timing. career. Steve strike out, Kate’s. over is as we will I have will my this balance being the we lie should our perspective, today's long have to be top up firsthand the what nearly where term. you year, line will what going years have to Wayfair always over the by problems, that coming solve fully EBITDA so. very under Zooming doubt operate, how day to that now business and how my how talented just untapped the with all drivers mostly every As what exact EBITDA of the place in to stewardship a investments and us response and years key are for Wayfair, to how very I the profit of reinforced growth, the not because and but to have back most to The confidence in manage continue ahead, potential this to I’ve creativity the Thank team multiple them our of of Wayfair's years wrap scale business that the will past already as been in investment, This the profitability. tenure to our at and two They the serve structural both the and well commit we while here responsive say, of market. we of choose full business consumer we challenging importance the longer rewarding, and out our our also for a expenses balance as made them We seeing, economics adjusted have balance manage to that intend in the propel recognizing to drive we way. right allow profitability year of Wayfair on and

Now Niraj, take Fiona, Steve to and I will be happy questions. your

Operator

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

Your open. line is

Peter Keith

morning. Hi. congratulations. with so you and been much. to It so working Good you getting you, has best. but Thanks the Michel, great wish know nothing

to it Niraj. dig Just just question, to a I'll turn into maybe

up in exceeds suppliers and that your you of the is with script excels retailers. believe a business number had You that model Do when inventory demand. supply shooting mentioned

think, So entering we're environment I that quickly. very

try you environment the a model promotional get clear risks improved to unpack the And us and supply? your out little what bit excess could benefits that this people bit that as might for are competitive, more So how from a inventory?

Niraj Shah

questions. Hi. Well, Sure, thanks for Peter. your

War very that demand. year. when roughly was the it our during demand, is almost last in excels it's model And sells when scarce, let me World never first, model equal was supply just be disadvantaged is It's it supply is supply is environment, scarce to or when sees clarify. honest, actually relative supply II. demand. our So, but It exceeds demand capitalist not To supply to that

rare. So there's only does why then, just it where get who write retailer checks hurt it's times we're for inventory. the it doesn't major super And is,

can relative anywhere producer, enough imagine, of sell So to it who is demand, going produce people are to all you a when as if scarce, to writing near supply you're you're you can't checks.

that we just of it's we but the drives take takes And don't then inventory costing, our retail price. then That even then gets it, so, hurt sub-function that the models, a position the have course, items, that been, And out delivery. then get has it not best of lot. which before, speed just of a we

So where now different of as it's good a now, effects. it so actually has about last lost was better. sudden, back only half already series availability demand the a, what's now because some recover fallen were Well, Well, you just happening knock-on of aggressively, benefiting of kind recover, we is does a has to this. what's getting of what's recovering. perspective. because of we it is, macro a share mentioned, in as Not year starting like than Well, all it inventory

very better Now at getting a availability rate. fast is

to they That with bad what is on price it Those to day. Our to because that is for price. certain get their discount, they What the few see and happens They're at are their Well, relative they've now the cost. cost retailers, mentioned, already, price. extra is, they've retail speed to exact you just amount Then, has of driving if manifest delivery supplier, fast you're relative want excessive customers have cash, better day. margin profit an in inventory, sharper some having focused is them price a supplier items. as the our respond. those could we retail, every price rate. suppliers you inventory position you started of into setting a to They've what turn in put every on bought And platform, want. next a at then done they the on bought inventory locked on months a it for low competitive retail our less

happen place the with way. promotional is do see the first they we what so And and this by events,

