- Earnings call transcript Q3 2022

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Operator

Good day, and welcome to the Wayfair Third Quarter 2022 Earnings Release Conference Call. Please note, today's conference is being recorded. All lines have been placed on mute to prevent any background noise. After the speakers remarks there will be a question and answer session. [Operator Instructions]. will Investor conference Relations. I Lamb, to time, of Head this turn over the James At Mr. Lamb, may you begin your conference.

James Lamb

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

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

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

Niraj Shah

along nearly a every twentyfold as since, our geographic by customer investments our catalog, made platform grown to and we In profits reinvested and business. first In growth. raised up big the Wayfair, we the got and morning, outside the we name more. Thank reconnect for we our out glad you, that share Steve James, first was and away results. nursery out to last Wayfair's business the We're adopting Steve's August shopping you of creating details the home. Wayfair summer point, today anniversary. premier a online in but and since beginning, marked vision the third from XXth nearly to good I of We our everyone. decade capital time, rebranded able logistics to This with meaningful this we've self-fund for at building a of of decade, the destination a the for quarter step started a operating It XXXX, that and and bold had as XXXX back the look decade were still and we've nearly in business presence, We've home. were scale way, the growth file, as into

controlling around to our this the Wayfair we're position cost orienting achieved, state quarter, operate and are and driving the and in profitability we we we three of are returning self-funding a both what every we not-too-distant framed controllables day. more. loyalty nailing talk August, where in told to on detail When principles: efficiency, I through would future. and talked business the way of in be fronts, like size want spoke growth the customer well to environment you once in would the and a what to to these we've scale supplier basics path come Last now top. With at each and more we begin and and can key that there will for the doing about our earning on Kate and profitability I look

You evidence to the later made nearly of couple corporate first XXX we saw the roles organization. weeks a eliminate decision across as the

an streamline to represent time, the kicked we we redundancies operations. monetization, was and At components set These that reduce our the our we returns initiatives as about that organization-wide here as scam spend excess of on talked such additional goal and to layers remove reduction, set in management labor. coming third-party are just Our from part same logistics effort of prevention, actions operational off a separate Simultaneously, efficiency optimization incident cost more. two one executing. involves reductions

the we our in improvements tens million changing $XXX Kate the taken example further and just a we complexities the Let so we with of coming. one we shortly, illustrating of returns return how one it pricing And improve on. the of platform cost see accuracy we the by and far is sales back from improvements, millions more the is initiative operational send there are opportunity can through return. of savings to numerous you me by Altogether, our to and grading box are an expenses provide P&L. we've in as product open involved monetization. after today, there will working actions should merchandise to to resell manage shipping expect of logistics. how drive When decreased savings process of We and alone and This hear increase dollars over result

of to free the for bound lower same From EBITDA been for EBITDA as most before drive profitability the will across a Returning board business. mid-single-digit we it targeting adjusted that the year. the adjusted we margin has of quickly there, XXXX treat remains cash goal thereafter. in shortly breakeven as Our flow towards level will a philosophically positive

cover as stock-based such costs, last us well off compensation will discussed as other software. As as and investments logistics associated we with quarter, this allow CapEx to threshold capitalized

metrics not will the to to look want drive we in deliver for future, turn interest to next also investment profitability I notion big planned means the now which of the a As we only continued products to but that and the this manner. into consistent ideas us showcasing years, the have basics, Wayfair's XX Key a great bold enable speed nailing which foundation that year and availability to are customer, as quickly. have the of days these perfect ago. from delivering including improved and we speed commitments records a in QX, particular, In delivery, such orders deliver penetration. all arrive providing where assortment, significantly experience site batch and were on that elements and reached speed of several

calendar promotional pressure broadly engage of is our being spectrum we now discretionary about and environment. basics Inflation part going. their in spending are see which given dollars a the of discerning we are where what shoppers, the with Another especially persists ensuring clear next and we very important have consumer across seeing goods shoppers quite is to relevant to in the continue

services, For the a much of of array shifted pressure discretionary including to sectors, spend wide retail summer from ours. with months, across felt that goods

patterns home shoppers as being for broad the seeing category spending deliberate are we their promotions. wait with more in and great remains, value they interest seek out While

Last Each remains ran our strong together suppliers, fall successful promotional we our tentpole events. a which activity back event. the events. are we As Day, support get we'll our second customers of traditional X industry suppliers. is deals opportunity very and a To across the a have X to of calendar week, just and our of customers responding weeks Cyber Way on came the to days an to positively. promotions put of result, right a value few in And high from very provide now, these

our compromising and is than more on key driving us today's gross given margins, supplier loyalty. next important to light remain inventory model. In environment, principle, our customer our Importantly, ever focused for without it

a of So how we're give few let doing examples this. you me

One of arises. order with professionals of for factors have of shoppers Even this, wider the very stages the an strong things the to shopping make even a issue is response. effort made toolkit a as enhancements delivered. generating our driving To if in an journey. to and experience after These solutions equip been our happens we occasionally service of right are has customer all great having loyalty biggest do

