Business Wire | Nov 4, 2021 07:00AM EDT

Wayfair Announces Third Quarter 2021 Results

Nov. 04, 2021

BOSTON--(BUSINESS WIRE)--Nov. 04, 2021--Wayfair Inc. (NYSE: W), one of the world's largest online destinations for the home, today reported financial results for its third quarter ended September 30, 2021.

Third Quarter 2021 Financial Highlights

* Total net revenue of $3.1 billion decreased $718.5 million, down 18.7% year over year * U.S. net revenue of $2.6 billion decreased $679.9 million, down 20.8% year over year * International net revenue of $0.5 billion decreased $38.6 million, down 6.8% year over year. International Net Revenue Constant Currency Growth was (12.1)% * Gross profit was $882.7 million or 28.3% of total net revenue * Net loss was $78.0 million and Non-GAAP Adjusted EBITDA was $101.1 million * Diluted loss per share was $(0.75) * Non-GAAP Adjusted Diluted Earnings per Share was $0.14 * Net cash for operating activities was $(130.8) million and Non-GAAP Free Cash Flow was $(203.2) million * Cash, cash equivalents and short-term investments totaled $2.4 billion

"Wayfair delivered $3.1 billion in net revenue and over $100 million of adjusted EBITDA in the third quarter. As various geographies reopened post-pandemic, consumers naturally shifted some spend towards travel and entertainment and from e-commerce towards brick and mortar. Demand and interest in the home remains resilient, but it will take a few more quarters for our growth - and e-commerce growth in general - to get back to normal," said Niraj Shah, CEO, co-founder and co-chairman, Wayfair. "Our long-term vision is in sharp focus coming out of the pandemic period. The initiatives required to realize it are in flight, even as we work through near-term macro challenges like supply chain congestion and related inflation. We are, as ever, focused on the long-term, balancing strong growth and profitability over years not quarters, and solidifying our position as the definitive destination for the home."

Other Third Quarter Highlights

* Active customers reached 29.2 million as of September 30, 2021, an increase of 1.5% year over year * LTM net revenue per active customer was $484 as of September 30, 2021, an increase of 7.3% year over year * Orders per customer, measured as LTM orders divided by active customers, was 1.92 for the third quarter of 2021, compared to 1.94 for the third quarter of 2020 * Repeat customers placed 76.3% of total orders in the third quarter of 2021, compared to 71.9% in the third quarter of 2020 * Repeat customers placed 8.4 million orders in the third quarter of 2021, a decrease of 25.8% year over year * Orders delivered in the third quarter of 2021 were 11.0 million, a decrease of 30.1% year over year * Average order value was $283 for the third quarter of 2021, compared to $243 for the third quarter of 2020 * In the third quarter of 2021, 57.7% of total orders delivered were placed via a mobile device, compared to 60.0% in the third quarter of 2020

Key Financial and Operating Metrics

Three months ended Nine months ended September September 30, 30,

2021 2020 2021 2020

(in thousands, except LTM Net Revenue per Active Customer, Average Order Value and per share data)

Key Financial Statement Metrics:

Net revenue $ 3,121,083 $ 3,839,570 $ 10,456,227 $ 10,474,305

Gross profit $ 882,728 $ 1,147,428 $ 3,013,815 $ 3,047,581

(Loss) income from $ (69,798) $ 221,854 $ 101,751 $ 259,784operations

Net (loss) income $ (78,021) $ 173,166 $ 70,641 $ 161,178

(Loss) earnings per share:

Basic $ (0.75) $ 1.82 $ 0.68 $ 1.70

Diluted $ (0.75) $ 1.67 $ 0.65 $ 1.64

Net cash (for) fromoperating $ (130,848) $ 331,027 $ 321,187 $ 1,209,988activities

Key Operating Metrics:

Active customers 29,213 28,783 29,213 28,783 (1)

LTM net revenue per $ 484 $ 451 $ 484 $ 451 active customer (2)

Orders delivered 11,016 15,758 39,597 44,526 (3)

Average order value $ 283 $ 243 $ 264 $ 235 (4)

Non-GAAP Financial Measures:

Adjusted EBITDA $ 101,051 $ 371,112 $ 617,658 $ 683,648

Free Cash Flow $ (203,167) $ 255,028 $ 114,960 $ 954,007

Adjusted Diluted $ 0.14 $ 2.30 $ 3.08 $ 3.77 Earnings per Share

(1)

The number of active customers represents the total number of individual customers who have purchased at least once directly from our sites during the preceding twelve-month period.