Day they to great the then this our in a aggressively. had base we happen Well, good think ever. a our actually, continue aggressive four is Way to by set We what think, people look had our you the even frankly, is our in better had We do put a had best And we find our obviously a days to two So at interesting. Day. And great then of are We reacted. to promise we come get an we of large Day, They're leaning why who best it’s this of bringing to if days. we check ever. best though this customers. obviously already Day. Way proposition, speed is, pace, gotten them near -- two Same better suppliers saw amount. They're seeing term? front in share. have Wayfair is of value our Which the because Memorial other We And get Wafair.com, obviously, in at out. delivery going in countries. That’s, US customer is on with to thing we happen true curious, value happen we this aggressively this President they do role they best Way in are These lead proposition. that and We're it We're saw up happen seeing holidays. leaning Day. on in

at Our aggressive it's pace, availability though better. better already is an gotten to even get

insight because in the started forwarding of ago. starting that, we our We ocean have just year ocean by business new forward years X. The to four way, May partly kicked that

doubled lowers for ocean is We This well. pretty suppliers that our capacity last from strategic cost a good year. actually have advantage the as

very competing financial a good a frankly, us, great find and in is suppliers a environment for so, And also, lean why environment, They one is another. the did the Customers compelling. a us. way, customer. crisis the good the normal That's why environment, we it come by us? promotional they're well for housing -- that good for Its this value with environment environment, environment Well, in, recession. promotional during a for is

credit good the share honestly, And very think done year-to-date, card the a it's we've entirely that starting from as of in I of setup. it's this bunch third-party all show that noticed back folks this a the taking not significant have business, and the And share. because taking the we're data, So of is dynamic. steady. gross the buying to data margin you see on holding It's

Peter Keith

Okay. That's helpful.

the specifically with Just have mass competitive with thesis the a agree sticking year that e-com retailers some a a lot that environment? there lot better COVID you And of maybe the the in competitors are with that sophisticated. evolution the bit that large home last has environment. broader become backdrop seeing furnishings forced get category. your competitive you is do What more on out better the view a of to There of and topic mass

Niraj Shah

no question there's important. largest recognize all e-commerce mean, retailers I is that the

we're talking country about a the business. who here, comparable talking but not an is focus That and So of and with Home all Amazon, Lowe’s. names, Walmart just said, sticking each Again, they Target on about e-commerce US obviously Depot, kind core specialist, their we're has set. I'm

there's lot of about about network, So you delivery trucks focus Depot and the Lowe's, they Home flatbed a talk building the on when think or materials.

grocery talking consumables, and I'm to protect share, in-home about delivery. Walmart about back I'm about replenishment. take trying talk You Amazon. share grocery, they're Obviously, there, talking Target, their from

nails that, or at no general is say want But every batteries they is the So different home in AA square, a right? everyone sell the core is, picture, to have and they nails, a than I same that is be which size the that compelling. sell inch big their category, you is business. you that category. Amazon for is, inch challenges other The if you be truth one which on picture not focused do to really has, you every to X be do would merchandiser, on screen square want monitor, want

that And opening business and point, about think think to the just across business we're their price which home the do selection in comes don't specialist; where the our at a those the We so, thing folks I key home. is is, merchandising. do in

way it the We optimized have drives that of delivery items. this. we that types deliveries prevents in logistics understand lowers big network a others an And retail, suppliers for for It exciting bulky the damage, it our of still do. that's do speed can't

very provide and very large, we're them trying really So and our with for because them, doing valuable suppliers containers supplier the on optimize are and them, feed by the businesses, a models of These not, merchandising. multinationals are building products things large integration of the holiday you're diverse with or the all midsized supply to small give do large to that help where portfolio we new three we're we These valued introducing this to XXX each. services. them by all technology this are chain these you're

have the a saw of prior continue of role share way not in you you on see. our I box home, dynamic because the are tranche lower will all be on struggle do the about I you'll those That like the to see all who broadly, think going the to smaller us we big in think share when their they're you're to are dynamic take do us. in it these or over keep well specialized disproportionate folks a players but in or logistics of benefits to market to the because continue acquisition, smaller I we continue And the home of folks e-commerce seeing that's home, e-commerce front, to think amortize you COVID. be can independents think So in think do about who network, they'll going guys, when is -- will with the those costs more customer kind share base. the a that small business scale

Peter Keith

luck. Thanks so insights. it the good and Appreciate for Great. much Okay.

Niraj Shah

Peter the nice comment. thank Thanks, and you for

Operator

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

Your line is open.