In we've rates over months, who repeat of rates repeat not. among match the actually issue last seen handful customers of an customers fact, who do report

data, Our as accolades. Best to team relentless well of that we're the internal XXXX on and external enabler a efforts our best Newsweek by creating focus possible experience service key shopping as and earning to rankings. In loyalty, been by customer Service has validated recognized their these share Customer honored We're see is customer pleased

programs with host we largest of Shop we. about sustainable certifications Wayfair's to refreshed for options the the care October of customers We thing third-party as efficiency, it's good home we as also to our On more. know as the our function offering. set environment we the program, the a filter address doing whether our are trade launched something is proud sustainability And continuing innovate now do very our or in bad, third-party and We for economy responsibility. Sustainably of Shop water as industry product XX, sustainability. well our Sustainably certified number customers to We're but fair attributes of and isn't of right like because think communities a

and rates lower been we of suppliers our shortages conversion better have chain multiple Since faster reduced side lean encouraging damage and visibility retail the this prices seen to volume to and cost into to tangible first equation, drive and creating that On on into loyalty last we've positive year, quick to ship cost groups to as suppliers delivery, more. penetration advantages wrap we've momentum. in is both the led off After continued suppliers other from site, suppliers, future. are savings, benefits suppliers. supply the CastleGate, of a climbing. to customers for year, of loyalty drives now we that returning through XX% due CastleGate strong earlier where result the The further to up the in will principles, reengaging, key value flywheel want CastleGate U.S. efficiency. provides on by I CastleGate well back our the as of

and a short the reach adjusted order. are, universally as in organization, focused neutrality We management and an taking flow team, cash needed steps as EBITDA on to

areas take We aggressively. hard our a improvement have holistically of identify and at action taken to cost look structure

deliberate to built economic One breakeven at our several One that this independent allow moments this capital growth. set this seen the margin focused. and move our Over to like financials. And well-funded forward of win future what same for intend the is while I it Thank you. when progress competitors. outside the ensure Kate reiterate make is adjusted know and clear. by EBITDA continued to compromising thoughtful We success front we're is once our that review have of is our to initiatives business these it that potential against I'm mid-single-digit be irony more, our our being our base and be Steve present target, that to towards learned without way. XX-year macro in both from category cover cycles. up reach which can to opportunity thing as history, funding an at expense lean to for to turn And we over of our profitability and to execution us targets, to will now brings with I how will ourselves Our very there, us. excited time no we've We best. We a leader. a

Kate Gulliver

everyone. morning, good and Niraj, Thanks,

a want the particular, key put principles these to and third-party QX. These with under loyalty Before G&A our been consultants, of I spend savings and burner contractors efficiency, cost accrue of given cost dimensions: you've savings into operational take two that emphasize tenets SOT and in of were across labor within the each started closely organization. In period. made. the nailing goods The just Several a Concurrently, savings across primarily our driving of myriad We programs basics meaningful back like dollar line. driving by close the employees we've beginning benefit cost to dive expenses supplier cost the discipline has the related I results, a primarily examining of forced and customer efficiency that mandate to of sold become represent quarter operating areas cost moment frenzy will are scrutiny. headcount the COVID third is initiatives impacted that of point earning to delivering line. that to already

roughly of to time greater of losses of actions will next will initiatives. XXXX. a approximately costs, practices right reengage best savings is hundred headcount savings additional XX% is finished. in our million, that and our and year, not is during details million Now labor $XXX a operational a represent we series that adjusted Combined, over the that tandem, build currently In provide motion we third-party XX% cost are across are set dollars which with annualized to anticipated are on several of savings actioning magnitude we on but this EBITDA call. than of from on This related we

Turning to results. quarter third now our

quarter. be as billion, was As seasonal at to macro pattern a you saw from which in decline weakening performance QX a quarter. in flat release, largely noted a to revenue second we would time, in the early sequentially year-over-year typical total a environment that decline second August. from that sequential the contributed and $X.X the XX% had expect we third we net to And the break press from the revenue line with in previewed quarter-to-date X% This is the

it the international at a impacted year-over-year decline, uncertainty. now, disproportionately the X% some time net for continue business headwinds especially to in aggregate macro As be our while revenue in has and negative outperformed geopolitical by Europe, U.S. markets,

While promotional holiday in events season the we are move a operating will and positive course continue P&L. QX, optimistic the of incrementally what the year. worsened respond hold for to customers now this over down the further see I'll to way environment

of As climbed our CastleGate basis, amortization referencing when the a margin exceed benefits simple most which and briefly structure, on XX%. combination of well. be it range QX related use is adoption margin have I asked not to often The relief our the XX% stock-based we're as by on penetration non-GAAP financials I'll which are promotional to CastleGate earlier, by that on intensity mentioned some guided how do, previously remaining includes non-GAAP rather we than and I to which gross nicely faster visible and adjustments. same will our compensation, other customers, but us depreciation The this further and our transportation line, discussing on passed please costs, basis outlook much. all taxes absorbed again to investors of in Niraj of but helped impacts excludes note answer XX.X%.

