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Wayfair (W) Q2 Earnings Surpass Estimates, Revenues Down Y/Y
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Wayfair (W - Free Report) reported second-quarter 2021 non-GAAP earnings of $1.89 per share, which surpassed the Zacks Consensus Estimate by 60.2%. The bottom line declined 39.6% year over year but increased 89% sequentially.
Total revenues were $3.86 billion, which declined 10.4% year over year and missed the consensus mark by 1.8%. Nonetheless, the figure increased 10.9% sequentially.
The sequential rise in revenues is due to growing customer demand, driven by ongoing vaccination drive and economic recovery.
However, year over year decline in the top line was primarily attributed to sluggish U.S. revenues. Also, weak momentum across repeat customers was a concern.
Net revenues in the United States decreased 15.2% year over year to $3.10 billion, whereas international net revenues increased 16.3% to $759.5 million.
Active customers were up 19.6% year over year to 31.1 million. In addition, LTM net revenues per active customer increased 8.6% year over year to $478. Average order value climbed 22.5% year over year to $278.
Total number of orders delivered in the reported quarter was 13.9 million, down 26.5% year over year. In addition, orders per customer for the quarter were 1.96 million compared with 1.89 million in the year-ago period.
Further, repeat customers placed 10.5 million orders (accounting for 75.6% of total orders) in the second quarter, down 17.6% year over year.
Additionally, 59.4% of total orders delivered were placed through a mobile device in the second quarter compared with 60.6% in the year-ago quarter.
Operating Details
Wayfair’s second-quarter gross margin was 29.2%, contracting 145 basis points on a year-over-year basis.
Adjusted EBITDA was $310.8 million compared with $439.8 million in the year-ago quarter.
Customer service and merchant fees increased 0.6% year over year to $144.6 million. Advertising expenses declined 15.8% from the prior-year quarter to $351.8 million. Selling, operations, technology, general and administrative expenses increased 5.9% year over year to $486.4 million.
Consequently, operating income was $145.2 million compared with $299.9 million in the year-ago quarter.
Balance Sheet & Cash Flow
As of Jun 30, 2021, cash, cash equivalents and short-term investments were $2.60 billion, reflecting a slight decrease from $2.70 billion reported on Mar 31, 2021.
Total debt as of Jun 30, 2021 was $3.05 billion compared with $3.06 billion onMar 31, 2021.
Cash from operations was $275.4 million while free cash flow was $206.9 million.
Guidance
The company expects third-quarter revenues to be lower than the previous two quarters.
Wayfair expects gross margin between 27% and 28%.
Further, customer service and merchant fees as percentage of revenues are expected between 3.5% and 4%. Advertising expenses as percentage of revenues are anticipated between 10% and 11%.
Selling, operations, technology, general and administrative expenses are expected to be $440 million.
Image: Bigstock
Wayfair (W) Q2 Earnings Surpass Estimates, Revenues Down Y/Y
Wayfair (W - Free Report) reported second-quarter 2021 non-GAAP earnings of $1.89 per share, which surpassed the Zacks Consensus Estimate by 60.2%. The bottom line declined 39.6% year over year but increased 89% sequentially.
Total revenues were $3.86 billion, which declined 10.4% year over year and missed the consensus mark by 1.8%. Nonetheless, the figure increased 10.9% sequentially.
The sequential rise in revenues is due to growing customer demand, driven by ongoing vaccination drive and economic recovery.
However, year over year decline in the top line was primarily attributed to sluggish U.S. revenues. Also, weak momentum across repeat customers was a concern.
Wayfair Inc. Price, Consensus and EPS Surprise
Wayfair Inc. price-consensus-eps-surprise-chart | Wayfair Inc. Quote
Top-Line Details
Net revenues in the United States decreased 15.2% year over year to $3.10 billion, whereas international net revenues increased 16.3% to $759.5 million.
Active customers were up 19.6% year over year to 31.1 million. In addition, LTM net revenues per active customer increased 8.6% year over year to $478. Average order value climbed 22.5% year over year to $278.
Total number of orders delivered in the reported quarter was 13.9 million, down 26.5% year over year. In addition, orders per customer for the quarter were 1.96 million compared with 1.89 million in the year-ago period.
Further, repeat customers placed 10.5 million orders (accounting for 75.6% of total orders) in the second quarter, down 17.6% year over year.
Additionally, 59.4% of total orders delivered were placed through a mobile device in the second quarter compared with 60.6% in the year-ago quarter.
Operating Details
Wayfair’s second-quarter gross margin was 29.2%, contracting 145 basis points on a year-over-year basis.
Adjusted EBITDA was $310.8 million compared with $439.8 million in the year-ago quarter.
Customer service and merchant fees increased 0.6% year over year to $144.6 million. Advertising expenses declined 15.8% from the prior-year quarter to $351.8 million. Selling, operations, technology, general and administrative expenses increased 5.9% year over year to $486.4 million.
Consequently, operating income was $145.2 million compared with $299.9 million in the year-ago quarter.
Balance Sheet & Cash Flow
As of Jun 30, 2021, cash, cash equivalents and short-term investments were $2.60 billion, reflecting a slight decrease from $2.70 billion reported on Mar 31, 2021.
Total debt as of Jun 30, 2021 was $3.05 billion compared with $3.06 billion onMar 31, 2021.
Cash from operations was $275.4 million while free cash flow was $206.9 million.
Guidance
The company expects third-quarter revenues to be lower than the previous two quarters.
Wayfair expects gross margin between 27% and 28%.
Further, customer service and merchant fees as percentage of revenues are expected between 3.5% and 4%. Advertising expenses as percentage of revenues are anticipated between 10% and 11%.
Selling, operations, technology, general and administrative expenses are expected to be $440 million.
Adjusted EBITDA is expected in low single digits.
Zacks Rank & Stocks to Consider
Wayfair currently carries a Zacks Rank #4 (Sell).
Some better-ranked stocks in the retail-wholesale sector include AutoNation (AN - Free Report) , Conns (CONN - Free Report) and Five Below (FIVE - Free Report) . While AutoNation and Conns sport a Zacks Rank #1 (Strong Buy), Five Below carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Long-term earnings growth rates for AutoNation, Conns and Five Below are currently projected at 20.2%, 23% and 32.6%, respectively.