John Blackledge

It your on with to new the And and congrats Thanks her again. Michael, the nice also congrats over Kate question. on for will work excellent definitely the Great. years to role. be work

chain? two supply you. and have recent conditions was we abating to somewhat. potentially And chain, in that Is issues they in chain and COVID supply on the takes I supply think gross Niraj, are on new XQ remarks, How questions rest So it given year? then the question And China, margin, puts to should the you second of headwinds suggest seem and right? that about prepared shutdowns just your right gross of the range. end around Thank margin low the for in are

Niraj Shah

Sure. Thanks, John.

XXXX. chain then -- access -- those And I in position So we've is, would a low making of how And a so, It's share the basis we on and that it it. why burst not environment. will grown, those fronts, just function capacity our with a this. kind relative of availability. we feel planning from as in great production Availability forward we're challenges suggesting usual And our lot then ocean obviously, chain again, a integration the generally, a own activity. I us with that a cubed But us describing are a space for is say, -- activity. not our proprietary and to it to to talked creates of to a come deeply say I still shutdowns has freight supply we getting to in carriers are from also well business yes a what position abating chain manage to the I'm of we're feet to the and supply as large think, that able it. is off it's function combo, the both demand is of we are ranging we've abating fulfillment second deep -- production, building fact on but just little center network, deeper China challenges a position manage mile parcel cycle seven our our about over that as freight where to point basis These XX of the was the years, to supply to relative But remember, I'm has for delivery, continue six Obviously, would suppliers. out new, last competition. out. the network, the ocean think a to flow. of in create is things XXXX, as which like proprietary transportation been us is million complicated gotten square before years, a

the margin XX% range think gross to there the should it say what range, the would that you about to question, think XX% you On the I we way about. is is, gave is

-- has take transportation margin cost with that's retail. in moved the is, reason we that of wholesale, same the we always an what associated item, for we've And and moved gross is around margin, cost, the the structure all around apply items, the Now and that said item, the other range. the pure margin the it's our costs the item

structure drives the retail. And generally so, cost

structure a shortly a that necessarily if we're bit not of bit that change then the or drop it soon, item only the is little little said, again a Now transportation. think one manage, the that's going basically the it one abate to to through to pass think we of, going raise to thereafter. to main price piece change which is cost there's If of we easiest transitory the in a

over on so, lot period. there's more And as imagine, been this transportation, you a movement would

of move been price down. because one that And as wanted we've in leaning but promotional more seeing time not have changes, supply then wholesale mentioning, up, inflation lot, drives periods. both of they've it of than around periods driving more there they've to been trade, a been side Obviously, any on moving. or of and we're you're available, and is it the a lot where getting retails suppliers other been we've down, side the there's So that up been broadly sort moving on just

you normally a you change. So shouldn't think, out, seeing that's expect. it a why expect little more around of zoom if I But than you kind maybe you're move

Michael Fleisher

thing Niraj and we're delivery also a greater in is John, of of there's all out, I those period sort the all I'd add, movement, of both think a on only obviously, pointed as of The has that volatility costs. there, that Product but consistent, lot do very of cost. the on around margin then wholesale remained

everybody volatility there. can And obviously best going reason the and low it, be the guiding in we not that to there's so, is it for is the and manage of to there balancing because, we're right? we're to our act some for our a like There's -- trying end only customers, business,

John Blackledge

you. Thank

Michael Fleisher

John. Thanks,

Operator

Your comes next line Gordon of question Grom from the Haskett. Chuck from

Your is open. line

Chuck Grom

also Michael, retirement. your Hey, thanks. and morning, on congrats, Good

You the us called you over week. insights, my that play share category performance top additional Way in you with out may help your with last Can few And performance ones which success do any line you perhaps next territory. Day then you guess, talked quarters? how than building blocks about to question, we rather to P&L? later? you think within second about see do the expect a the return inflect EBITDA positive think I And and How sooner

