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Wayfair (W) Q3 Loss Matches Estimates, Revenues Decline Y/Y
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Wayfair (W - Free Report) reported a non-GAAP loss of $2.11 per share for third-quarter 2022, matching the Zacks Consensus Estimate. The figure worsened from the loss of $1.94 in the previous quarter. Also, it compares unfavorably with the earnings of 14 cents reported in the year-ago quarter.
Total net revenues of $2.8 billion beat the consensus mark by 0.4%. However, the top line declined 9% year over year and 13.5%, sequentially.
The top-line decrease was due to declining domestic and international revenues. Further, a fall in active customers affected the results.
Net revenues in the United States decreased 6% year over year to $2.4 billion. International net revenues also declined 24% from the prior-year quarter’s figure to $0.4 billion. On a constant-currency basis, international net revenue growth was a negative 22.6%.
Active customers were down 22.6% year over year to 22.6 million. In addition, LTM net revenues per active customer increased 13% year over year to $547. Average order value climbed 14.8% year over year to $325.
Total number of orders delivered in the reported quarter were 8.7 million, down 20.9% year over year. In addition, orders per customer for the quarter were 1.82 compared with 1.92 million in the year-ago period.
Repeat customers placed 6.8 million orders (accounting for 77.8% of total orders) in the third quarter, down 19% year over year.
Additionally, 58.6% of total orders delivered were placed through a mobile device in the reported quarter compared with 57.7% in the year-ago period.
Operating Results
Wayfair’s third-quarter gross margin was 29%, expanding 70 basis points on a year-over-year basis.
Adjusted EBITDA was a negative $124 million versus $101 million in the year-ago quarter.
Customer service and merchant fees increased 11.4% year over year to $156 million. Advertising expenses rose 12.1% from the prior-year quarter’s level to $353 million. Selling, operations, technology, and general and administrative expenses increased 31.7% year over year to $656 million.
Wayfair incurred an operating loss of $372 million for the reported quarter compared with an operating loss of $70 million in the year-ago quarter.
Balance Sheet & Cash Flow
As of Sep 30, 2022, cash, cash equivalents and short-term investments were $1.29 billion, down from $1.74 billion reported on Jun 30, 2022.
Long-term debt as of Sep 30, 2022, was $3.13 billion compared with $3.05 billion on Jun 30, 2022.
In the third quarter, net cash used in operations was $431 million compared with $115 million in the prior quarter.
Wayfair generated a free cash flow of negative $538 million.
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Wayfair (W) Q3 Loss Matches Estimates, Revenues Decline Y/Y
Wayfair (W - Free Report) reported a non-GAAP loss of $2.11 per share for third-quarter 2022, matching the Zacks Consensus Estimate. The figure worsened from the loss of $1.94 in the previous quarter. Also, it compares unfavorably with the earnings of 14 cents reported in the year-ago quarter.
Total net revenues of $2.8 billion beat the consensus mark by 0.4%. However, the top line declined 9% year over year and 13.5%, sequentially.
The top-line decrease was due to declining domestic and international revenues. Further, a fall in active customers affected the results.
Wayfair Inc. Price
Wayfair Inc. price | Wayfair Inc. Quote
Top-Line Details
Net revenues in the United States decreased 6% year over year to $2.4 billion. International net revenues also declined 24% from the prior-year quarter’s figure to $0.4 billion. On a constant-currency basis, international net revenue growth was a negative 22.6%.
Active customers were down 22.6% year over year to 22.6 million. In addition, LTM net revenues per active customer increased 13% year over year to $547. Average order value climbed 14.8% year over year to $325.
Total number of orders delivered in the reported quarter were 8.7 million, down 20.9% year over year. In addition, orders per customer for the quarter were 1.82 compared with 1.92 million in the year-ago period.
Repeat customers placed 6.8 million orders (accounting for 77.8% of total orders) in the third quarter, down 19% year over year.
Additionally, 58.6% of total orders delivered were placed through a mobile device in the reported quarter compared with 57.7% in the year-ago period.
Operating Results
Wayfair’s third-quarter gross margin was 29%, expanding 70 basis points on a year-over-year basis.
Adjusted EBITDA was a negative $124 million versus $101 million in the year-ago quarter.
Customer service and merchant fees increased 11.4% year over year to $156 million. Advertising expenses rose 12.1% from the prior-year quarter’s level to $353 million. Selling, operations, technology, and general and administrative expenses increased 31.7% year over year to $656 million.
Wayfair incurred an operating loss of $372 million for the reported quarter compared with an operating loss of $70 million in the year-ago quarter.
Balance Sheet & Cash Flow
As of Sep 30, 2022, cash, cash equivalents and short-term investments were $1.29 billion, down from $1.74 billion reported on Jun 30, 2022.
Long-term debt as of Sep 30, 2022, was $3.13 billion compared with $3.05 billion on Jun 30, 2022.
In the third quarter, net cash used in operations was $431 million compared with $115 million in the prior quarter.
Wayfair generated a free cash flow of negative $538 million.
Zacks Rank & Stocks to Consider
Wayfair currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the retail-wholesale sector are Ross Stores (ROST - Free Report) , Arhaus (ARHS - Free Report) and The Kroger (KR - Free Report) , each carryinga Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Ross Stores has lost 17.8% on a year-to-date basis. The long-term earnings growth rate for the ROST stock is currently projected at 10.5%.
Arhaus has lost 34.3% on a year-to-date basis. The long-term earnings growth rate for the ARHS stock is currently projected at 14.3%.
Kroger has gained 2.6% on a year-to-date basis. The long-term earnings growth rate for the KR stock is currently projected at 11.7%.