(2)

LTM net revenue per active customer represents our total net revenue in the last twelve months divided by our total number of active customers for the same preceding twelve-month period.

(3)

Orders delivered represents the total orders delivered in any period, inclusive of orders that may eventually be returned.

(4)

We define average order value as total net revenue in a given period divided by the orders delivered in that period.

Webcast and Conference Call

Wayfair will host a conference call and webcast to discuss its third quarter 2021 financial results today at 8 a.m. (ET). Investors and participants should register for the call in advance by visiting https://bit.ly/39M9PMA and entering the conference ID number 4187968. After registering, instructions will be shared on how to join the call. The call will also be available via live webcast at https://bit.ly/3AbyW5Z and supporting slides will be available at investor.wayfair.com. An archive of the webcast conference call will be available shortly after the call ends at http://investor.wayfair.com.

About Wayfair

Wayfair is the destination for all things home: helping everyone, anywhere create their feeling of home. From expert customer service, to the development of tools that make the shopping process easier, to carrying one of the widest and deepest selections of items for every space, style, and budget, Wayfair gives everyone the power to create spaces that are just right for them.

The Wayfair family of sites includes:

* Wayfair - Everything home for every budget. * Joss & Main - Stylish designs to discover daily. * AllModern - The best of modern, priced for real life. * Birch Lane - Classic home. Comfortable cost. * Perigold - The widest-ever selection of luxury home furnishings.

Wayfair generated $14.1 billion in net revenue for the twelve months ended September 30, 2021. Headquartered in Boston, Massachusetts with operations throughout North America and Europe, Wayfair employs approximately 16,000 people.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of federal and state securities laws. All statements other than statements of historical fact contained in this press release, including statements regarding our investment plans and anticipated returns on those investments, our future customer growth, our future results of operations and financial position, available liquidity and access to financing sources, our business strategy, plans and objectives of management for future operations, consumer activity and behaviors, e-commerce adoption trends, developments in our technology and systems, constrained labor markets, disruptions, capacity constraints or inefficiencies in our supply chain or logistics network, including increased shipping costs, our future real estate plans, and anticipated results of those developments and the impact of the novel coronavirus (COVID-19) pandemic and our response to it, are forward-looking statements. In some cases, you can identify forward-looking statements by terms such as "may," "will," "should," "expects," "plans," "anticipates," "could," "intends," "target," "projects," "contemplates," "believes," "estimates," "predicts," "potential" or "continue" or the negative of these terms or other similar expressions.

Forward-looking statements are based on current expectations of future events. We cannot guarantee that any forward-looking statement will be accurate, although we believe that we have been reasonable in our expectations and assumptions. Investors should realize that if underlying assumptions prove inaccurate or that known or unknown risks or uncertainties materialize, actual results could vary materially from our expectations and projections. Investors are therefore cautioned not to place undue reliance on any forward-looking statements. These forward-looking statements speak only as of the date of this press release and, except as required by applicable law, we undertake no obligation to publicly update or revise any forward-looking statements contained herein, whether as a result of any new information, future events or otherwise.

A list and description of risks, uncertainties and other factors that could cause or contribute to differences in our results can be found in our filings with the Securities and Exchange Commission, including our most recent Annual Report on Form 10-K and subsequent filings. We qualify all of our forward-looking statements by these cautionary statements.

WAYFAIR INC.CONSOLIDATED AND CONDENSED BALANCE SHEETS(Unaudited)

The number of active customers represents the total number of individual(1) customers who have purchased at least once directly from our sites during the preceding twelve-month period.

