Yahoo Finance Wayfair (NYSE:W) Misses Q2 Revenue Estimates
Online home goods retailer Wayfair (NYSE: W) missed analysts' expectations in Q2 CY2024, with revenue down 1.7% year on year to $3.12 billion. It made a non-GAAP profit of $0.47 per share, improving from its profit of $0.21 per share in the same quarter last year.
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Wayfair (W) Q2 CY2024 Highlights:
Revenue: $3.12 billion vs analyst estimates of $3.18 billion (2% miss)
EPS (non-GAAP): $0.47 vs analyst expectations of $0.47 (1% miss)
Guidance to come on the earnings call, which moves the stock
Gross Margin (GAAP): 30.2%, down from 31.1% in the same quarter last year
Free Cash Flow of $183 million is up from -$193 million in the previous quarter
Active Customers: 22 million, in line with the same quarter last year
Market Capitalization: $6.64 billion
"Q2 was a dynamic quarter that resulted in another period of share gain, amid continued macro headwinds that are pressuring the ways customers are shopping the category. Customers remain cautious in their spending on the home, and our credit card data suggests that the category correction now mirrors the magnitude of the peak to trough decline the home furnishing space experienced during the great financial crisis," said Niraj Shah, CEO, co-founder and co-chairman, Wayfair.
Launched in 2002 by founder Niraj Shah, Wayfair (NYSE: W) is a leading online retailer for mass market home goods in the US, UK, Canada, and Germany.
Online Retail
Consumers ever rising demand for convenience, selection, and speed are secular engines underpinning ecommerce adoption. For years prior to Covid, ecommerce penetration as a percentage of overall retail would grow 1-2% annually, but in 2020 adoption accelerated by 5%, reaching 25%, as increased emphasis on convenience drove consumers to structurally buy more online. The surge in buying caused many online retailers to rapidly grow their logistics infrastructures, preparing them for further growth in the years ahead as consumer shopping habits continue to shift online.
Sales Growth
Wayfair's revenue has been declining over the last three years, dropping on average by 6.9% annually. This quarter, Wayfair reported a year on year revenue decline of 1.7%, missing analysts' expectations.
Ahead of the earnings results, analysts were projecting sales to grow 4.8% over the next 12 months.
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Usage Growth
As an online retailer, Wayfair generates revenue growth by expanding its number of buyers and the average order size in dollars.
Wayfair has been struggling to grow its active buyers, a key performance metric for the company. Over the last two years, its buyers have declined 7.5% annually to 22 million. This is one of the lowest rates of growth in the consumer internet sector.
Luckily, Wayfair added 200,000 active buyers in Q2, leading to 0.9% year-on-year growth.
Revenue Per Buyer
Average revenue per buyer (ARPB) is a critical metric to track for consumer internet businesses like Wayfair because it measures how much customers spend per order.
Wayfair's ARPB growth has been mediocre over the last two years, averaging 2.9%. Although its active buyers have shrunk during this time, the company's ability to increase prices shows that existing buyers still value its platform. This quarter, ARPB declined 0.9% year on year to $540 per buyer.
Key Takeaways from Wayfair's Q2 Results
We struggled to find many strong positives in these results. Its and its revenue growth was quite weak. Overall, this was a bad quarter for Wayfair. The stock traded down 4.9% to $51.75 immediately after reporting.
Wayfair may have had a tough quarter, but does that actually create an opportunity to invest right now? When making that decision, it's important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it's free.
