February 2025
To our Shareholders:
Thank you for your continued interest in Wayfair.
As always we are excited to share our thoughts with you here as we work to build Wayfair to its
full potential. For the last couple of years, our shareholder letters reflected on the recent past
and the Covid-era. This year our focus is on the present and the future; we want to start with
where we are today and share what we think is to come.
Navigating a Challenging Market
The home goods industry is inherently cyclical, but the past few years have been particularly
volatile. A confluence of macroeconomic factors - shifts in discretionary spending
post-pandemic, supply chain disruptions, and historically high mortgage rates - have
significantly impacted the housing market and, in turn, our category.
Despite these headwinds, our category remains vast, valued at over half a trillion dollars across
our four markets. As we reach what we believe is the bottom of this downcycle, we see
substantial opportunity for Wayfair to capture greater market share, grow revenue, and do so
while growing profit dollars. We will do this by being customer focused and execution oriented.
We have a tremendous amount of opportunity in front of us, and so we will be both incredibly
ambitious, and also very disciplined with respect to ruthless prioritization.
"Winners, win"
This is a favorite quote a friend of ours uses regularly. What this means to us is: (a) Resilience:
Overcoming setbacks and still achieving goals. (b) Execution: Turning ideas into reality and
delivering results. (c) Adaptability: Adjusting to market changes and staying ahead. and (d)
Continuous Improvement: Always seeking ways to grow and optimize.
Our plan in 2025 is to: (1) focus on tight execution to drive profitable growth through taking
market share in what is likely a continued challenging market, (2) continue improving the
1
financial position and strength of the business, and (3) invest in building the five long term
moats of the business. Here are some details:
(1) Focus on tight execution to drive profitable growth through taking market share in what is
likely a continued challenging market.
This is how we will do it:
● Enhance the core recipe (competitive prices, convenient and fast delivery, high in stock
availability) - an always-on activity, with a number of efforts underway such as reducing
retail pricing through new logistics cost gains, adding a number of convenience-oriented
home-specific delivery services such as ‘delivered assembled’, and working with
suppliers to drive up in-stock availability by concentrating on our curation programs.
● Go after the low hanging fruit - identify efforts where we are behind and that we can
accelerate through focus and execution to get an outsized return. On these things we
should be able to not just catch up, but do so quite rapidly. There is a list of efforts we
are prioritizing here, and each has an owner and dedicated resources. Some examples
include modernizing our merchandising platform, overhauling our B2B salesforce to
better service and grow larger accounts, and developing more nuanced promotions
capabilities, a beneficiary of tech resources now available post tech replatforming.
● Select a small number of high ROI efforts, and make sure to not only pursue them, but
as they reach sustained velocity, to then accelerate these initiatives so that they make a
meaningful impact. One example is Wayfair Verified, our merchant-led editorial program
where we select a finite set of great items, physically inspect them, and provide
customers with a discerning explanation of why these are quality items and ones that
represent great price-value. Wayfair Rewards is another of these efforts, where
customers gain benefits by making Wayfair their first stop for all things home, or physical
retail stores, such as the our first large format Wayfair store which opened outside of
Chicago last May.
The aggregate of this list is meaningful in its potential impact. We have selected the items,
defined ownership, set metrics, created a high frequency way to monitor & measure results, and
are off and running. One obvious question would be - why is this different from 2023 or 2024?
The main difference is that we spent the vast majority of our technology resources in those
years working on tech replatforming. Replatforming was a crucial step in evolving our tech
stack to a more scalable and flexible architecture. However, during this transition, we had
2
limited capacity to focus on developing features and functionalities that drive growth. Now that
the replatforming is far along we plan to use tech bandwidth to directly grow the business.
Product-led growth has always been a key piece of how we have succeeded.
(2) Continue improving the financial position and strength of the business.
For the first decade of the business, 2002 to 2011, we were net income positive and funded the
business from our own cash flow. We were incredibly growth oriented, did not take outside
capital, and bootstrapped ourselves from $0 to $500 million in annual sales. This led to a
decade of tremendous investment - including building a household brand in numerous
countries, creating our logistics network (~25 million square feet across ~75 buildings providing
an end-to-end logistics network optimized for the big and bulky goods we sell, to lower costs,
improve speed, and provide a convenient and easy experience to our customers), and scaling
our technology organization considerably. We ended 2019, pre-Covid with $9 billion in annual
revenue. We now have $12 billion in annual revenue, a streamlined cost base due to removing
$2+ billion of various costs, and a plan to grow revenue while growing profits.
Before we elaborate on our thinking, we do want to make one important point. We discuss
Adjusted EBITDA here because it is traditionally used in our industry. What we are optimizing
for is not solely Adjusted EBITDA, but rather a true measure of economic profitability. To
reiterate what we wrote in last year’s letter:
We think the true economic profitability of the business is best measured by our ability to
generate Adjusted EBITDA in excess of capital expenditures and equity-based
compensation, essentially treating all expenses as if they were cash paid at the moment
they are incurred. One of these expenses is equity based compensation, where we think
the best measure is share count. We aim to not only reduce the amount of dilution going
forward but ultimately reduce share count, thus accruing more benefit to all existing
shareholders. In tandem, we will compound growth in free cash flow (FCF) with
improving profitability and the working capital benefit that accrues as we grow. We
believe that the combination of FCF (growing) and share count (ultimately, shrinking) are
the two best ways to measure the financial success of the business.
We are now in a solid financial position where we can settle debts with cash as they
come due, and we are set to see earnings rise quickly as we return to growth. We intend
3
to keep working to make our operation more efficient while we pursue growth in tandem.
We expect that this will make Adjusted EBITDA, Net Income and FCF all grow over time.
We will maximize our Free Cash Flow while simultaneously tightly controlling and
ultimately reducing total share count, and treat this combination as our north star.
The main update we wanted to share is how we think the P&L evolves over time. We are on the
path to over 10% Adjusted EBITDA margins, but how, more specifically, does that play out?
Here are the major cost/margin lines that lead to EBITDA leverage in the P&L:
● SOTG&A (basically corporate overhead) will improve the fastest - this has been
happening for 2+ years during which we reduced expenses while revenue was roughly
flat. Today, we still have opportunities to reduce expenses, including some assisted by
Gen AI. However, the biggest factor is that we don't need to reinvest as revenue grows,
resulting in considerable leverage over time.
● Gross margin gains are happening and will show up over time - the nuance in this line is
that some gains are nearer-term and some longer-term. For a pair of nearer-term
examples, cost leverage from our CastleGate logistics network is significant as we grow
utilization, and continued growth in our supplier advertising (retail media) business will
grow gross margin. Examples that will happen further down the line include the scale
benefit we get from volume growth with suppliers, margin growth from our curation
programs as demand gets more concentrated, and overall margin improvement as our
emerging categories and specialty / luxury / professional / International businesses grow.
The gross margin line is a mix of all of these things.
● Advertising cost reductions will show up the slowest - this is because the improvements
in the business enable a new tranche of profitable advertising spend while demanding
the same payback as before. Leverage in overall advertising spend comes as the
portion of the base that is from loyal customers grows as a share of the total. We still
have a lot of new customers we can reach profitably (for all of our brands, including even
Wayfair.com where in 2024 at our first Wayfair physical retail store, the majority of
customers were new to file), and a large number of customers who are early in climbing
up the loyalty ladder. As we grow Wayfair Rewards, improve conversion via Wayfair
Verified, and enhance delivery services, more customers become interested in shopping
with us, and more start to climb up the ladder, and this productive spend offsets the
savings from those who climb up into the higher loyalty tiers. So the expectation that ad
cost by channel will only be run at tight paybacks is important and correct, but success
4
can lead to increased opportunity to profitably reach customers (with payback and profit
holding within the same multi-quarter basis), and so that is why this line is the slowest.