LTM net revenue per active customer represents our total net revenue in(2) the last twelve months divided by our total number of active customers for the same preceding twelve-month period.

(3) Orders delivered represents the total orders delivered in any period, inclusive of orders that may eventually be returned.

(4) We define average order value as total net revenue in a given period divided by the orders delivered in that period.

Webcast and Conference Call

Wayfair will host a conference call and webcast to discuss its third quarter 2021 financial results today at 8 a.m. (ET). Investors and participants should register for the call in advance by visiting https://bit.ly/39M9PMA and entering the conference ID number 4187968. After registering, instructions will be shared on how to join the call. The call will also be available via live webcast at https://bit.ly/3AbyW5Z and supporting slides will be available at investor.wayfair.com. An archive of the webcast conference call will be available shortly after the call ends at http://investor.wayfair.com.

About Wayfair

Wayfair is the destination for all things home: helping everyone, anywhere create their feeling of home. From expert customer service, to the development of tools that make the shopping process easier, to carrying one of the widest and deepest selections of items for every space, style, and budget, Wayfair gives everyone the power to create spaces that are just right for them.

The Wayfair family of sites includes:

* Wayfair - Everything home for every budget. * Joss & Main - Stylish designs to discover daily. * AllModern - The best of modern, priced for real life. * Birch Lane - Classic home. Comfortable cost. * Perigold - The widest-ever selection of luxury home furnishings.

Wayfair generated $14.1 billion in net revenue for the twelve months ended September 30, 2021. Headquartered in Boston, Massachusetts with operations throughout North America and Europe, Wayfair employs approximately 16,000 people.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of federal and state securities laws. All statements other than statements of historical fact contained in this press release, including statements regarding our investment plans and anticipated returns on those investments, our future customer growth, our future results of operations and financial position, available liquidity and access to financing sources, our business strategy, plans and objectives of management for future operations, consumer activity and behaviors, e-commerce adoption trends, developments in our technology and systems, constrained labor markets, disruptions, capacity constraints or inefficiencies in our supply chain or logistics network, including increased shipping costs, our future real estate plans, and anticipated results of those developments and the impact of the novel coronavirus (COVID-19) pandemic and our response to it, are forward-looking statements. In some cases, you can identify forward-looking statements by terms such as "may," "will," "should," "expects," "plans," "anticipates," "could," "intends," "target," "projects," "contemplates," "believes," "estimates," "predicts," "potential" or "continue" or the negative of these terms or other similar expressions.

Forward-looking statements are based on current expectations of future events. We cannot guarantee that any forward-looking statement will be accurate, although we believe that we have been reasonable in our expectations and assumptions. Investors should realize that if underlying assumptions prove inaccurate or that known or unknown risks or uncertainties materialize, actual results could vary materially from our expectations and projections. Investors are therefore cautioned not to place undue reliance on any forward-looking statements. These forward-looking statements speak only as of the date of this press release and, except as required by applicable law, we undertake no obligation to publicly update or revise any forward-looking statements contained herein, whether as a result of any new information, future events or otherwise.

A list and description of risks, uncertainties and other factors that could cause or contribute to differences in our results can be found in our filings with the Securities and Exchange Commission, including our most recent Annual Report on Form 10-K and subsequent filings. We qualify all of our forward-looking statements by these cautionary statements.

WAYFAIR INC.CONSOLIDATED AND CONDENSED BALANCE SHEETS(Unaudited)

September 30, December 31, 2021 2020

(in thousands, except share and per share data)

Assets:

Current assets

Cash and cash equivalents $ 1,864,821 $ 2,129,440

Short-term investments 528,392 461,698

Accounts receivable, net 166,497 110,299

Inventories 66,621 52,152

Prepaid expenses and other current assets 328,862 292,213

Total current assets 2,955,193 3,045,802

Operating lease right-of-use assets 816,951 808,375

Property and equipment, net 653,673 684,306

Other non-current assets 40,400 31,446

Total assets $ 4,466,217 $ 4,569,929

Liabilities and Stockholders' Deficit:

Current liabilities

Accounts payable $ 1,072,529 $ 1,156,624

Other current liabilities 957,963 1,008,970

Total current liabilities 2,030,492 2,165,594

Long-term debt 3,049,475 2,659,243

Operating lease liabilities 867,595 869,958

Other non-current liabilities 48,736 67,031

Total liabilities 5,996,298 5,761,826

Stockholders' deficit:

Convertible preferred stock, $0.001 par valueper share: 10,000,000 shares authorized and - - none issued at September 30, 2021 and December31, 2020

Class A common stock, par value $0.001 pershare: 500,000,000 shares authorized,77,666,738 and 72,980,490 shares issued and 78 73 outstanding at September 30, 2021 and December31, 2020

Class B common stock, par value $0.001 pershare: 164,000,000 shares authorized,26,563,761 and 26,564,234 shares issued and 26 27 outstanding at September 30, 2021 and December31, 2020

Additional paid-in capital 221,733 698,482

Accumulated deficit (1,747,030) (1,885,950)

Accumulated other comprehensive loss (4,888) (4,529)

Total stockholders' deficit (1,530,081) (1,191,897)

Total liabilities and stockholders' deficit $ 4,466,217 $ 4,569,929

Note: Wayfair adopted a new accounting standards update for debt effective January 1, 2021. The adoption of this standards update had no effect on prior periods.

WAYFAIR INC.CONSOLIDATED AND CONDENSED STATEMENTS OF OPERATIONS(Unaudited)

Three months ended September Nine months ended September 30, 30,

2021 2020 2021 2020

(in thousands, except per share data)

Net revenue $ 3,121,083 $ 3,839,570 $ 10,456,227 $ 10,474,305

Cost of goods 2,238,355 2,692,142 7,442,412 7,426,724 sold (1)

Gross profit 882,728 1,147,428 3,013,815 3,047,581

Operating expenses:

Customer serviceand merchant 139,931 139,589 431,802 372,825 fees (1)

Advertising 315,024 344,025 1,032,662 1,037,562

Selling,operations,technology, 497,571 441,960 1,435,388 1,377,410 general andadministrative(1)

Customer servicecenter - - 12,212 - impairment andother charges

Total operating 952,526 925,574 2,912,064 2,787,797 expenses

(Loss) income (69,798) 221,854 101,751 259,784 from operations

Interest (8,406) (36,315) (23,620) (87,472) expense, net

Other income 3,889 (13,584) (1,657) (10,720) (expense), net

(Loss) incomebefore income (74,315) 171,955 76,474 161,592 taxes

Provision(benefit) for 3,706 (1,211) 5,833 414 income taxes,net

Net (loss) $ (78,021) $ 173,166 $ 70,641 $ 161,178 income

(Loss) earnings per share:

Basic $ (0.75) $ 1.82 $ 0.68 $ 1.70

Diluted (2) $ (0.75) $ 1.67 $ 0.65 $ 1.64

Weighted-averagenumber of sharesof common stock outstanding usedin computing pershare amounts:

Basic 104,054 95,373 103,579 94,767

Diluted 104,054 109,200 106,600 98,021

(1)

Includes equity-based compensation and related taxes as follows:

Cost of goods sold

$

2,853

$

2,845

$

8,944

$

6,926

Customer service and merchant fees

6,879

4,477

18,974

10,909

Selling, operations, technology, general and administrative

79,200

69,361

235,623

193,541

$

88,932

$

76,683

$

263,541

$

211,376

(2)

Wayfair adopted a new accounting standards update for debt effective January 1, 2021. If Wayfair had not adopted the standard January 1, 2021, Wayfair's diluted loss per share would have been $(1.03) and $(0.36) for the three and nine months ended September 30, 2021.

