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Wayfair Q4 EPS of 85 cents beat estimates and swung from a year-ago loss.
W's revenues rose 6.9% to $3.3B, with U.S. sales up 7.4% and higher order values.
Wayfair expanded margins and cut ad spend ratio, driving 133% EBITDA growth.
Wayfair (W - Free Report) reported fourth-quarter 2025 non-GAAP earnings of 85 cents per share, which beat the Zacks Consensus Estimate by 32.8% and marked a significant improvement from a non-GAAP adjusted diluted loss of 25 cents per share in the year-ago quarter. Net revenues for the fourth quarter of 2025 rose 6.9% year over year to $3.3 billion. Excluding the impact of the company’s exit from Germany, revenue growth stood at approximately 7.8% year over year. The figure beat the Zacks Consensus Estimate by 1.48%.
Last Twelve Months (LTM) net revenues per active customer increased 5.6% year over year to $586. The active customer base saw a modest decline. The metric decreased 0.5% year over year to 21.3 million as of Dec. 31, 2025.
Net revenues in the United States (87.9% of total net revenues) increased 7.4% year over year to $2.9 billion. International net revenues (12% of total net revenues) increased 3.7% year over year to $395 million. International net revenues on a constant currency basis grew 1.3% year over year. Orders per customer (LTM orders delivered divided by active customers) for the quarter were 1.88, up from 1.85 reported in the year-ago quarter. The average order value increased from $290 to $301 year over year.
The total number of delivered orders in the fourth quarter was 11.1 million, up 3.7% year over year. Repeat customers placed 8.8 million orders (79.1% of total orders delivered) in the fourth quarter, which increased 3.5% year over year, compared with 8.5 million repeat orders (79.4% of total orders) in the year-ago quarter.
Operating Results of Wayfair
Wayfair’s fourth-quarter gross profit was $1 billion, representing a gross margin of 30.3%, which expanded approximately 10 basis points (bps) year over year. Non-GAAP Contribution Profit was $511 million, or 15.3% of net revenues, representing a contribution margin improvement of 250 bps year over year, reflecting improved advertising efficiency as the company lapped a period of investment into newer advertising channels. Adjusted EBITDA was $224 million in the reported quarter, up approximately 133% year over year, representing an adjusted EBITDA margin of 6.7%, which expanded 360 bps year over year.
Customer service and merchant fees represented 3.7% of net revenues, or approximately $122 million, in line with the year-ago quarter’s rate. Advertising expenses represented 11.4% of net revenues, or approximately $376 million, down from 13.7% of net revenues in the year-ago quarter, driven by improved efficiency in customer acquisition and growth in the Wayfair Rewards loyalty program.
Selling, operations, technology and general and administrative (SOT G&A) expenses were $358 million for the quarter. Wayfair reported a GAAP net loss of $116 million for the fourth quarter compared with a GAAP net loss of $128 million in the year-ago quarter.
The fourth-quarter GAAP net loss was materially impacted by a non-recurring loss on debt extinguishment of $165 million related to the company’s ongoing balance sheet optimization activities.
Balance Sheet & Cash Flow of Wayfair
As of Dec. 31, 2025, cash, cash equivalents and short-term investments were $1.5 billion, and total liquidity reached $1.9 billion, including availability under the revolving credit facility. The company had reported cash, cash equivalents and short-term investments were $1.2 billion as of Sept. 30, 2025.
Long-term debt, as of Dec. 31, 2025, was approximately $3.2 billion compared with $2.7 billion as of Sept. 30, 2025.
In the fourth quarter, net cash provided by operations amounted to $202 million. Wayfair reported non-GAAP free cash flow of $145 million in the fourth quarter, representing more than 40% year-over-year growth.
For 2025, net cash provided by operating activities was $534 million, and non-GAAP free cash flow was $329 million. Net leverage dropped below 2.5x as of year-end 2025 compared with approximately 4x at year-end 2024 and over 6x at year-end 2023, reflecting the company’s sustained balance sheet improvement.
Q1 2026 Guidance
For the first quarter of 2026, Wayfair expects revenues to grow in the mid-single digits year over year. The company expects gross margin to be in the 30-31% range, with the low end anticipated given continued investment in its Wayfair Rewards loyalty program.
Contribution margin is expected to be approximately 15%. SOT G&A is expected to be in the range of $360 million to $370 million, likely at the low end.
Adjusted EBITDA margin is expected to be in the 4.5-5.5% range for the first quarter. The company also noted that the first quarter is seasonally a cash outflow period given working capital dynamics, even when revenues show strong year-over-year growth.
Wayfair’s Zacks Rank & Stocks to Consider
Currently, Wayfair carries a Zacks Rank #4 (Sell).
Dillard’s shares have appreciated 22% in the past six months. Dillard’s is set to report first-quarter fiscal 2026 results on Feb. 24.
BJ’s Restaurants shares have appreciated 34.2% in the past six months. BJ’s Restaurants is slated to report first-quarter fiscal 2026 results on Feb. 25.
The TJX Companies shares have appreciated 13.7% in the past six months. The TJX Companies is set to report first-quarter fiscal 2026 results on Feb. 25.