choose savings we lean on on customer. those shopper in the suppliers As site the with pass to wholesales, to end

the to resilient be detail impacting quarter, stay versus in to these that paid landscape. metric. about also quarter, what our higher We prices across where, last the ACNR. percentage margins revenue came in as much once QX our range. effects There at is into of Our mix above great Advertising free net saw and XX.X% went competitive ensuring headwind retail a we QX reflected similar a stay traffic for temporary again, trends while of to various third this guided continue

just while that dollar parameters base fees our the for marketing We spend we we the Customer it paid item closely quarter. cost And payback still revenue, ensure very continue guided to within had on saw channel. headcount inflation to remain adjustments our that net in made and subsequently, range. ROI and merchant across We X.X% of line service across above monitor each impact our this an some QX. in earlier to were

closer this levels see to the quarter. in expect historical fourth return We to

G&A Finally, operations, our $XXX guided under range. technology selling, just totaled expenses million, our and

flow was negative of We you our set cost-cutting should With discuss million And a remainder $XXX X% $X.X see net leading capital August, expect million as with quarter expenditures reduction Net at of the $XXX QX. in to fully billion portion range. million, to investments. out, from line negative in in a quarter. accrue our as adjusted started highly revenue, a of the a a the came shortly, QX. EBITDA the play All cash towards savings the guidance more cash negative and and or cash $XXX of for below $XXX million negative of of over totaled we'll small liquid operations with the guided began to ended QX to our initiatives our combined, realized end of savings free

between our payables, revenue and typically of working net receivables due know, the capital a in As many inherent timing we grows favorable benefit differences you to model. enjoy business sequentially when

this declining dynamic periods like in a saw sequentially we QX, in of and outflow. However, revenue resulting inverts cash

in With half drag to loss in uptick capital. flow. net of than flow the from more revenue, representing fact, due a from sequential capital expect quarter operations was QX contribute cash again a we would In working working this net historically cash to once our to positively

part as over repurchase of notes convertible in from due $XXX has we think approximately $XXX notes liquidity the considerable transaction. well reducing a now saw, about the our at as million ourselves digits million As in $XXX management flexibility maturity the next beginning we down single to year-over-year. away trending With revenue to of as more proceeds outlook. many the September, navigating million, let's We outstanding been few XXXX the and to for in $XXX to chip discount, years. low an to convertible even of you XXXX meaningfully saw gross opportunity as Quarter-to-date million of notes give that, use our issued turn

of gross approximately impact Day revenue X, Way year-over-year. was the Excluding down XX%

expected margin bit QX, some Given the for this weigh in XX% high growth XX% you But Many gross model margins, to the would see of expect typical drivers to consumer continue. is outperformance in margins gross sequentially. guidance holiday pressure appropriate the will season, quarter. to in range holiday we the year-over-year it now fourth a around single-digit of revenue we range. are shift uncertainty up so QX to the to believe move the gross we mix Shifting our on down behavior to suggest

We around fees traffic of pressures of as advertising we impact $XXX OpEx see merchant revenue well through. and to G&A flowing XX% full X% service to from forecast customer labor and compensation excluding impact between expect would the same taxes as SOT the mix the the for quarter. fourth come million in channels. now we and continue XX% be across related earlier, macro as our QX the to are stock-based set The of cuts, or force, previewed million $XXX in to and during I net reduction third-party As

in outlined, If single-digit EBITDA adjusted would translate guidance quarter. the to follow I the low the margins negative range through for you that

amortization $XXX touch Now million XXX million; $XX approximately Please $X on for taxes few efficiency, million quickly loyalty. average approximately the to to assume how expense interest depreciation equal million; In we let and range. and housekeeping net equity-based nailing customer following: to $XXX closing, $XX to compensation unified outstanding of like and and basics are this to supplier approximately QX. call. million of on me million and million related key to million; items $XXX shares a pillars Cost in weighted $XXX of focused shares; on the three CapEx touched throughout reemphasize earning we've the I million $XX would

is We next cost the that the future the have step excited path. XX to laser allowing a drive focus on first for flexibility for on future, the years to while out and is a in we bright continue be into system tight of also done see as is in Wayfair. plan We're for needs XXXX what that a to way meaningful a proactive

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

Operator

[Operator the comes Instructions] first Nagel line Your question Brian with of from Oppenheimer.