WAYFAIR INC.CONSOLIDATED AND CONDENSED STATEMENTS OF CASH FLOWS(Unaudited)

(1) Includes equity-based compensation and related taxes as follows:

Cost of goods sold $ 2,853 $ 2,845 $ 8,944 $ 6,926

Customer service 6,879 4,477 18,974 10,909 and merchant fees

Selling, operations, 79,200 69,361 235,623 193,541 technology, general and administrative

$ 88,932 $ 76,683 $ 263,541 $ 211,376

(2) Wayfair adopted a new accounting standards update for debt effective January 1, 2021. If Wayfair had not adopted the standard January 1, 2021, Wayfair's diluted loss per share would have been $(1.03) and $(0.36) for the three and nine months ended September 30, 2021.

WAYFAIR INC.CONSOLIDATED AND CONDENSED STATEMENTS OF CASH FLOWS(Unaudited)

Nine months ended September 30,

2021 2020

(in thousands)

Cash flows from operating activities:

Net income $ 70,641 $ 161,178

Adjustments to reconcile net income to net cash from operating activities:

Depreciation and amortization 240,154 208,532

Equity-based compensation 237,073 197,199

Amortization of discount and issuance costs on 5,873 78,225 convertible notes

Loss on impairment 12,212 -

Other non-cash adjustments 2,483 12,065

Changes in operating assets and liabilities:

Accounts receivable, net (57,568) (14,891)

Inventories (14,823) 7,602

Prepaid expenses and other current assets (37,982) (93,055)

Other assets 833 612

Accounts payable and other current liabilities (133,234) 597,173

Other liabilities (4,475) 55,348

Cash flows from operating activities 321,187 1,209,988



Cash flows from investing activities:

Purchase of short- and long-term investments (774,708) (19,994)

Sale and maturities of short- and long-term 701,091 466,310 investments

Purchase of property and equipment (77,593) (146,303)

Site and software development costs (128,634) (109,678)

Other investing activities, net 5,200 (124)

Net cash (for) from investing activities (274,644) 190,211



Cash flows from financing activities:

Repurchase of common stock (300,208) (280,236)

Proceeds from borrowings - 200,000

Repayment of borrowings - (200,000)

Proceeds from issuance of convertible notes, - 2,027,758 net of issuance costs

Premiums paid for capped call confirmations - (255,024)

Payments to extinguish convertible debt - (1,040,349)

Other financing activities, net (2,448) 380

Net cash (for) from financing activities (302,656) 452,529

Effect of exchange rate changes on cash and (8,506) 7,458 cash equivalents

Net (decrease) increase in cash and cash (264,619) 1,860,186 equivalents



Cash and cash equivalents:

Beginning of period 2,129,440 582,753

End of period $ 1,864,821 $ 2,442,939

Non-GAAP Financial Measures

To supplement our unaudited consolidated and condensed financial statements presented in accordance with generally accepted accounting principles ("GAAP"), this earnings release and the accompanying tables and the related earnings conference call contain certain non-GAAP financial measures, including Adjusted EBITDA, Free Cash Flow, Adjusted Diluted Earnings per Share and Net Revenue Constant Currency Growth. We use these non-GAAP financial measures internally in analyzing our financial results and believe they are useful to investors, as a supplement to GAAP measures, in evaluating our ongoing operational performance. We have provided a reconciliation of these non-GAAP financial measures to the most directly comparable GAAP financial measure in this earnings release.

Net Revenue Constant Currency Growth is a non-GAAP financial measure that is calculated by translating the current period local currency net revenue by the currency exchange rates used to translate the financial statements in the comparable prior-year period. We believe Net Revenue Constant Currency Growth is an important indicator of our business performance, as it provides useful information to investors and others in understanding and evaluating trends in our operating results in the same manner as our management.

