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Wayfair Shares Rise 1.4% on Solid Q1 Earnings and Growth in Customers
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Key Takeaways
Wayfair's Q1 revenues rose 7.4% to $2.93B, beating estimates as active customers grew 1.4%.
Wayfair saw orders, AOV and EBITDA rise, while gross margin dipped on the Rewards program investment.
Wayfair guides Q2 revenues to see mid-single-digit growth with EBITDA margin of 6%-7%.
Wayfair (W - Free Report) shares have appreciated 1.4% since the company reported its first-quarter 2026 results on April 30, driven by a revenue outperformance against consensus estimates and a return to active customer growth after multiple quarters of year-over-year decline.
Wayfair reported first-quarter 2026 earnings of 26 cents per share, which met the Zacks Consensus Estimate. Net revenues for the first quarter of 2026 rose 7.4% year over year to $2.93 billion, surpassing the Zacks Consensus Estimate of $2.88 billion by 1.72%.
Last Twelve Months (LTM) net revenues per active customer increased 5.2% year over year to $591 as of March 31, 2026. The active customer base returned to positive territory, rising 1.4% year over year to 21.4 million.
Net revenues in the United States (89.1% of total net revenues) increased 7.5% year over year to $2.61 billion. International net revenues (10.9% of total net revenues) grew 6% year over year to $319 million. On a constant currency basis, international revenue growth stood at 1.7% year over year.
Orders per customer (LTM orders delivered divided by active customers) were 1.88 for the quarter, up from 1.85 in the first quarter of 2025. The average order value expanded from $301 to $312 year over year.
Total orders delivered in the first quarter were 9.4 million, up 3.3% year over year. Repeat customers placed 7.5 million orders (79.8% of total orders delivered), an increase of 2.7% year over year, compared with 80.5% of total orders in the first quarter of 2025. Mobile orders accounted for 64.7% of total orders delivered, up from 63.4% in the first quarter of 2025.
Operating Results of Wayfair
Wayfair's first-quarter gross profit was $880 million, representing a gross margin of 30%, which contracted 70 basis points year over year, reflecting deliberate investment in the Wayfair Rewards loyalty program. Non-GAAP Contribution Profit was $440 million, or 15% of net revenues, representing a contribution margin improvement of 70 basis points year over year. Adjusted EBITDA was $151 million in the reported quarter, up 42.5% year over year, representing an adjusted EBITDA margin of 5.2%, which expanded 130 basis points year over year.
Customer service and merchant fees represented 3.9% of net revenues, or $114 million, roughly in line with the first quarter of 2025. Advertising expenses represented 11.2% of net revenues, or $329 million, down from 12.6% of net revenues in the first quarter of 2025, driven by continued improvements in advertising efficiency. Selling, operations, technology and general and administrative (SOT G&A) expenses were $356 million for the quarter, the lowest level since the second quarter of 2019.
Wayfair reported a GAAP net loss of $105 million for the first quarter compared with a GAAP net loss of $113 million in the first quarter of 2025. GAAP diluted loss per share was 80 cents versus 89 cents a year earlier. First-quarter results included $24 million in restructuring charges related to the termination of an operating lease for a logistics facility and a $43 million loss on debt extinguishment from the repurchase of 2028 convertible notes.
Balance Sheet & Cash Flow of Wayfair
As of March 31, 2026, cash and cash equivalents were $1 billion, and short-term investments were $58 million, bringing the combined total to $1.06 billion compared with $1.54 billion as of Dec 31, 2025. Total liquidity reached $1.5 billion, including availability under the revolving credit facility.
Long-term debt as of March 31, 2026, was $2.93 billion compared with $3.23 billion as of Dec. 31, 2025, as the company redeemed $250 million of principal on its 2027 convertible notes and repurchased $56 million of principal on its 2028 convertible bonds during the quarter. Gross leverage stood at 3.8x, down roughly three full turns from a year ago.
Net cash used in operating activities was $52 million in the first quarter, improving from $96 million in the first quarter of 2025. Non-GAAP free cash flow was negative $106 million, improving by $33 million year over year. Capital expenditures totaled $54 million for the quarter.
Q1 2026 Guidance
For the second quarter of 2026, Wayfair expects revenues to grow in the mid-single digits year over year.
The company expects gross margin in the range of 29.5% to 30.5% of net revenues, reflecting the continued scaling of the Wayfair Rewards program.
Customer service and merchant fees are expected to be just below 4% of net revenues, while advertising is expected in the 10.5% to 11.5% range, yielding a contribution margin of roughly 15%. SOTG&A is expected to hold in the $360 million to $370 million range.
Adjusted EBITDA margin is guided in the 6% to 7% range for the second quarter.
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Wayfair Shares Rise 1.4% on Solid Q1 Earnings and Growth in Customers
Key Takeaways
Wayfair (W - Free Report) shares have appreciated 1.4% since the company reported its first-quarter 2026 results on April 30, driven by a revenue outperformance against consensus estimates and a return to active customer growth after multiple quarters of year-over-year decline.