Brian Nagel

more question, it's Kate. first probably again, my for So

persist the in in that will The should and here just around more slow about is we at elevated a have normalize? odd I question the XX%. for What like again sounds there expense Niraj. it follow-up take I'll Then this numbers talked when was and in about now. that We normalize? lot it saw the point for it QX, question, And -- to that down CastleGate QX. it I a 'XX? and penetration is talked You advertising some then the XX guess

that? touchy good guess maybe that if why say, or this a It strategic to not yours it's be? question. yours So like more is offering. from seems I that a is a guess standpoint, And of now Where feely so be? of a I'm partner using customer CastleGate, Where is designed should pretty longer-term I to number a infrastructure,

Niraj Shah

It's Niraj.

Let then in second. off on on in CastleGate can me start the to jump and and your actually cost in question go we'll question, certainly a chime then Kate that, ad and

of move cost I a sure think ACNR And if a things have of things that's effectively to that mix. a have brand, is right you happening where a the think, the main around. we you that And to millions one that thing, amount of has to significant household tens number composition now there's that percentage understand about do add we And that zero that's you have that lot cost. set make is number, number, them I with land think of traffic have of of customers. that of about

people how the channels. And of is, top what back. also manage and the shop Then take And channel they channels we Wayfair. pay each do downloaded they home the paid we to have a mind on We category payback. have in the at we the come app. where We've depending kept all is this

those all in going we're there, draw any we extended and And in not we've to want. at the targeting payback numbers channels way a in. ads and people running are we're So out coming

in move and that things other particularly Those like is a right which, that's down. not direct online is though leisure going channel every on little you're less. now, dollar, category in mind, payback. percentage mind numbers free just frankly, taking XXXX, or travel like of of getting of happens ACNR top much where, top to discretionary down, be that to each But of and category, don't is honest, to even entertainment the is tons what this traffic and free up and the category for times move happens is the mind need very a share what a number super the just not traffic, to for times of is Now example, top this where average QX

it as right the said, very don't is we've component around running the in problematic cycle So that reason a particularly them, problematic. of know before, what we that we're seen where see I that's them described, percentage that And they're where hard we normalizes. we as experiments that's and single and and now. the there's to figure that high buckets don't percentage we experimental measure are the that to the And how environment as That we'll either different get will or view biggest want refer moving to tests to the get there. in the spend not ACNR at are that to to scale or out before, is phase it factor

so and is And something getting bucket that, tighter we're that frankly, we at, a have been looking with.

so allow the reduce or ad proven to off cost basically And revenue much are because without taking expensive the as the that really things. will us that we're reducing least "most things things"

way about Kate, is, to so the we cost the maybe add how number anything why want you on And but kind it manage to also can that's of is ad where But it it. and think that?

Kate Gulliver

Yes.

covers that think it. I

managing guided XX% may we I some think over closely But of some of XX% that that longer-term and to continue we're as we mix payback obviously shifts the bringing in as necessary. Niraj happen, as mentioned, see to obviously, very to. time, as that

Niraj Shah

on jump CastleGate on me penetration. question Let second just your

records. noted, inventory was and basically it's super last those It break quite And way is nicely you records a hit year as to, great think, the XX%, offering. we So it's it's which that means then on its low from scarce. recovering when at

so quite in large a of number have And actually it. we suppliers

a be it. stage why they would a it, is either in in might not I not still at be about they're it. think it where the might just They be supplier testing way think to

category they suppliers who who these very with we So in way relative part may in of that some There our to on be is a conversations obviously are small it actively we not with. focused might suppliers team potential. having yet. be with work management And

have the or also systems. is lot long our who through extranet, new. tail Partner us self-service CastleGate suppliers And a relatively We with functionality of a work Home,

We bolster continue to that.

set points there there the suppliers who then And it get onboarded consolidation. supplier's lot freight where are, have do we So to a complicated as And inbound a there's inbound up little are CastleGate. as we period sort certain And from a on depending self-service certain really this use optimize it the do it too little origin you because flow they on too are to to lanes years we with supplier have flow manner. for then X.X and so a of been have yet in do harder ocean to went has for, easier able know, handle becomes of much really not been just the They that past way demand, that their own. a inventory. locations makes

that flow good -- supplies had and CastleGate penetration was numbers of get orders our against that would hurt. work the So sort saw even enough penetration you couldn't for they obviously,

you So up you into can that imagine Now right? go new CastleGate where excess suppliers a are in signing not for period, period there's effectively amounts inventory. of

more I lot are need. a do drive want lot sales, I who I to last things have either willing grow a CastleGate, a tough environment. want didn't now because out business just like, CastleGate. to of to willing want in now do there's to also but have been my in, now hey, suppliers now I that have I I you wasn't that you So a have want figure in how to try weren't do year to to okay,

