We use cookies to understand how you use our site and to improve your experience.
This includes personalizing content and advertising.
By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties.
You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Wayfair Q3 Earnings Beat on U.S. Growth and Ad Cost Leverage
Read MoreHide Full Article
Key Takeaways
Wayfair's Q3 adjusted EPS rose 32.9% to 93 cents, beating estimates, as revenues climbed 9.7% to $3.42B.
U.S. sales rose 11.4%, while advertising's revenue share fell to 9.9%, its first sub-10% since 2021.
Wayfair generated $62M in GAAP net income and 46.2% higher FCF, but expects heavier Q4 ad spending.
Wayfair Inc. (W - Free Report) reported adjusted earnings of 93 cents per share for the third quarter of 2026, up 32.9% year over year and beating the Zacks Consensus Estimate of 83 cents by 12.05%. Net revenues rose 9.7% to $3.42 billion, surpassing the consensus estimate by 1.59%.
The upside reflected double-digit U.S. growth and more efficient customer acquisition. Orders delivered increased 12.2% to 11 million, as Wayfair captured market share in a roughly flat domestic home furnishings market.
W's U.S. Sales Outpace International Demand in Q3
U.S. net revenues climbed 11.4% year over year to $3.04 billion from $2.73 billion, accounting for 88.9% of total revenues. The CEO said the company's domestic growth rate exceeded that of the broader home category, supported by competitive prices, selection and faster delivery.
International revenues declined 2.3% to $380 million from $389 million. Sales fell 1.8% on a constant-currency basis as Canada and the United Kingdom lagged the U.S. market. U.S. segment adjusted EBITDA rose to $261 million from $209 million, while the international adjusted EBITDA loss widened to $25 million from $1 million. Management cited later deployment of growth programs abroad and a one-time U.K. regulatory settlement.
Wayfair Adds Customers as Average Order Value Slips
Active customers increased 4.7% to 22.2 million as of Sept. 30, 2026. Net revenue per active customer over the last 12 months rose 3.1% to $596, while orders per customer improved to 1.90 from 1.87. Repeat shoppers placed 8.8 million orders, up 11.4%, representing 80% of total orders.
Average order value fell to $311 from $317. CFO Kate Gulliver pointed to a shifting mix between the core Wayfair website and higher-value business lines. Revenues from direct visits rose more than 15% year over year as loyalty initiatives and physical stores encouraged repeat engagement. AI-referred visits more than doubled sequentially to roughly 1% of total traffic.
Gross profit increased to $1.01 billion from $934 million, although gross margin contracted 40 basis points to 29.6%. Investments in customer experience and loyalty weighed on the rate, partly offset by growth in supplier services.
Advertising expenses increased to $338 million from $330 million, but their share of revenues eased to 9.9% from 10.6%, the first single-digit result since 2021.
Customer service and merchant fees totaled $127 million, or 3.7% of revenues. Non-GAAP contribution profit advanced 11.6% to $550 million, expanding contribution margin 30 basis points to 16.1%.
Wayfair Returns to GAAP Profitability
Adjusted EBITDA grew 13.5% year over year to $236 million from $208 million, while its margin improved 20 basis points to 6.9%. Operating income increased to $106 million from $38 million.
Wayfair posted GAAP net income of $62 million, or earnings of 45 cents per share, against a year-ago loss of $99 million, or 76 cents per share. The prior-year quarter included a $99 million loss on debt extinguishment, which did not recur in the reported period.
GAAP selling, operations, technology, general and administrative expenses eased to $441 million from $445 million. Excluding equity-based compensation and related taxes, these expenses increased to $378 million from $360 million amid higher software and cloud costs and a legal settlement.
W's Q3 Free Cash Flow Rises as Debt Declines
Operating cash flow increased 27.7% to $198 million from $155 million. Non-GAAP free cash flow rose 46.2% to $136 million from $93 million after $62 million in capital expenditures.
Cash and equivalents totaled $1.04 billion as of Sept. 30, with short-term investments of $60 million. Total liquidity, including revolver availability, stood at $1.5 billion.
Long-term debt declined to $2.57 billion from $3.23 billion at 2025 year-end. The company also repurchased $60 million of stock, which management said offset equity compensation dilution and kept the share count roughly flat quarter over quarter. It intends to make such offsets a recurring feature of capital allocation.
Wayfair Expects Q4 Growth Despite Higher Ad Spending
For the fourth quarter of 2026, Wayfair expects high-single-digit revenue growth year over year. Gross margin is projected at 29.5% to 30.5%, toward the lower end. Advertising is forecast at 10.5% to 11.5% of revenues, reflecting heavier holiday-season spending, while customer service and merchant fees should remain near the third-quarter rate.
Adjusted EBITDA margin is guided to 6% to 7%, with selling, operations, technology, general and administrative expenses, excluding equity-related costs, of $360 million to $370 million. Capital expenditures are expected at $70 million to $80 million as store investment accelerates. Management expects five additional physical stores to open in 2027.
W’s Zacks Rank & Other Stocks to Consider
Currently, Wayfair sports a Zacks Rank #1 (Strong Buy).