Adjusted EBITDA is a non-GAAP financial measure that is calculated as net (loss) income before depreciation and amortization, equity-based compensation and related taxes, interest expense, net, other income (expense), net, provision (benefit) for income taxes, net, non-recurring items and other items not indicative of our ongoing operating performance. We have included Adjusted EBITDA in this earnings release because it is a key measure used by our management and our board of directors to evaluate our operating performance, generate future operating plans and make strategic decisions regarding the allocation of capital. In particular, the exclusion of certain expenses in calculating Adjusted EBITDA facilitates operating performance comparisons on a period-to-period basis as these costs may vary independent of business performance. For instance, we exclude the impact of equity-based compensation and related taxes as we do not consider this item to be indicative of our core operating performance. Investors should, however, understand that equity-based compensation and related taxes will be a significant recurring expense in our business and an important part of the compensation provided to our employees. Accordingly, we believe that Adjusted EBITDA provides useful information to investors and others in understanding and evaluating our operating results in the same manner as our management and board of directors.

Adjusted Diluted Earnings per Share is a non-GAAP financial measure that is calculated as net (loss) income plus equity-based compensation and related taxes, provision (benefit) for income taxes, net, non-recurring items and other items not indicative of our ongoing operating performance, and, if dilutive, interest expense associated with convertible debt instruments under the if-converted method divided by the weighted-average number of shares of common stock used in the computation of diluted (loss) earnings per share. We believe that these adjustments to our adjusted diluted net income before calculating per share amounts for all periods presented provides a more meaningful comparison between our operating results from period to period.

Free Cash Flow is a non-GAAP financial measure that is calculated as net cash from or for operating activities less net cash used to purchase property and equipment and site and software development costs (collectively, "Capital Expenditures"). We believe Free Cash Flow is an important indicator of our business performance, as it measures the amount of cash we generate. Accordingly, we believe that Free Cash Flow provides useful information to investors and others in understanding and evaluating our operating results in the same manner as our management.

We calculate forward-looking non-GAAP Adjusted EBITDA based on internal forecasts that omit certain amounts that would be included in forward-looking GAAP net (loss) income. We do not attempt to provide a reconciliation of forward-looking non-GAAP Adjusted EBITDA guidance to forward looking GAAP net (loss) income because forecasting the timing or amount of items that have not yet occurred and are out of our control is inherently uncertain and unavailable without unreasonable efforts. Further, we believe that such reconciliations would imply a degree of precision and certainty that could be confusing to investors. Such items could have a substantial impact on GAAP measures of financial performance.

The non-GAAP measures have limitations as analytical tools. We do not, nor do we suggest that investors should, consider such non-GAAP financial measures in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. Investors should also note that the non-GAAP financial measures we use may not be the same non-GAAP financial measures, and may not be calculated in the same manner, as that of other companies, including other companies in our industry.

The following tables present net revenues attributable to our reportable segments for the periods indicated:

Three Months Ended September Nine Months Ended September 30, 30,

2021 2020 2021 2020

(in thousands)

U.S. net $ 2,594,964 $ 3,274,872 $ 8,513,807 $ 8,901,559 revenue

International 526,119 564,698 1,942,420 1,572,746 net revenue

Total net $ 3,121,083 $ 3,839,570 $ 10,456,227 $ 10,474,305 revenue

The following table reflects the reconciliation of net (loss) income to Adjusted EBITDA for each of the periods indicated:

Three months ended Nine months ended September 30, September 30,

2021 2020 2021 2020

(in thousands)

Reconciliation of Adjusted EBITDA

Net (loss) income $ (78,021) $ 173,166 $ 70,641 $ 161,178

Depreciation and 81,917 72,575 240,154 208,532amortization

Equity-based compensation 88,932 76,683 263,541 211,376and related taxes

Interest expense, net 8,406 36,315 23,620 87,472

Other (income) expense, net (3,889) 13,584 1,657 10,720

Provision (benefit) for 3,706 (1,211) 5,833 414income taxes, net

Other (1) - - 12,212 3,956

Adjusted EBITDA $ 101,051 $ 371,112 $ 617,658 $ 683,648

(1)

In the nine months ended September 30, 2021, we recorded $12.2 million of customer service center impairment and other charges related to our plan to consolidate customer service centers. During the nine months ended September 30, 2020, we recorded $4.0 million in selling, operations, technology, general and administrative expenses for severance costs associated with February 2020 workforce reductions.