So suppliers flows. a building lot we're I We're think up we're the inbound in adoption, phase of heavily. as more using a it it technology the optimization into CastleGate more around more adding

all is this it the will So grow. reasons

talked is percentage we there, built logistics of it have terms we haven't what footprint. what a about we get out to, exact discussed an but good level In really will

in not have to that up, need go be CastleGate the overhang, means of able buildings we over goods turns have some can network an in places in forecast some help bring just change So through for goods And time opening of way in. we'll now, that We so then, that having in sake a overhang, capacity our the because as well well, basically up inventory frankly, an normalizes, right that they which coming will gaps phase basically buildings, supplier over. see would buildings everybody. environment in just for is that us fill as demand where footprint's we the buildings more do our but flow inventory own building, you demand more just the their because increase see

So helpful. to Hopefully, that's I the about it. think way think that's

Operator

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

Steven Forbes

the for wanted start logistic to with cost. outlook overall I

about So Is frame it as help the just we we of you right, Do environment in months? to could XX% XX how you has of over XXXX? look been, two. inbound next frame see outbound. what out And combination Niraj, XX traditionally look relief you see general curious to cost and overall or of the the right around out net if it sales as the sort

Niraj Shah

if would the past. it of of up. that took hey, say, happened that if than kind a the of think That last I in what was say, number year, And was every revenue every logistics, you aspect what really you dollar. end-end was the we of $X.XX times of before sort mushroomed of more referenced round cost the XX%, about

now ocean from rose what's at So significantly. come happening, have freight back would fairly like that level. have if look you significantly And it things down

put XX%. of down back And to would in that you a sort level so back it's that

aspects. That range, somewhat trucking wasn't normal still you other They're reentering last should elevated is that over-the-road aspects think true chain $X.XX. Some than kind supply about historical year. are coming that those the like like come of I of what more have are down things think costs to down. But broadly,

is back excess And is -- supply/demand frankly, so now, relative deflationary supply right demand. out. That And it normalize there's will force. a

travel elegance speed ship So all now the a because with, miles, retail, to the offers And customer offers share. effectively positioning a retail that to we're get the And bag all forward efficiency see the doing really into and begin place so in price we of the the products the lower see taking with delivery. It they costs damage. around better by that less is add right customer them things of factored less having a price. also sudden,

building proposition cost value logistics. the also shipping that we customer a are we've reason that's so the for it's time, that that down over been -- And which is up averaging optimizing

Kate Gulliver

we as the costs that call, to add Steve, coming in logistics in spoke to the line. I'd on probably addition some just of

and those actions improvement that to of margin due also that have line, we this confidence series is helping actions. to combination XX% And grow throughout quarter. that of a have We gross continuing operational see us around combined XXXX our taken in costs, on

Steven Forbes

a be the just about pass quick if topic. follow-up down, et is help same value cost average impact, of consumer, frame us to on that it logistic outlook staying too through to XXXX the and Is guess I Maybe changes right, of say the cetera? we you mix value overall just order expect lower that can we probably average given for or sort think to directional-wise? it potentially, tell early should order fair the

Niraj Shah

future And much think sort the a can so answer, the drop in this much. right move to -- reversed Why cost bring like is some how that's of there's in it where quantify gets how through The now. don't I around short question hard it there's think that. pricing definitely I being item already too that that's to Yes, you're I suppliers exactly start be I AOV is have it can cost the does seeing future some. inflation lower. what closer much. to I and proactive My But faster.

there form is reflecting these costs down, of relief the coming absolutely. So in

of little orders conversion actually falls, flows gets a tricky AOV up. pick it terms because through that revenue, rate if In how and to

all And to flow lose so the don't you a actually AOV net of in revenue. through

that there's AOV on trying depending think the offset out an impacting, what to. to plays you're So about

Operator

Your next Jefferies. of Matuszewski question with Jonathan comes from the line

Jonathan Matuszewski

savings the That's monetization you the costs impact about shared coming of and the and examples think other potentially customer on should regarding Just experience billion customer to thanks of out How returns things. for the those demand? question. my out business, coming $X.X we of first

Niraj Shah

So a just refer $XXX to size, did million savings. we of the

detail remember and it call of And said so quantify the about earnings what We we'd back a decided you to That's August, talked a million. things later. we'd little we that in already $XXX do. set provide to if last you the

hundred And XXX. so million we're so added But since several that. expanded of we've the top that dollars on the quantifying now plan,

So up sure not forces to is operated standpoint, that in drive And retails grew see very profit that any very the to either not carrying us profile what around we excess decided outside from you that aggressive making can costs have. no like flow. or if to by cost you being of a have we're did want business our XXX we capital. cash to we We back the million we think sales out a history decade, for with And be lean.

set of a from there there's eyes, growth just that, we lot XX% just period managing extended where overnight as we And time there's of the everything saw should equally of not it of focused just structure COVID, maybe looked much our things a because on frankly, up a that dramatic as busy billion cost kind to was that at of we're while of be. period so when over fresh with $X