When you revisit the bridge we provided in the summer of 2023 on how EBITDA climbs to 10%+
(this slide is also in the investor presentation we published today), you can see that the route to
10%+ EBITDA from where we are today is even stronger now than it was then.
(3) Invest in building the five long term moats of the business.
We discussed these moats as the core of last year’s letter. These explain why Wayfair can be
the big winner in home, all while competing with very large retailers who at their core are
general merchandisers, or home improvement focused stores.
An astute observer will notice we changed this from 4 to 5 moats. The addition of how we work
with our suppliers is not new - we have done this from the earliest days of the business - but
rather is a recognition of the power of this difference and why we continually work to develop it.
These are 5 moats we are working to build and deepen:
1. A Trusted and Beloved Brand that is the Go-To Place for All Things Home: Wayfair’s
specialization and expertise within home provides us with unique capabilities to
understand and solve the significant challenges that customers face when shopping the
category which results in a platform that customers are loyal to and rely on as their first
stop for their most important purchases.
2. A Delivery Experience Built for Home: A proprietary logistics network and delivery
experience optimized for large and bulky home items that enables lower retails, faster
speed and higher customer satisfaction.
3. A Differentiated Customer Discovery Experience: We combine inspiration, curation, and
seamless navigation along with a powerful and trustworthy approach to product
validation - ensuring customers find exactly what they’re looking for and feel confident
that they will love what they buy.
4. A True Omni-Channel Experience: As we talked about in the letter last year, home is
unique. As a dominant retailer we will meet customers wherever they want to shop.
With a growing physical retail presence, Wayfair provides customers with the flexibility to
shop and engage with Wayfair how they want while ensuring seamless experiences
between on- and off-line.
5
5. A True Partnership with Our Suppliers: Wayfair invests in building strong and deep
relationships with our key suppliers - partnering with and empowering them to provide
our customers with a world class offering and thereby driving significant mutual growth.
Summary
We operate in a handful of countries with a handful of brands, all of which are focused on home
goods. The end market is over half a trillion dollars in these countries, and with $12 billion in
annual revenue, we are both a large player, and one with small absolute market share. The
market evolution of squeezing out the players in the middle who do not offer customer value has
picked back up - it was in full swing until Covid, then the low interest rate tide floated all boats -
and that is now over. Our opportunity to be the big winner in home is intact, and our ability to
organize around it and win through execution has never been better.
What do we need to do?
● Prioritize the things customers want
● Focus on what is in our control
● Ensure that our plans will drive profitable growth
● Leverage our tech strength as we are now moving past replatforming
● Make sure every dollar is worth spending
● Execute with rigor and speed
The plan is not hard, but executing it is not easy. We are thankful for the team we have. It is a
great team that is both a fun one to work alongside, but also a very capable one that can win.
And we thank you, our shareholders, for your interest and support.
Sincerely,
Niraj Shah
Co-Founder, Co-Chairman & CEO
Steve Conine
Co-Founder & Co-Chairman
6
Use of Non-GAAP Financial Measures: To supplement our consolidated financial statements presented in
accordance with generally accepted accounting principles ("GAAP"), we use certain non-GAAP financial
measures, including Adjusted EBITDA and Free Cash Flow. 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. Non-GAAP financial measures
should not be considered replacements for, and should be read together with, the most comparable
GAAP financial measures.
Adjusted EBITDA is a non-GAAP financial measure that is calculated as net income or loss before
depreciation and amortization, equity-based compensation and related taxes, interest income or expense,
net, other income or expense, net, provision or benefit for income taxes, net, non-recurring items and
other items not indicative of our ongoing operating performance. Adjusted EBITDA Margin is calculated
by dividing Adjusted EBITDA by Net Revenue.
Free Cash Flow is a non-GAAP financial measure that is calculated as net cash provided by or used in
operating activities less net cash used to purchase property and equipment and site and software
development costs.
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 income or loss. We do not attempt to
provide a reconciliation of forward-looking non-GAAP Adjusted EBITDA guidance to forward looking
GAAP net income or loss 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.
For full financial data and non-GAAP reconciliations, please refer to Wayfair’s earnings release issued on
February 20, 2025, available at https://investor.wayfair.com/reporting/quarterly-results/default.aspx.
Caution concerning forward-looking statements: This letter contains forward-looking statements within the
meaning of federal and state securities laws. All statements other than statements of historical fact
contained in this letter —including statements regarding our future results of operations and financial
position, business and capital markets strategy and plans, profitability goals and the financial impact and
expected savings of our cost efficiency plan, and objectives of management for future operations—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,” “goals,” “aim,” “target,”
“projects,” “contemplates,” “believes,” “estimates,” “predicts,” “potential,” or “continue,” or the negative of
these terms or other similar expressions. You are cautioned not to rely on these forward-looking
statements, which are based on current expectations of future events. For important information about the
risks and uncertainties that could cause actual results to vary materially from the assumptions,
expectations, and projections expressed in any forward-looking statements, please review the
“Forward-Looking Statements” section of the Wayfair earnings release issued on February 20, 2025 as
well as the most recently filed Wayfair Reports on Forms 10-K and 10-Q. Wayfair does not undertake to
update any forward-looking statement as a result of new information or future events or developments.
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K
☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the fiscal year ended December 31, 2024
OR
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the transition period from to
Commission File Number: 001-36666
Wayfair Inc.
(Exact name of registrant as specified in its charter)
Delaware
36-4791999
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification Number)
4 Copley Place
Boston,
MA
02116
(Address of principal executive offices)
(Zip Code)
(617) 532-6100
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading symbol(s)
Name of each exchange on which registered
Class A Common Stock, $0.001 par value
W
The New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
None.
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☒ No ☐
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject
to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to
Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to
submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting
company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and
“emerging growth company” in Rule 12b-2 of the Exchange Act:
Large Accelerated Filer
☒Accelerated filer
☐
Non-accelerated filer
☐Smaller reporting company
☐
Emerging growth company
☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its
internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm
that prepared or issued its audit report. ☒
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant
included in the filing reflect the correction of an error to previously issued financial statements. o
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based
compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
Table of Contents
1
The aggregate market value of the voting and non-voting common equity held by non-affiliates as of June 30, 2024 computed by reference
to the closing sale price of $52.73 per share as reported on the New York Stock Exchange on that date was $5.0 billion.
Class
Outstanding at February 13, 2025
Class A Common Stock, $0.001 par value per share
102,246,216
Class B Common Stock, $0.001 par value per share
24,658,295
DOCUMENTS INCORPORATED BY REFERENCE
Certain sections of the registrant's definitive Proxy Statement for the 2025 Annual Meeting of Stockholders to be filed with the Securities and
Exchange Commission pursuant to Rule 14A not later than 120 days after the end of this fiscal year covered by this Form 10-K are incorporated by
reference into Part III of this Form 10-K.
Table of Contents
2
Wayfair Inc.
Annual Report on Form 10-K
For the Year Ended December 31, 2024
TABLE OF CONTENTS
Page
Forward-Looking Statements
4
Summary of the Material Risks Associated with our Business
5
PART I
Item 1.
Business
7
Item 1A.
Risk Factors
12
Item 1B.
