Wayfair beats Q2 estimates as U.S. demand drives 8.7% growth

Wayfair reported Q2 revenue of $3.52 billion, up 7.5 percent year over year, beating consensus of $3.47 billion as U.S. demand accelerated.

"We saw noteworthy outperformance from our specialty retail brands, which grew by nearly 20 percent in the second quarter, and Perigold, which grew by more than 35 percent," CEO Niraj Shah said.

Adjusted earnings came in at 95 cents per share, above the 89 cents analysts expected. Adjusted EBITDA reached $242 million, a 6.9 percent margin — the strongest since 2021 — while free cash flow hit $301 million, up more than 30 percent year over year and the best quarterly figure since Q2 2020.

Shares surged 18 percent in premarket trading. The company guided Q3 revenue to high-single-digit growth with adjusted EBITDA margin of 6 to 7 percent, as it continues to take share from brick-and-mortar rivals.

U.S. net revenue rose 8.7 percent to $3.13 billion, representing 88.8 percent of total revenue and the segment's strongest growth in the post-pandemic period. International revenue declined 1.3 percent to $394 million, with Canada and the U.K. facing softer consumer sentiment. Orders delivered totaled 10.6 million, up 6 percent year over year, while the active customer base expanded 3.3 percent to 21.7 million. Average order value rose to $332 from $328.

Metric	Actual	Consensus	Beat/Miss
Revenue	$3.52B	$3.47B	+1.4%
Adj. EPS	$0.95	$0.89	+$0.06
Adj. EBITDA	$242M	$230M	+5.2%

Gross margin came in at 30.0 percent, down 10 basis points year over year, while contribution margin improved 10 basis points to 15.3 percent. Advertising expenses fell to 11.1 percent of revenue, down roughly 30 basis points, and selling, operations, technology and G&A costs delivered 100 basis points of leverage at $361 million.

Perigold, Wayfair's luxury brand, crossed a roughly $400 million annual run-rate with more than 35 percent growth in Q2. Its customer base approached 400,000 active shoppers, up about 20 percent year over year, with those customers spending about three times what a typical Wayfair.com shopper spends annually. CFO Kate Gulliver credited gains to shoppers drawn away from traditional brick-and-mortar retailers, even as a stalled housing market continues to weigh on the broader category.

The company ended the quarter with $1.1 billion in cash and $1.6 billion in total liquidity. It issued $400 million of high-yield notes to retire remaining 2028 convertible debt, prompting Fitch to upgrade its credit rating by two notches. A $59 million loss on debt extinguishment drove a GAAP net loss of $1 million, compared with net income of $15 million a year earlier.

For Q3, Wayfair expects gross margin in a 29.5 percent to 30.5 percent band, likely at the low end as it reinvests in loyalty programs and customer experience. Advertising is guided to 10.5 percent to 11.5 percent of revenue, with SOTG&A between $360 million and $370 million.

The results show Wayfair's U.S. core is regaining momentum while international operations remain a drag. Investors will watch whether the company can sustain high-single-digit growth as it expands Perigold's physical store footprint to five new markets in 2027.

This article is for informational purposes only and does not constitute investment advice.