And taking do either of that's about not think a is is about way retails monetization in increases if Well, of they customer, customers these impact cost return one benefits, neutral to or you The optimization we're There's example. do think positive cases, fact areas. the cost positive. just say some I we're the the it's either effectively, out providing customer delivery. think so if of is it's hurt those lower about what the things or in that number why to that? doing doesn't transportation some or that speed actually the neutral that's of you the And

not better, better, making net costs doing speed out it's adding retails value. making are where like think to we that we're adding, things So taking

cost the looking customers. on So the at coming back we're not of

earlier. -- you and is on done maybe fact, In we're things argue streamlining we're we're that cleaning we're of up of sort at increasing. should the looking some the anything you add to what Kate, cost? want have could sort And doing proposition

Kate Gulliver

to Yes, sure I just clarify. we want make

is million in million savings margin that will back fees context So about on operational what come for the line, several is flow of that was hundred improvements more XXX then more think we're more And about Niraj that details you gross XXX that XX% and provide through will we gross million, and referencing that cost -- margin. of that just sort in some then. what February with on

Jonathan Matuszewski

into on environment, the a Day, event first or Way held a kind year going But just expect you kind forward this all expect impact this period Is just suppliers forward? question, kind to of changes? in that should see clarified of of is you're second I second curious here. terms we changing of how of what second are philosophy reflection of kind the terms regular the my just think that going inventory much. then inventory promotional the the of margin we more it doesn't you in current perpetuity? you And as Obviously, with gross Should holiday working holidays situation

Niraj Shah

important to X. along calendar. mass the President's point Cyber Labor always a out, had, other think frankly, holidays, every Day, They're pretty it's with right, I solid retailer, around Memorial major Day, Day, we've shopping

So we safe have of year, which X days through we this a Day, thing calendar redid Way back, year. give the deals

And on down then you environment. so the it or can the is up about think depending we have a it to way calendar flex

a of sidelines, -- point, the a that's your now, kind have the And and when of customers look though excess so we they're on there's even they sentiment. and at customer money, more plenty little sitting of reflection to are right inventory

is those works forever. the keep don't kind what promotional it of you you well. and it calendar, do in But promotion-- there so out And you environments what flex you is don't do

buying we but They're didn't normal people normalizes, calendar same And wanted that every have. they that carry do then the during it somewhat they then So to rare, normally just day. environment periods. COVID, promotions bang just bring like we because promotional are as the what the there's back

work way, those a are there's although too, -- of little other So bit there's the times flexes somewhat rare.

like you which a up. this, up, of your the period you've then And in relatively calendar. that's this don't short Way fair And of bulk an flexing still normal during the of Day it normally X flex That's of us do, sale normal time, think environment think of of has thing. will is there have time be you a a is example period the [Indiscernible]. but seen a like amount just what -- So but

Operator

with question comes Ripps from next Canaccord. Your line of the Maria

Maria Ripps

cost sort soft the at scenario fulfillment capacity focus your to of additional term revenue from the just next continues initiatives, on standpoint? do and talk as in of about the your in a utilization the highlighted this optimization see U.S. you optimize the in footprint, And sort Can where need to you especially that as point layer you near be Kate of savings. you possible are

Niraj Shah

at And our that suppliers utilized think target. is hearing function way the going would it's heavily the necessarily -- I that but about that's our It's footprint be we to to so a just from we level now, good have footprint. you're sort think a not fairly of this everybody right cycle turns of about inventory everywhere. and

imbalance what against demand They all is profile which And folks about, through have. inventory slowed. hearing have been they already too You've it. now working inventory flowed or the in just sits they're on much demand that

have much and building the in how do why suppliers rate dramatically Day Way balance. get or out only Well, So that want in will is that at and to is goes quite are think They into excess on factors, in now X buildings, a you you what thing the of in of doesn't it inventory. right leaning or works. do things the their customers we of would how price. full which rate move amount fact, is to two why to inventory. good. They these value it's of is that's if moving than clear you like. want or not, change course, in lower stuff they is like kind the the through One, building. all The the why up They share now rightsize know really want back giving

that's So happening.

cost California. in to really that, think are you sitting that about and increase the on customer. I East out, versus when without the expensive U.S. easiest move have items it's they is of way you can't about leg, if optimization the leg and it into taking the our bring in the Coast most of long buildings you the XX% Then bring final the Because think something got so distance talk which realize I to logistics cost. I of people to our we important that port the when buildings, think -- actually mile miles. reduce do your L.A., Because buildings is excess cost you you

Now to put but faster goods put the relation I'll going a New some leg. in hey, some to is, put a Jersey demand in a our in building cetera. goods sees get-go. customer speed, in but In some the very the what you you all expensive the of is off And not down some of inbound and a some obviously, all relative I'm say, what Dallas, roughly without and that in, et place sudden, frankly, balance I'll in Chicago, can't put to do sudden, said. outbound leg dramatically shipping I that goes because to cost just Jacksonville

one small a warehouse. have Our and negligible percentage A have typically warehouses, it's that. suppliers two more percentage than