Unresolved Staff Comments
36
Item 1C.
Cybersecurity
36
Item 2.
Properties
38
Item 3.
Legal Proceedings
38
Item 4.
Mine Safety Disclosures
38
PART II
Item 5.
Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity
Securities
38
Item 6.
Reserved
39
Item 7.
Management's Discussion and Analysis of Financial Condition and Results of Operations
39
Item 7A.
Quantitative and Qualitative Disclosures About Market Risk
54
Item 8.
Financial Statements and Supplementary Data
55
Item 9.
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
92
Item 9A.
Controls and Procedures
92
Item 9B.
Other Information
94
Item 9C.
Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
94
PART III
Item 10.
Directors, Executive Officers and Corporate Governance
94
Item 11.
Executive Compensation
94
Item 12.
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
94
Item 13.
Certain Relationships and Related Transactions, and Director Independence
94
Item 14.
Principal Accountant Fees and Services
94
PART IV
Item 15.
Exhibit and Financial Statement Schedules
94
Item 16.
Form 10-K Summary
95
EXHIBIT INDEX
95
SIGNATURES
101
3
Forward-Looking Statements
This Annual Report on Form 10-K contains forward-looking statements within the meaning of Section 27A of the Securities
Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the
“Exchange Act”). All statements other than statements of historical fact contained in this Annual Report on Form 10-K, including
statements regarding our investment plans and anticipated returns on those investments, our future customer growth, our future
results of operations and financial position, including our exit from the German market, available liquidity and access to financing
sources, our business strategy, plans and objectives of management for future operations, including our international growth and
omni-channel strategy, consumer activity and behaviors, developments in our technology and systems and anticipated results of
those developments, and the impact of macroeconomic events, including interest rates and inflation, and our response to such
events, are forward-looking statements. In some cases, you can identify forward-looking statements by terms such as “aim,”
“may,” “will,” “should,” “expects,” “plans,” “anticipates,” “continues,” “could,” “intends,” “goals,” “target,” “projects,”
“contemplates,” “believes,” “estimates,” “predicts” or “potential” 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 Wayfair’s 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
Annual Report on Form 10-K and, except as required by applicable law, we undertake no obligation to publicly update or revise
any forward-looking statements, whether as a result of any new information, future events or otherwise.
Factors that could cause or contribute to differences in our future results include, without limitation, the following:
•
adverse macroeconomic conditions, including economic instability, changes in tax laws, regulations and new or
increased tariffs, including based on the recent U.S. presidential election, export controls, sustained higher interest rates,
inflation, slower growth or the potential for recession, disruptions in the global supply chain and other conditions
affecting the retail environment for products we sell, and other matters that influence consumer spending and
preferences, as well as our ability to plan for and respond to the impact of these conditions;
•
our ability to manage the impacts of our restructurings and workforce reductions, including our exit from the German
market;
•
our ability to acquire and retain customers in a cost-effective manner;
•
our ability to increase our net revenue per active customer;
•
our ability to build and maintain strong brands;
•
our ability to manage our growth initiatives;
•
our ability to expand our business and compete successfully;
•
disruptions, capacity constraints or inefficiencies in our information systems network, or any potential cybersecurity
incident;
•
geopolitical events, natural disasters, public health emergencies, civil disturbances and terrorist attacks; and
•
developments in, and the outcome of, legal and regulatory proceedings and investigations to which we are a party or are
subject, and the liabilities, obligations and expenses, if any, that we may incur in connection therewith.
A further list and description of risks, uncertainties and other factors that could cause or contribute to differences in our
future results include the cautionary statements in this Annual Report on Form 10-K and in our other filings with the Securities
and Exchange Commission. We qualify all of our forward-looking statements by these cautionary statements.
Table of Contents
4
SUMMARY OF THE MATERIAL RISKS ASSOCIATED WITH OUR BUSINESS
Our business is subject to a number of risks that could adversely affect our business, financial condition and operating results.
These risks are discussed more fully below and include, but are not limited to, risks related to:
Risks Related to Macroeconomic Conditions and Industry Trends
•
Global economic conditions may have a material adverse effect on our business, results of operations and financial
condition.
•
Changes in consumer confidence and spending due to economic conditions on a global level or in particular markets,
geopolitical uncertainty, and other factors may adversely affect our financial performance.
•
We are subject to risks from changes to trade policies, including tariff and import/export regulations by the U.S. and/or
other foreign governments.
•
Our results could be adversely affected by events beyond our control, such as natural disasters, public health crises,
political crises, negative global climate patterns, or other catastrophic events.
Risks Related to Our Business and Industry
•
If we fail to manage our growth effectively, our business, financial condition and operating results could be harmed.
•
If we fail to acquire new customers, reactivate prior customers or retain existing customers, or fail to do so in a cost-
effective manner, our business, financial condition and operating results could be harmed.
•
Our success depends in part on our ability to increase our net revenue per active customer. If our efforts to increase
customer loyalty and repeat purchasing as well as maintain high levels of customer engagement are not successful, our
growth prospects and net revenue will be materially adversely affected.
•
Our business depends on our ability to build and maintain strong brands. We may not be able to maintain and enhance
our brands if we receive unfavorable customer complaints, negative publicity or otherwise fail to live up to consumers'
expectations, which could materially adversely affect our business, results of operations and growth prospects.
•
Our aspirations and disclosures related to corporate responsibility matters expose us to risks that could adversely affect
our reputation and performance.
•
Our expansion into physical retail stores may not achieve sales or operations targets and may negatively impact our
financial results.
•
Our efforts to expand our business into new brands, channels, products, programs, services, technologies and geographic
markets will subject us to additional business, legal, financial and competitive risks and may not be successful.
•
Our international operations subject us to various additional legal, regulatory, financial and other risks.
•
We have had a history of losses and we may be unable to achieve or sustain profitability and positive cash flow in the
future as we continue to expand our business.
•
System interruptions that impair customer access to our sites or other performance failures or incidents involving our
logistics network, our technology infrastructure or our critical technology partners could damage our business, reputation
and brand and substantially harm our business and results of operations.
•
Our reliance on single service providers for certain business operations may result in disruptions to our business and
adversely affect our financial results.
•
A cybersecurity attack, data breach or other security incident could impact our sites, networks, systems, platforms,
confidential information and assets causing damage and substantial harm to our business and operating results, reputation
and brand, and resulting in proceedings or actions against us by government regulatory bodies or private parties.
•
Our failure to operate effectively in a highly competitive and evolving industry could have a material adverse effect on
our business.
Table of Contents
5
•
Our marketing efforts to help grow our business may not be effective, and failure to effectively develop and expand our
sales and marketing capabilities could harm our ability to increase our customer base and achieve broader market
acceptance of our e-commerce and omnichannel approach to shopping for home goods.
•
We may be subject to product liability and other similar claims and lawsuits if people or property are harmed by the
products we sell.
•
Risks associated with the suppliers from whom our products are sourced could materially adversely affect our financial
performance as well as our reputation and brand.
•
We depend on our suppliers and other third parties, including logistics service providers, customs brokers and carriers, to
perform certain services regarding the products that we offer.
•
Our business may be adversely affected if we are unable to respond and adapt to rapid changes in technology.
•
We rely on the performance of members of management and highly skilled personnel, and if we are unable to attract,
develop, motivate and retain well-qualified employees, our business could be harmed.
•
We may not be able to adequately protect our intellectual property rights.
Risks Related to Our Indebtedness and Capital Raising
•
Our outstanding indebtedness, or additional indebtedness that we may incur, could limit our operating flexibility and
adversely affect our financial condition.