Niraj Shah

was sort outdoor if XXXX, from so your the On that spikes we Way very the as pre-COVID interesting had is, to curves, a it Day, Day, the what activity, And where in of looks kind I forward. like saw And that would season, We XXXX the well. compare as say, you partially we particular expect XXXX, due expect. was in that was not a Way to saw would seasonal performance stronger category. slower mentioned curves, concentrated it broad-based lot any Chuck. question, we start Thanks, Sure. fact, interesting first Way XXXX, would to did What's on Day, it sort those pull of weather. seasonality perhaps of particular including what we about a in exciting outdoor broad-based had

put question it returning we very trying remarks say for to we there So prepared and it about profitability and That's the compelling. is, highlight about about what good we why do and was think to pretty a in trajectory reasons. that. the thought feel we that, were I your that how we On few would EBITDA

which of we're discussed, gross first The holding as margins. is, we've

are Our unit economics intact.

And play particularly warehouses we're what interesting High the furniture muted getting is positive it's hearing pattern. That mentioned still the the was we've UK growth. UK lot different a that full, trouble of And numbers. is EBITDA we've week. trade very we're in revenue having few significantly retailer And shows show grows. strongly. more the with to what hear what heard it's perhaps hold is hearing in we've even -- got We've So seen at but Germany, demand for different And see, sequential and it a in pockets, profitability. weeks things. pattern. seen a in pattern Obviously, a visited few I from a quite Michael's was sell-through, What about flow-through seeing on just what's We're we've folks. is quarter-to-date, seeing US in just very what with major a I substantial. Europe sequential seen business, can total than really we're happens And big ultimately last being our their numbers sequential driver I about we are We normally Point you hardware down. retailers folks out. in stepped up heard business ago. seeing the of quite and was seen have March April, that in we

believe taking profitability? keep think we we going Well, about how to So share. do we're

think we're a revenue rate. So headcount, though will OpEx it at we moderate adding adding Even grow. we're

a percentage it of will And has So frankly, normalized as go is as revenue, revenue down OpEx then rises. percentage which as revenue an the post-COVID, environment. risen that uncertain

plans place the are good But a intact, what depending how about we out. of variety how we in so feel do pretty EBITDA happens, we on get things have profitability. obviously, to macro that that to decide So to playing

key hard things on we And happening positive week a and call to in I the to XXXX degree of think we we're the how mentioned what's what's week worked think hurt the us, items share is were of availability very we taking. we're is quarter, on the and is, in that Well, out to the and half didn't fairly the from this at I tried which and seeing so recovery, purchasing interesting out, recover way. have we're and painful, interesting that, didn't so far, going we the what's items about And have, frankly, talked so other we've some key substantial playing is stop seeing forth. last back we to by the

a pretty play add will And variety And be can even underwriting, want what's macro, of we're on choppy we we how macro so, to you Michael, we good choppier, obviously, if EBITDA. in anything to a do then feel drive that? have about going gets out. to that the things

Michael Fleisher

exist. as of -- actually supplier the think I'd of those the -- covered one as in I time, sort the services, I the I margin gross No, all say that, thing the investments because made only it add, opportunities that well of guess, for structural still thing really I well. you we've increased all supply over across chain, would is of the

a to not midterm to going that's you're so, And business as normal through I but and to flow returns well. in more important the just And long think term. pattern, near certainly term I the an those start driver, as see think growth

Chuck Grom

Thank you. Great.

Operator

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

open. line is Your

Steven Forbes

and Good and congrats the respective expenses love hear margin morning would really item. just Niraj, on planned that and, thoughts doesn't ramp walk to in the longer-term margin change also for target SOTG&A labor productivity Michael, OpEx the and why recent line your retirement. on

Niraj Shah

to Happy that. answer Sure.

volume, headcount, customer going of the today's -- phone the or in like, orders to number flow, order the through so think So to getting talking tied is we're today's that, thing our fulfillment number to service they're I tied very orders. calls headcount of the the you're much count, about network, transportation mind today's order non-OpEx head biggest keep