CastleGate is her to -- supplier their own. have It's get happens to proposition This So retails items can the that's right, drop. They're demand to items. speed for converting goods a in good for store. do part forward creates of customers, that benefit to on to get the higher value is big move is, are doesn't Those this of those they And them. badge, infrastructure drives up what the then positioning. the why the and the the appealing that

self-fulfilling cycle. a So positive it's

the so to piece key of a building driving And the take is cost. out volume strategy actually through

Kate Gulliver

the when add, mentioned FCs, FCs the we we're related relation think that far we about not our just it. Maria, on when expenditure advance focused that 'XX. goal we Yes, of very is it, capital I'll initiatives as for in to the need savings you how And in as do to building need buildout cost core of and

capital very be to about and incremental expenditure thoughtful intend there. we So moderated any

Maria Ripps

would recently, customer count near then it in seeing clues sometime behavior, secondly, anything sort return here to And some the that is maybe term? you should there in of give you're customer more growth

Niraj Shah

have mean I Yes, as we're macro to we customer I and behavior well seeing relation expected what to in doing are responding that would the customers we're is in what think environment.

have and playbook environment goods, we we at macro customer the excess a sentiment That's et the Way cetera. see look X, if why see that. for we So do know Day we low, we

So run playbook. we know to how that

to So that that out events. seeing exciting great way. and they customers we're we We playbook participate market seeing run how suppliers a We're respond. those in to know these of

So as they're you've work in, that coming they're seeing gross well margins holding seen incredibly We're buying. up.

respond is levels. gave feel the working excess time when it work also we So by not talked use that's environment. we're Way really amount Suppliers not is the you how doing something to discount. a for And is little Because while. And little we be the And what what some doing to not bit going on to well impact understand of doing in inventory perfect this we're we're of go we're that for Day take Customers playbook. that I investing of that to of It's playbook. that also revenue going here about it's playbook. well. through. think a a why running And playbook environment to to kind It's this going away. that's is

number a small But months. of this say not about this it's lasting, -- environment weeks can shorter So I you is would probably or quarters. think

Kate Gulliver

long that, of TAM, has our term, the Yes, total but penetration that our position should not in view changed. land, where potential, e-comm the

moved. So our term, while there not may outlook be long-term some volatility in the near has

Operator

with Evercore of line withdrawn. the from ISI. The been comes question next has question Your Greg Melich

line next with of Sachs. Staiger from comes the Goldman Your question Alexandra

Alexandra Steiger

on the wanted customer here. up active growth question to follow I

you the Given potential reactivation the large forward? to customer support growth? an reactivation how of pandemic, And about new and think how opportunity relative do growth reach forward to customer achieved the going you as do scale see you during

Niraj Shah

kind reactivation -- swings to And there's not macro our is now wrap, which built top mean category revert a number a you number visit time a of thing. mind of think think is where a frankly, big this phenomenon number of of we which customers, of a actually, regularly. they I And have over have of And right? are which it, e-mail the on amongst basically the opportunity, customers time. you Right list, so large over just a people about if a have following that happen.

make And these doing first-party market who are that have positioning of it that is back customer benefit direct What retailer, a the what's the reasonable help mind. in the Only there sure to of home that those there largest in that's as things we of the have category because already cost. side a And hard landscape out targeting reach to the -- go-to us the And that's have ad are of benefit at the on the to very the to have lot home, We on the becomes privacy coming marketing landscape, pretty companies back we it very file that a getting someone the technologies ability what's for regions, lot because effectively we are as are of and the then benefit. specific some we're changed largest doing a doesn't well. to as drive data further in customers we directly I'm to a makes major happened we more today customers. top because have then out there. that specialist

along we working those the this so There's purchased view huge past, is opportunity. a And lines. have of in customers lot that on recent we're a reactivating not things

Operator

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

Anna Andreeva

Two us. questions from

is consumer there? during progressed, meaningful continues quarter? I a to think of environment could more was sure a implement talk the about closer you get obviously getting And that in got continues drag And I'm the to to quarter secondly, the business, pretty international on business Do not mentioned the the what international if could expense are but for realistic monthly third you missed but 'XX to you the difficult. cadence third some You in respond. bit then this, be that what as macro bucket? is worse opportunities obviously, breakeven

Niraj Shah

great. Yes,

in of to me start questions. too. some jump to your answer Let Kate I'll ask

getting the worse that. was sure environment exactly QX, made the what On we in not to I'm comment referring

Kate Gulliver

for we do coming see right we've those in little promotional during a disclose said trends. right We although that Certainly, is moment. now. is And be broader bit activities don't customer I tend this obviously, reiterate highlights to I macro monthly now, and and the would what us typically at uncertain the think context,