Risks Related to Laws and Regulations
•
Government regulation of the Internet and e-commerce is evolving, and unfavorable changes or failure by us to comply
with these regulations could substantially harm our business and operating results.
•
Failure to comply with federal, state and international laws and regulations relating to privacy, data protection and
consumer protection, or the expansion of current, or the enactment of new laws or regulations relating to privacy, data
protection and consumer protection, could adversely affect our business reputation and our financial condition.
•
If the use of “cookie” tracking technologies is further restricted, regulated, or blocked, or if changes in technology cause
cookies to become less reliable or acceptable as a means of tracking consumer behavior, the amount or accuracy of
Internet user information we collect would decrease, which could harm our business and operating results.
•
Our amended and restated bylaws (“Bylaws”) and our amended and restated certificate of incorporation (“Charter”)
generally provide that the Court of Chancery for the State of Delaware will be the exclusive forum for certain legal
actions concerning the internal affairs of Wayfair, including but not limited to stockholder derivative litigation, and our
Bylaws provide that the United States (“U.S.”) federal district courts will be the exclusive forum for legal actions arising
under the Securities Act, which could increase costs to such claims, discourage such claims or limit the ability of
Wayfair’s stockholders to bring such claims in a judicial forum viewed by the stockholders as more favorable.
Risks Related to Ownership of our Class A Common Stock
•
The price of our Class A common stock has been and may in the future be volatile. This volatility may affect the price at
which you could sell your Class A common stock, and the sale of substantial amounts of our Class A common stock
could adversely affect the price of our Class A common stock.
•
The dual class structure of our common stock has the effect of concentrating voting control with our co-founders, which
will limit your ability to influence corporate matters.
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PART I
Item 1. Business
Overview
Wayfair is the destination for all things home. Through our e-commerce platform, we offer customers visually inspired
browsing, compelling merchandising, easy product discovery and attractive prices. We are focused on bringing our customers an
experience that is at the forefront of shopping for the home online. Our customers span a wide range of demographics, with
annual household incomes ranging from $25,000 to over $250,000, and also include business professionals, from small startups to
global enterprises. Our selections of furniture, décor, housewares and home improvement products appeal to our customers’
different tastes, styles, purchasing goals and budgets when shopping for their homes and businesses.
To meet our customers where they are, we offer a family of sites, each with a unique brand identity that offers a tailored
shopping experience and rich product selection to a different target audience.
•
Wayfair: Every style. Every home.
•
AllModern: Modern made simple.
•
Birch Lane: Classic style for joyful living.
•
Joss & Main: The ultimate style edit for home.
•
Perigold: The destination for luxury home.
•
Wayfair Professional: A one-stop Pro shop.
Wayfair represents a significant majority of our net revenue and is currently the only one of our sites that also operates
internationally, operating as Wayfair.ca in Canada, Wayfair.co.uk in the United Kingdom and Wayfair.ie in Ireland. Wayfair also
operated Wayfair.de in Germany until we exited the German market on January 10, 2025 (the “Germany Restructuring”). For
more information on the Germany Restructuring, see Note 14, Subsequent Events , in the notes to the consolidated financial
statements, included in Part II, Item 8, Financial Statements and Supplementary Data, in this Annual Report on Form 10-K.
On our sites, we also feature certain products under our house brands, such as Three Posts® and Mercury Row®. Through
these house brands, which feature curated selections refined by style and price point, we help our customers navigate our vast
product assortment to find items that uniquely match their needs.
The delivery experience and overall customer service we offer our shoppers are central to our business. The majority of our
products are shipped to customers directly from our suppliers with an increasing proportion flowing through our own logistics
network. We have invested considerably in our logistics network and leverage these capabilities to improve the experience for
both customers and suppliers. This network consists of CastleGate and the Wayfair Delivery Network (“WDN”). We also offer
inbound services via CastleGate Forwarding (“CGF”). Our CastleGate facilities enable suppliers to forward-position their
inventory in our warehouses, allowing us to offer faster delivery. Through WDN, we can directly manage large parcel deliveries
via consolidation centers, cross docks and last mile delivery facilities, which, alongside CastleGate, enables us to speed up
deliveries, decrease our reliance on third parties and undertake efforts to reduce damage. Our CGF services allow our suppliers to
unlock efficiencies on inbound logistics, including through Asia-based product consolidation and port-to-door freight forwarding
solutions, which ultimately result in faster deliveries to our customers. We believe these investments in logistics capabilities result
in an enhanced experience for our customers and suppliers. In addition to logistics, we offer a range of supplemental media
services in support of a seamless selling experience for suppliers. We also believe providing superior customer service is key to
delighting our customers. Our global customer service locations are staffed with over 2,000 full-time highly-trained sales and
service employees.
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Our Growth Strategy
Our goal is to further increase our leadership in the home goods market by pursuing the following key strategies:
•
continue to build our brands by delighting our customers;
•
increase repeat purchases from existing customers and acquire new customers;
•
invest in technology to further improve our customer and supplier experiences;
•
grow certain categories where we under-index the broader home goods market today;
•
engage with our customers through our loyalty program;
•
increase delivery speed and improve the delivery experience for our customers through the continued build-out
of our proprietary logistics network;
•
continue to grow internationally;
•
continue to execute our omni-channel strategy with the launch of physical retail stores across our family of
brands; and
•
opportunistically pursue strategic acquisitions.
As used herein, “Wayfair,” “the company,” “we,” “us,” “our” and similar terms refer to Wayfair Inc. and its subsidiaries,
unless the context indicates otherwise.
Segments
Our operating and reportable segments are the United States (“U.S.”) and International, which includes our businesses in
Canada, the United Kingdom, Ireland and Germany (through January 10, 2025). See Note 13, Segment and Geographic
Information, in the notes to the consolidated financial statements, included in Part II, Item 8, Financial Statements and
Supplementary Data, in this Annual Report on Form 10-K. Net revenue of the U.S. segment represented 88% of consolidated net
revenue for the year ended December 31, 2024.
Our Industry
The home goods market is large and characterized by specific consumer trends, structural challenges and market dynamics
that are shaping the future of our industry.
Why Home is Different
Home is shopped differently than other retail verticals. Homes are personal expressions of self and identity, which is why
many consumers seek uniqueness, crave originality and enjoy the feeling created by home design, furniture and décor. Consumers
shopping for home goods often cannot articulate exactly what they are looking for and they rarely know the names of the
manufacturer brands they like, as the category is largely unbranded. We believe search-based websites have difficulty serving
customers shopping for home products in this more emotional, visual and inspirational manner.
When shopping for the home, consumers desire uniqueness, which requires vast selection. In the market for home goods,
consumers with different tastes, styles, purchasing goals and budgets require a broad selection of products and choices.
Traditional brick and mortar home goods retailers must balance scale of selection with the challenges of high inventory carrying
costs and limited showroom and storage space - as a result, consumers must shop multiple stores in order to browse and access a
vast selection of products. Other e-commerce retailers that sell home goods typically focus their shopping experiences around
keyword search, instead of a browse-oriented journey that encourages discovery. We believe the lack of an easy-to-browse, one-
stop shopping experience with massive selection has led to consumer dissatisfaction with home goods shopping both online and
off.
Logistics, fulfillment and customer service for home goods products are challenging given the variety of categories and
price points and the mix of heavy and bulky items. Home goods often have a low dollar value to weight ratio compared to other
categories of retail, therefore requiring a robust and reliable logistics network that is optimized for items with those
characteristics. Many consumers also seek first-rate customer service so they are not burdened with managing delivery, shipping
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and return logistics on their own. However, we believe big box retailers that serve the mass market for home goods are often
unable or unwilling to provide this level of service.