View the Zacks #1 Rank List
Image: Bigstock
Wayfair Q3 Earnings Beat on U.S. Growth and Ad Cost Leverage
Key Takeaways
Wayfair Inc. (W - Free Report) reported adjusted earnings of 93 cents per share for the third quarter of 2026, up 32.9% year over year and beating the Zacks Consensus Estimate of 83 cents by 12.05%. Net revenues rose 9.7% to $3.42 billion, surpassing the consensus estimate by 1.59%.
The upside reflected double-digit U.S. growth and more efficient customer acquisition. Orders delivered increased 12.2% to 11 million, as Wayfair captured market share in a roughly flat domestic home furnishings market.
W's U.S. Sales Outpace International Demand in Q3
U.S. net revenues climbed 11.4% year over year to $3.04 billion from $2.73 billion, accounting for 88.9% of total revenues. The CEO said the company's domestic growth rate exceeded that of the broader home category, supported by competitive prices, selection and faster delivery.
Wayfair Inc. Price, Consensus and EPS Surprise
Wayfair Inc. price-consensus-eps-surprise-chart | Wayfair Inc. Quote
International revenues declined 2.3% to $380 million from $389 million. Sales fell 1.8% on a constant-currency basis as Canada and the United Kingdom lagged the U.S. market. U.S. segment adjusted EBITDA rose to $261 million from $209 million, while the international adjusted EBITDA loss widened to $25 million from $1 million. Management cited later deployment of growth programs abroad and a one-time U.K. regulatory settlement.
Wayfair Adds Customers as Average Order Value Slips
Active customers increased 4.7% to 22.2 million as of Sept. 30, 2026. Net revenue per active customer over the last 12 months rose 3.1% to $596, while orders per customer improved to 1.90 from 1.87. Repeat shoppers placed 8.8 million orders, up 11.4%, representing 80% of total orders.
Average order value fell to $311 from $317. CFO Kate Gulliver pointed to a shifting mix between the core Wayfair website and higher-value business lines. Revenues from direct visits rose more than 15% year over year as loyalty initiatives and physical stores encouraged repeat engagement. AI-referred visits more than doubled sequentially to roughly 1% of total traffic.
W's Advertising Leverage Supports Contribution Profit
Gross profit increased to $1.01 billion from $934 million, although gross margin contracted 40 basis points to 29.6%. Investments in customer experience and loyalty weighed on the rate, partly offset by growth in supplier services.
Advertising expenses increased to $338 million from $330 million, but their share of revenues eased to 9.9% from 10.6%, the first single-digit result since 2021.
Customer service and merchant fees totaled $127 million, or 3.7% of revenues. Non-GAAP contribution profit advanced 11.6% to $550 million, expanding contribution margin 30 basis points to 16.1%.
Wayfair Returns to GAAP Profitability
Adjusted EBITDA grew 13.5% year over year to $236 million from $208 million, while its margin improved 20 basis points to 6.9%. Operating income increased to $106 million from $38 million.
Wayfair posted GAAP net income of $62 million, or earnings of 45 cents per share, against a year-ago loss of $99 million, or 76 cents per share. The prior-year quarter included a $99 million loss on debt extinguishment, which did not recur in the reported period.
GAAP selling, operations, technology, general and administrative expenses eased to $441 million from $445 million. Excluding equity-based compensation and related taxes, these expenses increased to $378 million from $360 million amid higher software and cloud costs and a legal settlement.
W's Q3 Free Cash Flow Rises as Debt Declines
Operating cash flow increased 27.7% to $198 million from $155 million. Non-GAAP free cash flow rose 46.2% to $136 million from $93 million after $62 million in capital expenditures.
Cash and equivalents totaled $1.04 billion as of Sept. 30, with short-term investments of $60 million. Total liquidity, including revolver availability, stood at $1.5 billion.
Long-term debt declined to $2.57 billion from $3.23 billion at 2025 year-end. The company also repurchased $60 million of stock, which management said offset equity compensation dilution and kept the share count roughly flat quarter over quarter. It intends to make such offsets a recurring feature of capital allocation.
Wayfair Expects Q4 Growth Despite Higher Ad Spending
For the fourth quarter of 2026, Wayfair expects high-single-digit revenue growth year over year. Gross margin is projected at 29.5% to 30.5%, toward the lower end. Advertising is forecast at 10.5% to 11.5% of revenues, reflecting heavier holiday-season spending, while customer service and merchant fees should remain near the third-quarter rate.
Adjusted EBITDA margin is guided to 6% to 7%, with selling, operations, technology, general and administrative expenses, excluding equity-related costs, of $360 million to $370 million. Capital expenditures are expected at $70 million to $80 million as store investment accelerates. Management expects five additional physical stores to open in 2027.
W’s Zacks Rank & Other Stocks to Consider
Currently, Wayfair sports a Zacks Rank #1 (Strong Buy).
Other top-ranked stocks in the broader Retail-Wholesale sector are Alliance Laundry (ALH - Free Report) , Abercrombie & Fitch (ANF - Free Report) and Best Buy Co., Inc. (BBY - Free Report) , each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Alliance Laundry’s shares have gained 12.8% year to date. ALH is set to report its third-quarter 2026 results on Nov. 10.
Abercrombie & Fitch’s shares have appreciated 35.9% year to date. ANF is slated to report its third-quarter 2026 results on Nov. 24.
Best Buy's shares have climbed 51.5% year to date. BBY is scheduled to report its third-quarter fiscal 2027 results on Nov. 24, 2026.