Niraj Shah

But I think would I say, don't like, worsening. is environment the

like maybe you as It's phrase context seeing. been not I'm more what to, the like it it's It's the would steady. way think steady I give improving. I of

question see in -- major today, the in of States. out the X U.K., ones And States X that operate in On the The holding a have we up we and in best X of no the see United that Germany, terms we there's countries economically is countries it international, macro, of technically course, United micro our Canada those and data. macro of that's data, then, the X. you effectively

curve online plays out revert And every But of that the of very Now that it's of to mentioned, we country hard we the is working issues is believe different through. all normal set goods has of below a in that exactly them, as sales to. home timing how estimate. trend will

XXX we million XXX cost, XXX incredibly million amount well. So we we also what on we're executing of Then are we to cost, a think -- doing? talked positions us micro we And we've working. tremendous can about of focus your talked taking seeing then big up, tailwinds and share about We're There's on the we more know the on top question million. those. out drive a we're those and where on actually which

tighter netting there's take the And on where down getting So of think lot on tailwinds you're and cost, driving same you're retail then about if can that well. at that's a based doing. share if you micro think the you as time, things you

for have positive a you all of we Now, a quite is netting the think, is which time, of quality course, that, period but macro, the story. of

out we quite think so that And play well. will

country is different In a obviously, how think through country countries terms of really smaller to set at international, in. things. the And the I think of level, about every were working

conditions quite I is in faster challenged smaller is these have countries opportunity right we quite are the when some macro of be and higher So different, now. for But to the a them there share. think honestly, tailwinds the

Kate Gulliver

get very the aggregate. time And That's that as focused line. the intend seen we We're to one hundred $XXX And talk that regardless reason we not EBITDA We've international business, when that's the and said, across perform that over can't of sector profitability geography. as why in we several structural goal. million a to on certainly, well as our in U.S. sector. that's top more, million on focused about savings cost entire

Operator

of And one will Cowen. comes final take We Blackledge line question. from John question more the with your

John Blackledge

questions. Two

the U.S. First you on then customers is a revenue revenue. question, doing of positioning added the through macro as hold? get X% home to all versus I do like Wayfair single second of the it pre-pandemic? just returning relative typically cost Wayfair's third said still And Or How expensive expense Does X% think Do in returning just customer? past, competitive more kind a positioning, the changed U.S. environment, percent at third to is given market down Wayfair's high you quarter? is quarter. competitive the through think digits has think you that to

Niraj Shah

in part positioning question, first the U.S. the on competitive So your of

positioning, So competitive what that as of positioning the level super high I I been. U.S. in I down, we're the think the And it's X%. competitive think is our is seeing U.S. was think, same

There's competitors tail are competitors. set competitors. of of same a Our the long

we So us. about the micro we tailwinds that the COVID tail a in folks few competitors large long then do there do and sort hurt kind I of I through think some though, a talk the of when are category. cycle think of have things

period so And talk bad a availability of of they're tried to kind but basically pretty big product three the time, positioning. for I the got about sometimes, speed

got And combination forward of quite retail bad the passed goods the positioning. bad. inflation quite lack how forward of through position of the then of was the and the So got

that that, things. erodes We're kind cycle, which Well, where reversing far now a an is of now? if So into those we think about offer. you reasonably are

speed, speed has nicely, of is at quite you actually that you have have quite yes, others, ahead we we're good. nicely. gotten insight been we've all-time good that feels holiday look look and that's compare headroom into, it, recovered fast at I like, still now continuing rate. Availability offering side, wow, on has you prices climb falling So nice what retail and be to like and a -- highs and to it it for if think right quite on And you'd our very

well. of are out things that playing sort there's these So quite

So elements particularly relative of to due were are the and we home feel very these we're that core our good and where specifically the and far offer about ago of we things our both external doing, bespoke then where kind forces to on position were the a a out as we of retailer these control. year

economics of lot Now returning are you leverage. definitely a of customers. customers the show Returning

the on is and where of you is In that's to the order percentage way number drops from that the from third fourth when cost kind when think the We go and is X%. it about like one X I go the the The obviously we fact, to you I X then order second well, said. average being third way the is from that percentage about to and think to orders and works two repeat again go then drop it percentage talked order.

kind of climb like thinking expensive get the loyalty [indiscernible] for cost order. ladder, they increasingly less someone to -- that next this an this as they of So up from ad standpoint

think macro pay the ad -- see you've ad the economics by-product I about to channel one go now murky underneath. for just outlook what But that to think environment, reverse I that's makes and I thing you it will you earlier, right see way harder you'll back. it it like to seen mix this a the which shift is affect free thing channel, the cost that's the complicating tried it talk makes is

not And that's as clear. I the of of so to is thing I'd because just remind think causing you kind it that be that

John Blackledge

Thank you.

Niraj Shah

Okay, I up great. think we're wrapping I think that, Well, call. with the

So thanks you have great for everybody joining this us a And season. hope holiday I morning. all

Kate Gulliver

all. you Thank

Operator

concludes conference. today's This

may You disconnect time. at this

Wayfair (W) 3 Nov 222022 Q3 Earnings call transcript