Wayfair NYSE: W reported first-quarter 2026 results showing year-over-year revenue growth and improved profitability, while executives emphasized continued market share gains in a home furnishings category they described as still under pressure. Management also highlighted progress in international markets, ongoing investments in loyalty and customer experience, and further steps to reduce convertible debt-related dilution.
Q1 revenue growth and category backdrop
Co-founder, CEO, and Co-chairman Niraj Shah said the company got off to “a solid start to the year” despite a “volatile macroeconomic backdrop.” Net revenue increased 7% in Q1, which Shah attributed to 3% order growth and 4% average order value (AOV) expansion. CFO and CAO Kate Gulliver put the revenue increase at 7.4% year-over-year, with U.S. revenue up 7.5% and international revenue up 6%.
Shah said the home furnishings category experienced a “choppy start” to the year, citing weather disruptions early in the quarter followed by a broader pullback in consumer spending tied to elevated energy and fuel prices. He noted that while Wayfair is online, weather can still disrupt customers’ ability to shop.
By management’s estimates, the home furnishings category was down in the low single digits in Q1. Shah said that implied Wayfair outperformed the market by a “high single-digit spread,” and he later described the company’s share spread as “basically a double-digit share spread” in response to a question about demand volatility.
Profitability, expense discipline, and free cash flow
Wayfair’s Q1 profitability improved, with management pointing to its adjusted EBITDA performance and ongoing cost discipline. Shah said the company delivered a 5.2% adjusted EBITDA margin in Q1, calling it the best first-quarter result in five years.
Gulliver reported gross margin of 30.1% of net revenue and said Wayfair is making “gross margin investments” as it scales programs like Rewards and other customer-experience initiatives. She characterized the approach as prioritizing higher profit dollars even if reported gross margin is “slightly lower.”
On the cost side, Gulliver said Selling, Operations, Technology, General, and Administrative expenses (SOTG&A) were $356 million in Q1, “the lowest it has been since the Q2 of 2019.” She added that from the company’s 2022 peak, Wayfair has reduced SOTG&A by nearly 40% on an annualized basis, representing more than $800 million in run-rate reduction.
Adjusted EBITDA totaled $151 million for the quarter, or a 5.2% margin, up 130 basis points year-over-year, according to Gulliver. Wayfair ended Q1 with $1.1 billion of cash and equivalents and $1.5 billion of total liquidity including its undrawn revolver.
Free cash flow was negative $106 million in Q1, which Gulliver said was a $33 million improvement from Q1 2025 and reflected the company’s typical seasonal working capital cycle following a strong fourth quarter.
Customer metrics and initiatives: Rewards, Verified, and Stores
Gulliver said order growth was 3% year-over-year, including “new order growth of nearly 7%,” which she called Wayfair’s best result since 2021. She also said active customer growth turned positive year-over-year after multiple quarters of sequential improvement.
Executives repeatedly pointed to programs such as Wayfair Rewards, Wayfair Verified, and physical Stores as drivers of share gains. Shah said Way Day customer engagement was strong and noted what he called a “terrific opening” for the company’s Atlanta store. In response to a question about long-term growth potential, Shah said the Atlanta store “opened stronger than Chicago opened,” and outlined a store pipeline that includes Columbus, Ohio this summer and Denver in November, with more openings planned in 2027.
Shah also described Verified as an editorial-style review process designed to set customer expectations and improve purchase confidence. He said the Verified assortment is “increasingly exclusive to Wayfair,” positioning it as a differentiator beyond price comparison.
On Rewards, Gulliver said the company ended 2025 with “a little over 1 million members” and intends to continue growing the program in 2026. She acknowledged Rewards is a component affecting gross margin but said management remains focused on “EBITDA dollars and EBITDA margin growth,” with offsets elsewhere in the P&L including lower advertising costs and leverage on fixed expenses.
International momentum and AI-enabled execution
Shah devoted a significant portion of prepared remarks to international markets, describing Canada and the U.K. as “large, highly attractive markets” with demographics and online penetration similar to the U.S. He said Wayfair is seeing “clear structural share gains” in both countries, driven by execution on selection, pricing, and delivery; leverage from a centrally developed technology platform; and locally nuanced marketing.