Key Benefits for Our Customers
We offer a broad selection and choice. We have one of the largest online selections of furniture, décor, housewares and
home improvement products, with over 30 million products from over 20 thousand suppliers. We have built a portfolio of over
one hundred house brands, which offer curated brand experience, making it easier for customers to discover styles, products and
price points that appeal to them.
Convenience and value are central to our offering. We are a one-stop shop for consumers in the home goods category, with
competitive pricing reflecting the many supplier participants on our platform and a differentiated and robust merchandising
experience. For items shipped from our CastleGate warehouses, we are able to deliver many products to a majority of the U.S.
population in two days or less.
We give customers inspirational content and an engaging shopping journey. To inspire customers, we produce beautiful
imagery and highly-tailored editorial content both in house and through third parties. We use personalization to create a more
engaging consumer experience and we allow customers to create looks they love with tools such as our Room Ideas. More than
half of the traffic coming to Wayfair.com is from mobile devices and our investment in mobile allows us to deliver value,
convenience and inspiration to consumers anytime and anywhere. Our mobile app also offers customers a powerful way to shop
for their home from their home using our “View in Room 3D” augmented reality tool.
We support our customers' shopping journey from start to finish through everything from financing solutions to customer
support. Our private label and co-branded credit cards build loyalty and encourage repeat shopping with cash back rewards.
Wayfair Rewards, our recently introduced membership program, also encourages repeat shopping. Membership provides cash
back rewards, as well as other benefits, including free shipping, access to member only sales, and special offer and perks,
designed to enhance the customer shopping experience and build long-term loyalty.
Superior customer service is a core part of the experience we offer shoppers. Our customer service organization has over
2,000 full-time employees who help consumers navigate our sites, answer questions and complete orders, and offers specialists
focused on specific product classes. This team helps us build trust with consumers, build our brand awareness, enhance our
reputation and drive sales.
Key Benefits for Our Suppliers
We give suppliers cost-effective access to our large customer base. We sell products from over 20 thousand suppliers, many
of which are small, family-run operations without well-known product brands and without easy retail access to a large customer
base. We provide our suppliers with access to our large customer base, with 21 million active customers over the last twelve
months, enabling our suppliers to increase their sales and access the growing e-commerce market.
Suppliers can leverage our technological expertise to enhance their success on our platform. Our technology platform is
designed to allow suppliers to easily provide us with their full product selection and to highlight selected products for customers
on our sites. We offer our suppliers a view of our demand and inventory needs via powerful data and analytics. Suppliers are also
able to enhance their media and merchandising by using additional services provided by Wayfair, including through sponsored
content. We believe many of our suppliers have increased their sales through our technology platform, which has strengthened
their loyalty to us.
Our logistics infrastructure allows us to ship directly to our customers from our suppliers or from our CastleGate
warehouses. This fulfillment network is a key component of our custom-built and seamlessly integrated technology and
operational platform.
Technology
We have custom-built large portions of our technology and operational platform to deliver the best experience for both our
customers and suppliers. Our success has been built on a culture of data-driven decision-making, operational discipline and an
unwavering focus on the customer. We believe that our internal control of our technology systems, which gives us the ability to
update them often, is a competitive advantage.
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Our team of engineers and data scientists has built a full set of technology solutions specific to the home goods market. Our
storefront consists of a large set of tools and systems with which our customers directly interact, that are specifically tuned for
shopping the home goods category by mixing lifestyle imagery with easy-to-use navigation tools and personalization features
designed to increase customer conversion. We have designed operations software to deliver the reliable and consistent experience
consumers desire, with proprietary software enhancing our performance in areas such as integration with our suppliers, our
warehouse and logistics network and our customer service operation. Much of our advertising technology was internally
developed, including campaign management and bidding algorithms for online advertising. This allows us to leverage our internal
data and target customers efficiently across various channels. We also partner selectively with marketing partners where we find
solutions that meet our marketing objectives and deliver a strong return on investment.
Much of the underlying infrastructure for storefront, operations and advertising technology is common across all of our
sites and countries. We have transitioned most of our data storage and processing systems from our physical data centers to a
cloud-based solution.
Marketing
We use a variety of marketing and advertising efforts to drive customer engagement across all of our channels, strengthen
and reinforce brand and product awareness, as well as attract new customers and encourage repeat purchases from existing
customers. Our paid advertising efforts consist primarily of online channels, including search engine marketing, display
advertising and paid social media, and to a lesser extent direct mail and television advertisements. Our non-paid advertising
efforts include search engine optimization, non-paid social media, mobile “push” notifications and email. Upon acquiring a
customer or a potential customer's email address, we seek to increase their engagement with our sites and drive repeat purchases.
This effort to increase engagement and repeat purchasing is driven by all of our marketing tools, including personalized email
marketing efforts and customer retargeting. We rigorously manage our paid marketing efforts towards the goal that each new
spending initiative is cost-effective with a measurable return on investment within a designated period of time.
Logistics
Our logistics network was built specifically for the home category, where items can be bulky, heavy and prone to damage.
Our primary method of fulfillment is a drop-ship network where integration into our suppliers' back-end technology infrastructure
allows us to process an order and send the information directly to a supplier's warehouse. We arrange for shipment from the
loading dock of the supplier's warehouse to the customer's home. Depending on the size of the package, the delivery is made
either primarily through FedEx, for our small parcel products, or third-party line haul trucking companies for our large parcel
products and third-party last mile home delivery agents.
We have also been growing the percentage of our customer orders that are shipped from our CastleGate warehouses over
the last several years. This is facilitated by our CastleGate Forwarding services, offering inbound freight, drayage and ocean
services for suppliers sending products from Asia with direct delivery to CastleGate locations. The majority of large parcel items
are delivered to the customer through our WDN, which includes consolidation centers, cross docks and last mile delivery
facilities. We believe that our proprietary logistics network has and will continue to help drive incremental sales by delighting our
customers with faster delivery times, lower prices and a better home delivery experience.
Competition
The market for online home goods and furniture is highly competitive, fragmented and rapidly changing. While we are
primarily focused on the mass market, we compete across all segments of the home goods market. Our competition includes
furniture stores, big box retailers, department stores, specialty retailers and online retailers and marketplaces in the U.S., Canada,
the United Kingdom and Ireland, including:
•
Furniture Stores: American Freight, Ashley Furniture, Bob's Discount Furniture, Havertys, Raymour & Flanigan
and Rooms To Go;
•
Big Box Retailers: Home Depot, IKEA, Lowe's, Target and Walmart;
•
Department Stores: JCPenney, Macy's and Neiman Marcus;
•
Specialty Retailers: Arhaus, At Home, Container Store, Crate and Barrel, Design Within Reach, Ethan Allen, Floor
& Decor, LL Flooring, Restoration Hardware, Room & Board, Serena & Lily, TJX Companies and Williams
Sonoma;
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•
Online Retailers and Marketplaces: Amazon, Build.com, Houzz, eBay, Etsy and Bed Bath & Beyond;
•
International: Argos, Canadian Tire, John Lewis, Leon's, and Next in addition to several of the companies listed
above who also compete with us internationally.
We believe that the primary competitive factors in the mass market are vast selection, visually inspiring browsing,
compelling merchandising, ease of product discovery, price, convenience, reliability, speed of fulfillment and customer service.