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Wayfair Q4 Earnings & Revenues Beat Estimates, Increase Y/Y
Key Takeaways
Wayfair (W - Free Report) reported fourth-quarter 2025 non-GAAP earnings of 85 cents per share, which beat the Zacks Consensus Estimate by 32.8% and marked a significant improvement from a non-GAAP adjusted diluted loss of 25 cents per share in the year-ago quarter. Net revenues for the fourth quarter of 2025 rose 6.9% year over year to $3.3 billion. Excluding the impact of the company’s exit from Germany, revenue growth stood at approximately 7.8% year over year. The figure beat the Zacks Consensus Estimate by 1.48%.
Last Twelve Months (LTM) net revenues per active customer increased 5.6% year over year to $586. The active customer base saw a modest decline. The metric decreased 0.5% year over year to 21.3 million as of Dec. 31, 2025.
Wayfair Inc. Price, Consensus and EPS Surprise
Wayfair Inc. price-consensus-eps-surprise-chart | Wayfair Inc. Quote
Wayfair’s Q4 in Details
Net revenues in the United States (87.9% of total net revenues) increased 7.4% year over year to $2.9 billion. International net revenues (12% of total net revenues) increased 3.7% year over year to $395 million. International net revenues on a constant currency basis grew 1.3% year over year. Orders per customer (LTM orders delivered divided by active customers) for the quarter were 1.88, up from 1.85 reported in the year-ago quarter. The average order value increased from $290 to $301 year over year.
The total number of delivered orders in the fourth quarter was 11.1 million, up 3.7% year over year. Repeat customers placed 8.8 million orders (79.1% of total orders delivered) in the fourth quarter, which increased 3.5% year over year, compared with 8.5 million repeat orders (79.4% of total orders) in the year-ago quarter.
Operating Results of Wayfair
Wayfair’s fourth-quarter gross profit was $1 billion, representing a gross margin of 30.3%, which expanded approximately 10 basis points (bps) year over year. Non-GAAP Contribution Profit was $511 million, or 15.3% of net revenues, representing a contribution margin improvement of 250 bps year over year, reflecting improved advertising efficiency as the company lapped a period of investment into newer advertising channels. Adjusted EBITDA was $224 million in the reported quarter, up approximately 133% year over year, representing an adjusted EBITDA margin of 6.7%, which expanded 360 bps year over year.
Customer service and merchant fees represented 3.7% of net revenues, or approximately $122 million, in line with the year-ago quarter’s rate. Advertising expenses represented 11.4% of net revenues, or approximately $376 million, down from 13.7% of net revenues in the year-ago quarter, driven by improved efficiency in customer acquisition and growth in the Wayfair Rewards loyalty program.
Selling, operations, technology and general and administrative (SOT G&A) expenses were $358 million for the quarter. Wayfair reported a GAAP net loss of $116 million for the fourth quarter compared with a GAAP net loss of $128 million in the year-ago quarter.
The fourth-quarter GAAP net loss was materially impacted by a non-recurring loss on debt extinguishment of $165 million related to the company’s ongoing balance sheet optimization activities.
Balance Sheet & Cash Flow of Wayfair
As of Dec. 31, 2025, cash, cash equivalents and short-term investments were $1.5 billion, and total liquidity reached $1.9 billion, including availability under the revolving credit facility. The company had reported cash, cash equivalents and short-term investments were $1.2 billion as of Sept. 30, 2025.
Long-term debt, as of Dec. 31, 2025, was approximately $3.2 billion compared with $2.7 billion as of Sept. 30, 2025.
In the fourth quarter, net cash provided by operations amounted to $202 million. Wayfair reported non-GAAP free cash flow of $145 million in the fourth quarter, representing more than 40% year-over-year growth.
For 2025, net cash provided by operating activities was $534 million, and non-GAAP free cash flow was $329 million. Net leverage dropped below 2.5x as of year-end 2025 compared with approximately 4x at year-end 2024 and over 6x at year-end 2023, reflecting the company’s sustained balance sheet improvement.
Q1 2026 Guidance
For the first quarter of 2026, Wayfair expects revenues to grow in the mid-single digits year over year. The company expects gross margin to be in the 30-31% range, with the low end anticipated given continued investment in its Wayfair Rewards loyalty program.
Contribution margin is expected to be approximately 15%. SOT G&A is expected to be in the range of $360 million to $370 million, likely at the low end.
Adjusted EBITDA margin is expected to be in the 4.5-5.5% range for the first quarter. The company also noted that the first quarter is seasonally a cash outflow period given working capital dynamics, even when revenues show strong year-over-year growth.
Wayfair’s Zacks Rank & Stocks to Consider
Currently, Wayfair carries a Zacks Rank #4 (Sell).
Some better-ranked stocks in the broader Retail-Wholesale sector are Dillard’s (DDS - Free Report) , BJ’s Restaurants (BJRI - Free Report) and TheTJX Companies (TJX - Free Report) , each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Dillard’s shares have appreciated 22% in the past six months. Dillard’s is set to report first-quarter fiscal 2026 results on Feb. 24.
BJ’s Restaurants shares have appreciated 34.2% in the past six months. BJ’s Restaurants is slated to report first-quarter fiscal 2026 results on Feb. 25.
The TJX Companies shares have appreciated 13.7% in the past six months. The TJX Companies is set to report first-quarter fiscal 2026 results on Feb. 25.