Wayfair reported first-quarter 2026 earnings of 26 cents per share, which met the Zacks Consensus Estimate. Net revenues for the first quarter of 2026 rose 7.4% year over year to $2.93 billion, surpassing the Zacks Consensus Estimate of $2.88 billion by 1.72%.
Last Twelve Months (LTM) net revenues per active customer increased 5.2% year over year to $591 as of March 31, 2026. The active customer base returned to positive territory, rising 1.4% year over year to 21.4 million.
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 (89.1% of total net revenues) increased 7.5% year over year to $2.61 billion. International net revenues (10.9% of total net revenues) grew 6% year over year to $319 million. On a constant currency basis, international revenue growth stood at 1.7% year over year.
Orders per customer (LTM orders delivered divided by active customers) were 1.88 for the quarter, up from 1.85 in the first quarter of 2025. The average order value expanded from $301 to $312 year over year.
Total orders delivered in the first quarter were 9.4 million, up 3.3% year over year. Repeat customers placed 7.5 million orders (79.8% of total orders delivered), an increase of 2.7% year over year, compared with 80.5% of total orders in the first quarter of 2025. Mobile orders accounted for 64.7% of total orders delivered, up from 63.4% in the first quarter of 2025.
Operating Results of Wayfair
Wayfair's first-quarter gross profit was $880 million, representing a gross margin of 30%, which contracted 70 basis points year over year, reflecting deliberate investment in the Wayfair Rewards loyalty program. Non-GAAP Contribution Profit was $440 million, or 15% of net revenues, representing a contribution margin improvement of 70 basis points year over year. Adjusted EBITDA was $151 million in the reported quarter, up 42.5% year over year, representing an adjusted EBITDA margin of 5.2%, which expanded 130 basis points year over year.
Customer service and merchant fees represented 3.9% of net revenues, or $114 million, roughly in line with the first quarter of 2025. Advertising expenses represented 11.2% of net revenues, or $329 million, down from 12.6% of net revenues in the first quarter of 2025, driven by continued improvements in advertising efficiency. Selling, operations, technology and general and administrative (SOT G&A) expenses were $356 million for the quarter, the lowest level since the second quarter of 2019.
Wayfair reported a GAAP net loss of $105 million for the first quarter compared with a GAAP net loss of $113 million in the first quarter of 2025. GAAP diluted loss per share was 80 cents versus 89 cents a year earlier. First-quarter results included $24 million in restructuring charges related to the termination of an operating lease for a logistics facility and a $43 million loss on debt extinguishment from the repurchase of 2028 convertible notes.
Balance Sheet & Cash Flow of Wayfair
As of March 31, 2026, cash and cash equivalents were $1 billion, and short-term investments were $58 million, bringing the combined total to $1.06 billion compared with $1.54 billion as of Dec 31, 2025. Total liquidity reached $1.5 billion, including availability under the revolving credit facility.
Long-term debt as of March 31, 2026, was $2.93 billion compared with $3.23 billion as of Dec. 31, 2025, as the company redeemed $250 million of principal on its 2027 convertible notes and repurchased $56 million of principal on its 2028 convertible bonds during the quarter. Gross leverage stood at 3.8x, down roughly three full turns from a year ago.
Net cash used in operating activities was $52 million in the first quarter, improving from $96 million in the first quarter of 2025. Non-GAAP free cash flow was negative $106 million, improving by $33 million year over year. Capital expenditures totaled $54 million for the quarter.
Q1 2026 Guidance
For the second quarter of 2026, Wayfair expects revenues to grow in the mid-single digits year over year.
The company expects gross margin in the range of 29.5% to 30.5% of net revenues, reflecting the continued scaling of the Wayfair Rewards program.
Customer service and merchant fees are expected to be just below 4% of net revenues, while advertising is expected in the 10.5% to 11.5% range, yielding a contribution margin of roughly 15%. SOTG&A is expected to hold in the $360 million to $370 million range.
Adjusted EBITDA margin is guided in the 6% to 7% range for the second quarter.
Zacks Rank & Stocks to Consider
Wayfair currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader Zacks Retail-Wholesale sector are FGI Industries (FGI - Free Report) , Dillard’s (DDS - Free Report) and Canada Goose (GOOS - Free Report) . FGI Industries sports a Zacks Rank #1 (Strong Buy) at present, while Dillard’s and Canada Goose carry a Zacks Rank #2 (Buy) each at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
FGI Industries is set to report first-quarter 2026 results on May 12. FGI shares have increased 29.2% year to date.
Dillard’s is set to report first-quarter fiscal 2027 results on May 21. DDS shares have decreased 9.1% year to date.
Canada Goose is set to report fourth-quarter 2026 results on May 20. GOOS shares have decreased 13.8% year to date.