We believe our technological and operational expertise allows us to provide our customers with a vast selection of goods,
attractive price points, reliable and timely fulfillment, plus superior customer service and that the combination of these capabilities
is what provides us with a sustainable competitive advantage.
Human Capital and Corporate Responsibility
At Wayfair, we believe strongly in our people. Supporting our employees has always been central to our work and we
believe that it is important that all employees feel welcome and are able to bring their full selves to work every day.
We believe we have a good relationship with our employees, which includes approximately 13,500 employees, of whom
approximately 12,100 were full-time equivalents, as of December 31, 2024. Our reported headcount includes the approximately
730 employees impacted by the Germany Restructuring, although we expect approximately half of these positions to relocate to
other corporate offices. Additionally, we rely on independent contractors and temporary personnel to supplement our workforce,
primarily in our logistics network. None of our employees are represented by a labor union or covered by a collective bargaining
agreement.
Compensation and Benefits
Wayfair’s overall compensation program is structured to attract, motivate and retain highly qualified talent by paying
competitively and equitably, including offering market-competitive salaries, equity and benefits. Our full-time employees are
eligible to receive, subject to the satisfaction of certain eligibility requirements, our comprehensive benefits package including life
and health (medical, dental and vision) insurance, a 401(k) retirement plan, where we provide matching contributions competitive
with those provided by our peers, paid parental leave, paid time off and a discount off of purchases made through our family of
sites.
Health, Well-Being and Safety
Wayfair is committed to protecting our team members’ health and wellness. Our programs focus on supporting our
employees’ health and wellness needs. We also provide benefits and resources to employees aimed at addressing stress, burnout
and mental health and the promotion of self-care. Maintaining a safe work environment is also important to us, and our
management team reaffirms our objectives each year to our frontline employees through our annual Commitment to Safety
Statement. Our efforts include incident and hazard reporting, standard operating procedures aimed at reducing risk of injury,
training, promotion of best practices, and measurement of key safety metrics.
Corporate Responsibility
As a multinational retailer with a global supply chain, Wayfair is committed to responsible practices across our business—
from showcasing more sustainable products through our Shop Sustainably program, to implementing waste reduction initiatives,
lowering emissions and adopting sustainable business practices. We have established and publicly announced our goals to achieve
zero waste (90%+ waste diversion from landfill and incineration) across Wayfair operations globally by 2030 and to reduce our
Scope 1 and 2 greenhouse gas emissions by 63% by 2035 compared to a 2020 baseline. This past year, Wayfair made progress
towards our emission goal by joining a second aggregated virtual power purchase agreement. As part of this agreement, Wayfair
is contracted to offtake 20 MW of power annually from the solar project. Wayfair also continues to evaluate and incorporate
energy efficiency features across its global facilities. Building on the initial success of our Shop Sustainably program, we have
expanded the number of suppliers’ products that meet the standards for one or more of the third-party certifications included in
this program. These certifications include energy or water efficiency, sustainably sourced wood, organic textile use, or Fair Trade
Certified™.
More Information
Additional information about our human capital management efforts can be found on our investor website at
investor.wayfair.com. The information on our website is not, and shall not be deemed to be, a part hereof or incorporated into this
or any of our other filings with the SEC, and the reference to our website is intended to be an inactive textual reference only.
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Government Regulation
We are subject to domestic and foreign laws and regulations regarding general business, as well as laws and regulations
governing the Internet and e-commerce, many of which are still evolving. Adverse legal or regulatory developments could
substantially harm our business. Additional information regarding laws and regulations applicable to our business is set forth in
Part I, Item 1A, Risk Factors, in this Annual Report on Form 10-K.
Seasonality
Our business is affected by seasonality, which historically has resulted in higher sales volume during our fourth quarter,
which ends December 31 and includes the November and December holiday sales period.
Intellectual Property
We believe our intellectual property, including any trademarks, service marks, copyrights, domain names, patents, trade
dress, trade secrets and proprietary technologies, is an important part of our business. We seek to protect our intellectual property
by relying on federal, state and common law rights in the United States and other countries, as well as contractual restrictions. We
generally enter into confidentiality and assignment of invention assignment agreements with employees and certain contractors
and confidentiality agreements with other third parties, such as suppliers, in order to limit access to, and disclosure and use of, our
confidential information and proprietary technology. In addition to these contractual arrangements, we also rely on a combination
of trademarks, trade dress, domain names, copyrights, trade secrets and patents to help protect our other intellectual property.
Available Information
We encourage investors to use our investor relations website, investor.wayfair.com, to find information about us. We
promptly make available on this website, free of charge, the reports that we file or furnish with the Securities and Exchange
Commission (“SEC”), as well as corporate governance information (including our Code of Business Conduct and Ethics). We file
annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, proxy and information statements
and amendments to reports filed or furnished pursuant to Sections 13(a), 14 and 15(d) of the Securities Exchange Act of 1934, as
amended (the “Exchange Act”). The SEC maintains a website at www.sec.gov that contains reports, proxy and information
statements and other information regarding Wayfair and other issuers that file electronically with the SEC.
Investors should note that we currently announce material information to our investors and others using filings with the
SEC, press releases, public conference calls, webcasts, or our investor relations website (investor.wayfair.com). Information that
we post on our investor relations website could be deemed material to investors. We encourage investors, the media, and others
interested in us to review the information we post on these channels. The information on our website is not, and shall not be
deemed to be, a part hereof or incorporated into this or any of our other filings with the SEC, and any reference to our website is
intended to be an inactive textual reference only.
Item 1A. Risk Factors
Our operations and financial results are subject to various risks and uncertainties, including those described below, which
should be read in conjunction with Item 7, Management’s Discussion and Analysis of Financial Condition and Results of
Operations in this Annual Report on Form 10-K. Our business may also be adversely affected by risks and uncertainties not
presently known to us or that we currently believe to be immaterial. If any of the events contemplated by the following discussion
of risks should occur or other risks arise or develop, our business, which includes our prospects, financial condition and results
of operations, the trading prices of our securities and our reputation, may be adversely affected.
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Risks Related to Macroeconomic Conditions and Industry Trends
Global economic conditions may have a material adverse effect on our business, results of operations and financial
condition.
Uncertainties in global economic conditions that are beyond our control have in the past impacted our business and may in
the future materially adversely affect our business, results of operations, financial condition and stock price. These adverse
conditions include economic instability, changes in tax laws, regulations and new or increased tariffs, including retaliatory tariffs,
export controls, the impacts of inflation, slower growth or recession, sustained higher interest rates, high unemployment,
decreased consumer confidence in the economy, armed hostilities, such as the ongoing conflicts between Russia and Ukraine, and
other events related thereto, such as economic sanctions and trade restrictions, geopolitical tensions in China and other regions,
foreign currency exchange rate fluctuations, conditions affecting the retail environment for products we sell, and other unexpected
events, including public health crises.
A downturn in the economic environment can also lead to financial instability, increased credit and collectability risk on our
receivables, the failure of important partners, including suppliers, logistics providers, derivative counterparties and other financial
institutions, limitations on our ability to issue new debt, reduced liquidity and declines in the fair value of our financial
instruments. These and other economic factors can materially adversely affect our business, results of operations, financial
condition and stock price.
Changes in consumer confidence and spending due to economic conditions on a global level or in particular markets,
geopolitical uncertainty, and other factors may adversely affect our financial performance.
