Wayfair Q3 Earnings Call Highlights

Key Points

• Wayfair delivered its strongest post-pandemic quarterly revenue growth, with Q3 revenue up 9.7% year over year and orders up 12.2%. Net income reached $62 million, while adjusted EBITDA was $236 million, or 6.9% of revenue.
• Growth was led by the U.S., where revenue rose 11.4% and active customers increased more than 4%; international revenue fell 2.3%. Management credited product, pricing and delivery improvements, alongside loyalty programs and stores.
• For Q4, Wayfair expects high-single-digit revenue growth and an adjusted EBITDA margin of 6% to 7%. It plans to raise advertising spending for the holiday season, with advertising forecast at 10.5% to 11.5% of revenue.

Wayfair NYSE: W reported its strongest quarterly revenue growth of the post-pandemic period in the third quarter of 2026, as U.S. sales and order growth helped lift the home furnishings retailer to a profit.

Revenue rose 9.7% from a year earlier, with U.S. revenue up 11.4% and international revenue down 2.3%. Orders increased 12.2%, while average order value declined roughly 2%, chiefly because of changes in the mix of business lines, Chief Financial Officer and Chief Administrative Officer Kate Gulliver said.

Net income was $62 million, an improvement of more than $160 million from the year-earlier quarter. Adjusted EBITDA, a non-GAAP measure, was $236 million, or 6.9% of revenue. Chief Executive Officer Niraj Shah said the adjusted margin was Wayfair’s best third-quarter result since 2020.

Shah said U.S. growth outpaced a roughly flat home furnishings category by a double-digit margin. Active customers rose more than 4%, and orders from new customers increased more than 14%. He attributed the gains to a combination of product selection, pricing and delivery improvements, along with initiatives including Wayfair Rewards, Wayfair Verified and physical stores.

Fourth-Quarter Outlook

Wayfair projected high-single-digit revenue growth for the fourth quarter and an adjusted EBITDA margin of 6% to 7%. Gulliver said the company was pleased with momentum at the start of the quarter, including its recent Way Day promotional event.

Management expects gross margin of 29.5% to 30.5% of revenue, targeting the lower portion of that range. Advertising is expected to account for 10.5% to 11.5% of revenue, up from 9.9% in the third quarter as the company increases spending for the holiday season.

Third-quarter gross margin was 29.6%, reflecting investments in loyalty and the customer experience. Contribution margin, another non-GAAP measure, was 16.1%. Gulliver said the company continues to view roughly 15% as an appropriate contribution margin for balancing revenue growth and adjusted EBITDA growth; its fourth-quarter guidance implies a return to approximately that level.

Selling, operations, technology, general and administrative expenses were $378 million, above the company’s guided range. Gulliver cited one-time costs, including a settlement with the U.K. Competition and Markets Authority, and forecast expenses of $360 million to $370 million in the fourth quarter.

Loyalty and Marketing

Advertising fell below 10% of revenue in the third quarter for the first time since 2021. Shah said Wayfair has expanded its use of controlled experiments to assess marketing effectiveness and shifted spending toward channels including television, creators and video.

Revenue from direct visits rose more than 15% year over year, while branded search visits increased more than 17%, Shah said. He added that sales driven by creator content during the recent Way Day event grew more than 70% from the fall event a year earlier.

Shah described Wayfair Rewards as still early in its development and said the company sees room to increase both membership and spending by existing members. Loyalty benefits can reduce gross margin, but Gulliver said they are an intentional investment because engaged customers return more often and cost less to reach through advertising.

Shah said the company is focused on growing adjusted EBITDA dollars faster than revenue rather than maximizing the pace of margin expansion. If profit dollars grow faster than sales, he said, margins would also rise over time.

Stores, International Markets and AI

Gulliver said Wayfair’s Atlanta and Columbus stores are showing results similar to those of its Chicago location, including a lift in sales at the state level. She said the company has announced leases for five stores opening next year and intends to fund store expansion through the performance of the business.

International revenue declined as the home furnishings markets in Canada and the U.K. continued to lag the U.S., Gulliver said. Shah said Wayfair has introduced some growth initiatives later in those markets; Rewards launched there in the spring, while Delivery+ and stores have not yet been introduced. Gulliver said the U.K. settlement also affected international adjusted EBITDA in the quarter.

Wayfair is also making its catalog available through AI platforms. Shah said AI-referred visits more than doubled sequentially in the third quarter, reaching roughly 1% of total traffic. He said most shoppers who discover Wayfair through AI tools continue shopping on its own site or app, though customers can complete purchases within some AI experiences.

At quarter-end, Wayfair had $1.1 billion in cash and equivalents and $1.5 billion in total liquidity, including its revolving credit facility. Free cash flow was $136 million, more than 40% above the prior-year quarter, and the company repurchased $60 million of shares to offset stock-based compensation paid during the period.

About Wayfair (NYSE:W)

Wayfair Inc is an e-commerce company focused on furniture and home furnishings. Its online platform offers products for living rooms, bedrooms, kitchens, bathrooms, outdoor spaces and other areas of the home, including furniture, décor, lighting, rugs and housewares.

The company operates a portfolio of retail brands, including Wayfair, AllModern, Birch Lane, Joss & Main and Perigold. It serves customers primarily in the United States and Canada, as well as in select international markets.

Wayfair was founded in 2002 by Niraj Shah and Steve Conine as CSN Stores and adopted the Wayfair name in 2011.

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