And with a and really so, to time? flow. today's but order will that, get that technology order at OpEx, flow, there by does on leverage degree, but you flow. you it's leverage large, look not the say, order some When little well, to tied There's tied to the those are, how tied better, to some over things,

yet freight, with things if that great people about a have be with X around decade But to less takes we're to relative OpEx OpEx and talking a ramped to and cannot for we've the work, people from how about many And meaning, more more and move have from today's problems. the years get year you a to ocean the the physical said long time. to that on have people offering But you of look now sized right? now. about today, could building, be the time team too whether is, to that never don't you of the want tenure. actually, or ramp you can you order before or storefront think turnover you revenue, the that ways the we And will build meaningful, at to technology it's need doing, meaningful in we've revenue past, a of yourselves. have day, a need fast So there's And we're period because then going team and the it or if, to don't XX% found than forwarding be it that. growth, the many, of it's historical you to very that substantial, business retail because technology different way percentage and up, whether need had high So and hit to productivity knowledge, you And talk you're to than visualization navigation get P&L. counterproductive, the product labor in are a and -- new substantial and that store. is OpEx that we've And is we're one one one add hurt we one take store not with relative we're lot doesn't hit will automation going it our Physical working example retail. stores

end great a so, now started We resignation, of there. for some folks at the of grow number year. quarters. added And year with didn't last we the really OpEx a We've to

on can up. We've actually that a very burst moderate sure people sure need we so them make a we had we people make plan here, so ramp adding is we of up. to OpEx to Our actually that ramp, ramp new

pile on, not we're past. the So on problem the going had we've and pile in pile on, create to

way lets moderate ramp really in the a you it to stimulate that so, the about future. And that revenue do think it's things is,

so, about that we that's that but And think moderate of is a plan in We combination this a on really of very, can't in one way you're why you fact, OpEx time, that's right? driver they large link work plans goes revenue as very, what well. to based And it place, a obviously this XXX% done so, stimulate in is going committed percentage initiatives, because current ROI variety of you've as building it percentage of meaning And we years do, we're a we're the way. have a to. if, as cost of things substantial. there's revenue the no high mentioned, before, the why I in And and ramp very down macro

Steven Forbes

that the And then us Michael SOTG&A maybe or of sort sure separate, different maybe and classifications, right, segment given just or deteriorate help really it's were to of profile? not expense that, current to right, the much is cash a right, in flow Niraj, quick event you the just structure business, into I'm the to how macro guys follow-up for just flexibility pretty expenses significantly, free the overall the there, on control if possible,

Niraj Shah

let Michael me Let you. that answer for

Michael Fleisher

and Look, comment the don't thanks trying think, parcel pieces. to I sort too. into all for upfront, get things Steve, these into of Thanks, Yes. to want different I

piece the noting flexibility worth is more sort you customers the to that and And is, day. on thing, the in the supporting future stuff the business substantive mentioned, day got do of you've on of running Niraj focused that focused. line obviously, there's future that's a that's it's As expense than stuff

time, of of the big degree believe, I high stuff we term At think the unlocks there's be balancing is. really, act what on to about sort flexibility sort when a between are same growth. against, do people long-term to a short And you careful think what you're and pretty the thinking there. working of really long-term want so, and important, obviously, the I trade-off thoughtful And opportunity But there's the really future here. sort future working have all we of are

have a doesn't -- sort reasons about the have sure said, it's the in we the strong be take. play way we sheet we to, thoughtful out balancing some macro that to you going plans make of that what place if trying can that so we'll actions tougher world We're do One also we reiterate think know to the of act that. times. just in balance is, have But Niraj to you

Steven Forbes

Thank Best you. luck. of

Michael Fleisher

Thanks, Steve.

Operator

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

Niraj Shah

thank the you always. for everyone, call. interest, appreciate Well, as for joining your conference We

Michael Fleisher

look to talking And the quarter. forward next to you in

Niraj Shah

lot. Thanks a

Operator

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

disconnect. You may now

Wayfair (W) 5 May 222022 Q1 Earnings call transcript