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Wayfair (W) Q3 Loss Wider Than Anticipated, Revenues Beat
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Wayfair Inc. (W - Free Report) reported non-GAAP loss of $1.28 per share in the third quarter of 2018, wider than the Zacks Consensus Estimate of $1.12. The company had incurred a loss of 77 cents in the last reported quarter.
Total revenues were $1.71 billion in the third quarter, up 42% year over year. The figure also outpaced the Zacks Consensus Estimate of $1.67 billion.
The year-over-year increase in revenues was driven by strengthening of the direct retail business across the United States and international regions.
Following the company’s earnings release, its shares declined 12.8%. However, Wayfair’s shares have returned 19.8% on a year-to-date basis against the industry’s decline of 1.3%.
Quarter in Detail
The company’s direct retail net revenues, which include sales generated primarily through Wayfair’s sites, were $1.7 billion in the third quarter, increasing 43.3% year over year.
Active customers increased 35% to 13.9 million. Also, LTM net revenues per active customer increased 8.6% year over year to $443 million.
Wayfair’s total number of orders delivered in the reported quarter came in at 6.9 million, up 47% year over year. Orders per customer in the quarter were 1.84 million, reflecting an increase of 5.1% from the year-ago quarter. Further, repeat customers placed 4.6 million orders in the third quarter, up 59.7% year over year.
Operating Results
In the third quarter, Wayfair’s gross margin was 23%, down 40 basis points on a year-over-year basis.
Adjusted EBITDA margin was (4.5%) million compared with (1.9%) in the year-ago quarter. This was led by increasing investments, mainly in the international regions.
Wayfair’s operating expenses of $538 million increased 51.9% year over year. Operating loss came in at $145.3 million, which was wider than the prior-year quarter’s $74 million.
Balance Sheet & Cash Flow
As of Sep 30, 2018, cash, cash equivalents and short-term investments were $518.7 million, down from $575.4 million in the second quarter. Accounts receivables were $41 million, up from $34.8 million in the last reported quarter.
Cash from operations was $7.8 million in the third quarter and capital expenditure totaled $49.4 million. Free cash flow was ($58.8) million compared with ($7.5) million in the last reported quarter.
Guidance
For the fourth quarter of 2018, Wayfair anticipates total revenues in the range of $1.92-$1.968 billion. The Zacks Consensus Estimate for revenues is currently pegged at $1.93 billion.
The company expects direct retail revenues in the range of $1.905-$1.950 billion, reflecting year-over-year growth of 34-37%. This includes expected growth in U.S. direct retail revenues of 32-35% and international segment sales between 50% and 55%.
Further, other revenues are expected between $15 million and $18 million.
Long-term earnings growth rate for boohoo group, IAC/InterActiveCorp and AMETEK is currently pegged at 25%, 15% and 10.97%, respectively.
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Wayfair (W) Q3 Loss Wider Than Anticipated, Revenues Beat
Wayfair Inc. (W - Free Report) reported non-GAAP loss of $1.28 per share in the third quarter of 2018, wider than the Zacks Consensus Estimate of $1.12. The company had incurred a loss of 77 cents in the last reported quarter.
Total revenues were $1.71 billion in the third quarter, up 42% year over year. The figure also outpaced the Zacks Consensus Estimate of $1.67 billion.
The year-over-year increase in revenues was driven by strengthening of the direct retail business across the United States and international regions.
Following the company’s earnings release, its shares declined 12.8%. However, Wayfair’s shares have returned 19.8% on a year-to-date basis against the industry’s decline of 1.3%.
Quarter in Detail
The company’s direct retail net revenues, which include sales generated primarily through Wayfair’s sites, were $1.7 billion in the third quarter, increasing 43.3% year over year.
Active customers increased 35% to 13.9 million. Also, LTM net revenues per active customer increased 8.6% year over year to $443 million.
Wayfair’s total number of orders delivered in the reported quarter came in at 6.9 million, up 47% year over year. Orders per customer in the quarter were 1.84 million, reflecting an increase of 5.1% from the year-ago quarter. Further, repeat customers placed 4.6 million orders in the third quarter, up 59.7% year over year.
Operating Results
In the third quarter, Wayfair’s gross margin was 23%, down 40 basis points on a year-over-year basis.
Adjusted EBITDA margin was (4.5%) million compared with (1.9%) in the year-ago quarter. This was led by increasing investments, mainly in the international regions.
Wayfair’s operating expenses of $538 million increased 51.9% year over year. Operating loss came in at $145.3 million, which was wider than the prior-year quarter’s $74 million.
Balance Sheet & Cash Flow
As of Sep 30, 2018, cash, cash equivalents and short-term investments were $518.7 million, down from $575.4 million in the second quarter. Accounts receivables were $41 million, up from $34.8 million in the last reported quarter.
Cash from operations was $7.8 million in the third quarter and capital expenditure totaled $49.4 million. Free cash flow was ($58.8) million compared with ($7.5) million in the last reported quarter.
Guidance
For the fourth quarter of 2018, Wayfair anticipates total revenues in the range of $1.92-$1.968 billion. The Zacks Consensus Estimate for revenues is currently pegged at $1.93 billion.
The company expects direct retail revenues in the range of $1.905-$1.950 billion, reflecting year-over-year growth of 34-37%. This includes expected growth in U.S. direct retail revenues of 32-35% and international segment sales between 50% and 55%.
Further, other revenues are expected between $15 million and $18 million.
Wayfair Inc. Price, Consensus and EPS Surprise
Wayfair Inc. Price, Consensus and EPS Surprise | Wayfair Inc. Quote
Zacks Rank and Stocks to Consider
Wayfair currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the broader technology sector are boohoo group plc (BHOOY - Free Report) , IAC/InterActiveCorp (IAC - Free Report) and AMETEK, Inc. (AME - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Long-term earnings growth rate for boohoo group, IAC/InterActiveCorp and AMETEK is currently pegged at 25%, 15% and 10.97%, respectively.
Today's Stocks from Zacks' Hottest Strategies
It's hard to believe, even for us at Zacks. But while the market gained +21.9% in 2017, our top stock-picking screens have returned +115.0%, +109.3%, +104.9%, +98.6%, and +67.1%.
And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - 2017, the composite yearly average gain for these strategies has beaten the market more than 19X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.
See Them Free>>