Our business depends on consumer demand for our products. As a result, we believe that our sales are sensitive to a number
of factors that influence consumer confidence and spending, both on a global level and in particular markets, that can, in turn,
affect our business or the home goods industry generally. These factors include, among others, financial market volatility,
inflationary pressures, the impacts of tariffs, negative financial news, conditions in the real estate and mortgage markets, including
home equity loans and consumer credit, changes in net worth based on market changes and uncertainty, energy shortages and cost
increases, labor and healthcare costs, government actions and general uncertainty regarding the overall future economic
environment. Consumers may view a substantial portion of the products we offer as discretionary items rather than necessities. As
a result, our operating results are sensitive to changes in macroeconomic conditions that impact consumer spending, including
discretionary spending. Declines in consumer spending have in the past resulted, and in the future may result, in decreased
demand for our products and services which may have an adverse effect on our results of operations.
We are subject to risks from changes to the trade policies, including tariff and import/export regulations by the U.S. and/
or other foreign governments.
Changes in trade policy, including trade restrictions, new or increased tariffs or quotas, embargoes, sanctions and
countersanctions, safeguards or customs restrictions by the U.S. and/or other foreign governments could have a material adverse
impact on our business. The imposition of new tariffs or increases in existing tariffs on products imported from countries where
we or our suppliers operate could result in increased costs for finished goods. These cost increases may reduce our margins,
require us to raise prices, or make our products less competitive in the marketplace. In addition, other countries may change their
business and trade policies in anticipation of or in response to increased import tariffs and other changes in trade policy and
regulations already enacted or that may be enacted in the future. If we are unable to mitigate these risks through supply chain
adjustments, pricing strategies, or other measures, our financial performance and growth prospects could be negatively affected.
For example, the U.S. has recently imposed new tariffs on China related to the importation of certain product categories, including
home goods. China has responded with retaliatory tariffs. A substantial portion of our products are manufactured in China. We are
working with our suppliers to mitigate any exposure to current and any other potential tariffs and seeking opportunities to engage
with new suppliers outside of China, but there can be no assurance that we will be able to offset any increased costs or secure
these new suppliers.
Our results could be adversely affected by events beyond our control, such as natural disasters, public health crises,
political crises, negative global climate patterns, or other catastrophic events.
Our operations, or those of our suppliers, could be negatively impacted by various events beyond our control, including,
without limitation, natural disasters, such as hurricanes, tornadoes, floods, earthquakes, extreme cold events and other adverse
weather conditions; public health crises, such as pandemics and epidemics; political crises, such as terrorist attacks, war, labor
unrest, and other political instability (including, without limitation, the ongoing conflicts between Russia and Ukraine), negative
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global climate patterns, especially in water stressed regions; or other catastrophic events, such as fires or other disasters occurring
at our distribution centers or our suppliers’ manufacturing facilities, whether occurring in the U.S. or internationally. These events
could disrupt our business operations, including the operations of our corporate offices, physical retail locations, and warehouses,
as well as the operations of our global supply chain and those of our third-party partners, including our suppliers, vendors and
logistics carriers, and could make it more difficult and costly for us to deliver our products. Furthermore, these types of events
could negatively impact consumer spending in the impacted regions or, depending upon the severity, globally. Disasters occurring
at our suppliers’ manufacturing facilities could impact our reputation and customers' perception of the products we offer. To the
extent any of these events occur, our operations and financial results could be adversely affected. In addition, the impacts of
climate change could result in changes in regulations, which could in turn affect our business, operating results, and financial
condition.
Risks Related to Our Business and Industry
If we fail to manage our growth effectively, our business, financial condition and operating results could be harmed.
Our historical growth rates may not be sustainable or indicative of future growth. To manage our growth effectively, we
must continue to implement our operational plans and strategies, improve and expand our infrastructure of people and information
systems and appropriately manage our employee base. If our new hires perform poorly, if we are unsuccessful in hiring, training,
managing and integrating these new employees and staff, or if we are not successful in retaining our existing employees and staff,
our business may be harmed. Moreover, beginning in 2022 and continuing in 2023 and 2024, in an effort to reduce our
operational costs and improve our organizational efficiency, we implemented a cost efficiency plan, part of which included
internal restructurings and workforce reductions to right-size our cost structure. Further in January 2025, we announced our
decision to exit the German market, including a workforce reduction impacting approximately 730 employees, although we
expect approximately half of these positions to relocate to other corporate offices. Any reduction in force may yield unintended
consequences and costs, such as attrition beyond the intended reduction in force, the distraction of employees, reduced employee
morale and adverse effects to our reputation as both an employer and with respect to customers, which could make it more
difficult for us to hire new employees in the future and to retain and motivate key employees, and there is a risk that we may not
achieve the anticipated benefits from the reduction in force. We also face significant competition for personnel. Failure to manage
our hiring needs effectively or successfully integrate our new hires may have a material adverse effect on our business, financial
condition and operating results. Properly managing our global workforce will also require us to establish consistent policies across
regions and functions, and a failure to do so could likewise harm our business. Further, we have a substantial number of hourly
employees. While we are at or above current local and federal minimum wage requirements across the U.S., any future local or
federal minimum wage increases may increase our labor costs, which may have an adverse effect on our results of operations.
Additionally, the growth of our business places significant demands on our operations, as well as our management and
other employees. For example, we typically launch hundreds of promotional events across thousands of products each month on
our sites via emails, “push” notifications and personalized displays. These events require us to produce updates of our sites and
emails to our customers on a daily basis with different products, photos and text. Any surge in online traffic and orders associated
with such promotional activities places increased strain on our operations, including our logistics network, and may cause or
exacerbate slowdowns or interruptions. The growth of our business may require significant additional resources to meet these
daily requirements, which may not scale in a cost-effective manner or may negatively affect the quality of our sites and customer
experience. Further, we have faced and may continue to face a number of challenges to our expansion into physical retail
locations, including locating retail space with a cost and geographic profile that will allow us to operate in highly desirable
shopping locations, hiring in-store talent and expanding our physical retail operations in a cost-effective manner. We have entered
into and may continue to enter into long-term leases before we know whether our physical retail strategy or a particular geography
will be successful. We are also required to manage relationships with a growing number of suppliers, customers and other third
parties across the world. Our information technology systems and our internal controls and procedures may not be adequate to
support future growth of our supplier and employee base.
Failure to manage our growth and organizational change effectively could lead us to over-invest or under-invest in
technology and operations; result in weaknesses in our infrastructure, systems or controls; give rise to operational mistakes, losses
or loss of productivity or business opportunities; reduce customer satisfaction; limit our ability to respond to competitive
pressures; and result in loss of employees and reduced productivity of remaining employees. If we are unable to manage the
growth of our organization effectively, our business, financial condition and operating results may be materially adversely
affected.
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If we fail to acquire new customers, reactivate prior customers or retain existing customers, or fail to do so in a cost-
effective manner, our business, financial condition and operating results could be harmed.