In Canada, Shah said Wayfair offers nearly all of the 40 million products shown to U.S. customers and uses its CastleGate network to forward-position inventory in Canadian warehouses while also fulfilling cross-border orders from U.S. sites. He said supply chain optimization helped reduce delivery times by nearly two days over the past year. Shah also highlighted efforts to make Canadian-made and Canada-shipping products easier to find, which he said drove a 15% increase in customer engagement for that segment.
In the U.K., Shah said Wayfair’s catalog has grown to more than 6 million products and that 60% of large-parcel orders are now delivered within two days. He also cited the addition of room-of-choice delivery and assembly options to improve the post-order experience. Shah said the company offers substantially all of the U.K. assortment to customers in Ireland as well.
On technology, Shah said Wayfair’s tech organization includes more than 2,000 engineers, data scientists, and product managers and emphasized centralized development across markets. He highlighted the use of generative and “Agentic AI” for tasks including French localization in Quebec and automated catalog enrichment in the U.K. Gulliver added that Wayfair is also using AI to improve on-site personalization and shopping experiences, referencing prior discussions about AI stylists and merchandising enhancements.
When asked about “agentic commerce” referrals, Shah said traffic levels are “de minimis” today. He also argued that agent-driven shopping may have more impact in replenishment, commodity, and technical product categories than in home furnishings, which he described as emotional and discovery-oriented.
Capital structure: convertible repurchases and dilution management
Wayfair also emphasized capital structure actions intended to reduce leverage and potential dilution. Shah said the company repurchased more of its convertible bonds in Q1, “which functions essentially as a stock repurchase,” reducing potential dilution by more than 4 million shares.
Gulliver said gross leverage ended Q1 at 3.8x, down “a full three turns” from a year earlier. The company issued a partial redemption for $250 million of principal on its 2027 convertible notes and repurchased roughly $56 million of principal on its 2028 convertible bonds. She added that Wayfair repurchased another $43 million of principal of the 2028s in April under a 10b5-1 plan. As of the call, Gulliver said Wayfair had just over $700 million of principal remaining on the 2027 and 2028 convertibles, plus a $39 million “stub” on its 2026 bonds.
Asked about capital returns, Gulliver said Wayfair intends to remain opportunistic in managing the 2027s and 2028s and that “eventually you get to a place where…you’re sort of talking about outright repurchasing of shares.”
Q2 outlook: mid-single-digit growth and higher EBITDA margin
For Q2, Gulliver guided to mid-single-digit year-over-year revenue growth, saying April category trends had been volatile and “trending down in the mid-single-digit range,” while Wayfair’s share spread remained “in the high single-digit range.” She said promotional intensity is expected to be similar to the year-ago period.
Additional Q2 guidance included:
- Gross margin: 29.5% to 30.5% of net revenue
- Customer service and merchant fees: just below 4%
- Advertising: 10.5% to 11.5%
- Contribution margin: roughly 15%
- SOTG&A: $360 million to $370 million
- Adjusted EBITDA margin: 6% to 7% of net revenue
Housekeeping items provided by Gulliver included expected equity-based compensation and related taxes of roughly $70 million to $90 million, depreciation and amortization of approximately $63 million to $69 million, net interest expense of about $38 million, weighted average shares outstanding of about 132 million, and capital expenditures of $55 million to $65 million.
In closing remarks, Shah reiterated the company’s focus on “profitably grow[ing] the business,” accelerating revenue growth through increasing share gains, and translating that into growth in adjusted EBITDA dollars and margins.
About Wayfair NYSE: W
Wayfair Inc NYSE: W is an e-commerce company focused on home furnishings and décor. Through its platform, Wayfair offers a broad assortment of furniture, lighting, home textiles, kitchenware and decorative accessories. The company's portfolio includes flagship sites such as Wayfair.com, as well as specialty retail brands like Joss & Main, AllModern, Birch Lane and Perigold, each catering to distinct design styles and price points.
Founded in 2002 by Niraj Shah and Steve Conine under the name CSN Stores, the business rebranded as Wayfair in 2011 and went public in 2014.
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