The following table presents Adjusted EBITDA attributable to our segments, and the reconciliation of net (loss) income to Adjusted EBITDA is presented in the preceding table:

In the nine months ended September 30, 2021, we recorded $12.2 million of customer service center impairment and other charges related to our(1) plan to consolidate customer service centers. During the nine months ended September 30, 2020, we recorded $4.0 million in selling, operations, technology, general and administrative expenses for severance costs associated with February 2020 workforce reductions.

The following table presents Adjusted EBITDA attributable to our segments, and the reconciliation of net (loss) income to Adjusted EBITDA is presented in the preceding table:

Three months ended Nine months ended September September 30, 30,

2021 2020 2021 2020

(in thousands)

Segment Adjusted EBITDA

U.S. $ 167,091 $ 377,007 $ 716,887 $ 766,486

International (66,040) (5,895) (99,229) (82,838)

Adjusted EBITDA $ 101,051 $ 371,112 $ 617,658 $ 683,648

A reconciliation of the numerator and denominator for diluted (loss) earnings per share, the most directly comparable GAAP financial measure, to the numerator and denominator for Adjusted Diluted Earnings per Share, in order to calculate Adjusted Diluted Earnings per Share is as follows:

Three months ended Nine months ended September 30, September 30,

2021 2020 2021 2020

(in thousands, except per share data)

Numerator:

Net (loss) income $ (78,021) $ 173,166 $ 70,641 $ 161,178

Effect of dilutive securities:

Interest expense(income) associated - 9,136 (1,568) - with convertible debtinstruments

Numerator for dilutedEPS - net (loss)income available to (78,021) 182,302 69,073 161,178 common stockholdersafter the effect ofdilutive securities

Adjustments to net (loss) income:

Interest expenseassociated with - 19,919 25,483 10,819 convertible debtinstruments

Equity-basedcompensation and 88,932 76,683 263,541 211,376 related taxes

Provision (benefit) 3,706 (1,211) 5,833 414 for income taxes, net

Other - - 12,212 3,956

Numerator for AdjustedDiluted EPS - Adjusted $ 14,617 $ 277,693 $ 376,142 $ 387,743 net income

Denominator:

Denominator for basicEPS - weighted-averagenumber of shares of 104,054 95,373 103,579 94,767 common stockoutstanding

Effect of dilutive securities:

Employee stock options - 24 6 32

Restricted stock units - 4,123 2,785 3,222

Convertible debt - 9,680 230 - instruments

Dilutive potential - 13,827 3,021 3,254 common shares

Denominator fordiluted EPS - adjustedweighted-averagenumber of shares of 104,054 109,200 106,600 98,021 common stockoutstanding after theeffect of dilutivesecurities

Adjustments to effectof dilutive securities:

Restricted stock units 2,011 - - -

Convertible debt - 11,330 15,551 4,740 instruments

Denominator forAdjusted Diluted EPS -adjustedweighted-averagenumber of shares of 106,065 120,530 122,151 102,761 common stockoutstanding after theeffect of dilutivesecurities

Diluted (Loss) $ (0.75) $ 1.67 $ 0.65 $ 1.64 Earnings per Share

Adjusted Diluted $ 0.14 $ 2.30 $ 3.08 $ 3.77 Earnings per Share

The following table presents a reconciliation of net cash from or for operating activities to Free Cash Flow for each of the periods indicated:

Three months ended Nine months ended September September 30, 30,

2021 2020 2021 2020

(in thousands)

Net cash (for) from $ (130,848) $ 331,027 $ 321,187 $ 1,209,988 operating activities

Purchase of property (28,521) (41,493) (77,593) (146,303) and equipment

Site and software (43,798) (34,506) (128,634) (109,678) development costs

Free Cash Flow $ (203,167) $ 255,028 $ 114,960 $ 954,007

View source version on businesswire.com: https://www.businesswire.com/news/home/20211104005164/en/

CONTACT: Media Relations Contact: Jane Carpenter, 617-502-7595 PR@wayfair.com

CONTACT: Investor Relations Contact: Jane Gelfand IR@wayfair.com