Our success depends on our ability to acquire and retain customers in a cost-effective manner. In order to expand our
customer base, we must appeal to and acquire customers who have historically used other means of commerce to purchase home
goods and may prefer alternatives to our offerings, such as traditional brick and mortar retailers, the websites of our competitors
or our suppliers' own websites. We have made significant investments related to customer acquisition and expect to continue to
heavily invest to acquire additional customers and to reactivate prior customers. Our paid advertising efforts consist of television
advertising, direct mail, catalog and print advertising, and online channel advertising, including display advertising, paid search
advertising, social media advertising, search engine optimization and comparison shopping engine advertising. These efforts are
expensive and may not result in the cost-effective acquisition of customers. Our marketing expenses have varied from period to
period, and we expect this trend to continue as we test new channels and refine our marketing strategies. We may increase or
decrease our marketing spend within a period, based on the degree of our achievement of intended results, which may result in
increased or decreased customer engagement in any given period. We cannot assure you that the net profit from new or returning
customers we acquire will ultimately exceed the cost of acquiring those customers. Additionally, actions by third parties to block
or impose restrictions on the delivery of certain advertisements could also adversely impact our business. If we fail to deliver a
quality shopping experience, or if consumers do not perceive the products we offer to be of high value and quality, we may not be
able to acquire new customers or retain existing customers. If we are unable to acquire new customers or reactivate prior
customers who purchase products in numbers sufficient to grow our business, we may not be able to generate the scale necessary
to drive beneficial network effects with our suppliers or efficiencies in our logistics network, our net revenue may decrease, and
our business, financial condition and operating results may be materially adversely affected.
We also utilize non-paid advertising. Our non-paid advertising efforts include search engine optimization, non-paid social
media, mobile "push" notifications and email. We obtain a significant amount of traffic via search engines and, therefore, rely on
search engines such as Google, Bing and Yahoo!. Although we employ search engine optimization and search engine marketing
strategies, our ability to maintain and increase the number of visitors directed to our website and application is not entirely within
our control. Search engines frequently update and change the logic that determines the placement and display of results of a user's
search, such that the purchased or algorithmic placement of links to our sites can be negatively affected. Moreover, a search
engine could, for competitive or other purposes, alter its search algorithms or results, causing our sites to place lower in search
query results. A major search engine could change its algorithms in a manner that negatively affects our paid or non-paid search
ranking, and competitive dynamics could impact the effectiveness of search engine marketing or search engine optimization. In
addition, if there are changes in the usage and functioning of search engines or decreases in consumer use of search engines, for
example, as a result of the continued development of artificial intelligence technology, this could negatively impact our owned
and operated and third-party publishers’ websites. We also obtain a significant amount of traffic via social networking websites or
other channels used by our current and prospective customers. As e-commerce and social networking continue to rapidly evolve,
we must continue to establish relationships with these channels, and we may be unable to develop or maintain these relationships
on acceptable terms. If we are unable to cost-effectively drive traffic to our sites, our ability to acquire new customers, reactivate
prior customers or retain our existing customers and our financial condition may suffer.
We also expect our new loyalty program to attract customers to our stores and to encourage purchases by our customers
online. Our loyalty program offers customer rewards dollars that can be redeemed on future purchases. If we fail to execute the
loyalty program, if our customers do not respond positively to the program or if the program costs more than anticipated in reward
redemptions, our competitors may be able to attract some of our customers and our financial results could be adversely impacted.
Further, some of our new customers originate from word of mouth or other non-paid referrals from existing customers. If our
efforts to satisfy our existing customers are not successful, we may not be able to acquire new customers or reactivate prior
customers through these referrals, which may adversely affect how we continue to grow our business, or may require us to incur
significantly higher marketing expenses in order to acquire new customers.
Our success depends in part on our ability to increase our net revenue per active customer. If our efforts to increase
customer loyalty and repeat purchasing as well as maintain high levels of customer engagement are not successful, our growth
prospects and net revenue will be materially adversely affected.
Our ability to grow our business depends on our ability to retain our existing customer base and generate increased net
revenue and repeat purchases from this customer base and maintain high levels of customer engagement. To do this, we must
continue to provide our customers and potential customers with a unified, convenient, efficient and differentiated shopping
experience by:
•
providing imagery, tools and technology that attract customers who historically would have bought elsewhere;
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•
maintaining a high-quality and diverse portfolio of products and services;
•
providing excellent customer service;
•
delivering products on time and without damage; and
•
maintaining and further developing our mobile platforms.
If we fail to increase net revenue per active customer, generate repeat purchases or maintain high levels of customer
engagement, our growth prospects, operating results and financial condition could be materially adversely affected.
We have faced and may face price competition in the future. In addition, competitors with whom we compete, or who can
obtain better pricing, more favorable contractual terms and conditions, or more favorable allocations of products during periods of
limited supply may be able to offer lower prices than we are able to offer. Our operating results and financial condition may be
adversely affected by these and other industry-wide pricing pressures.
Our business depends on our ability to build and maintain strong brands. We may not be able to maintain and enhance
our brands if we receive unfavorable customer complaints, negative publicity or otherwise fail to live up to consumers'
expectations, which could materially adversely affect our business, results of operations and growth prospects.
Maintaining and enhancing our brands is critical to expanding our base of customers and suppliers. Our ability to maintain
and enhance our brands depends largely on our ability to maintain customer confidence in our product and service offerings,
including by maintaining product availability and delivering products on time and without damage. If customers do not have a
satisfactory shopping experience, they may seek out alternative offerings from our competitors and may not return to our sites as
often in the future, or at all. In addition, unfavorable publicity regarding, for example, our practices relating to privacy and data
protection, employment matters, product quality or availability, poor customer service, delivery problems, competitive pressures,
litigation or regulatory activity, could seriously harm our reputation. Such negative publicity could also have an adverse effect on
the size, engagement and loyalty of our customer base and result in decreased net revenue, which could adversely affect our
business and financial results. A significant portion of our customers' brand experience also depends on third parties outside our
control, including our suppliers, assembly and installation service providers and logistics providers. If these third parties do not
meet our or our customers' expectations, our brands may suffer irreparable damage.
In addition, maintaining and enhancing our brands may require us to make substantial investments, and these investments
may not be successful. If we fail to promote and maintain our brands, or if we incur excessive expenses in this effort, our
business, operating results and financial condition may be materially adversely affected. We anticipate that, as our market
becomes increasingly competitive, maintaining and enhancing our brands may become increasingly difficult and expensive.
Maintaining and enhancing our brands will depend largely on our ability to provide high quality products to our customers and a
reliable, trustworthy and profitable sales channel to our suppliers, which we may not be able to do successfully.
Customer complaints or negative publicity about our sites, products, delivery times, company practices, employees,
customer data handling and security practices or customer support, especially on blogs, social media websites and our sites, could
rapidly and severely diminish consumer use of our sites and consumer and supplier confidence in us and result in harm to our
brands and decreased revenue, whether or not the complaints and negative sentiment are based in fact. Further, the proliferation of
social media may increase the likelihood, speed, and magnitude of such negative events.
Our aspirations and disclosures related to corporate responsibility matters expose us to risks that could adversely affect
our reputation and performance.
We have established and publicly announced sustainability goals, including our commitment to reduce our Scope 1 and 2
greenhouse gas (“GHG”) emissions by 63% by 2035 compared to a 2020 baseline and our goal to achieve zero waste (90%+
waste diversion from landfill and incineration) across Wayfair operations globally by 2030. Such announcements reflect our
current plans and aspirations and are not guarantees that we will be able to achieve them. Our failure to adequately update,
accomplish or accurately track and report on these goals on a timely basis, or at all, could adversely affect our reputation,
financial performance and growth, and expose us to increased scrutiny from the investment community, special interest groups
and enforcement authorities.
Our ability to achieve any sustainability objective is subject to numerous risks, some of which are outside of our control.
Examples of such risks include the availability and cost of low- or non-carbon-based energy sources and low-carbon building
conditioning and transportation solutions, the availability of materials and suppliers that allow us to meet our sustainability goals
on our timelines, and competing strategic growth opportunities, such as increasing the scale of our physical retail footprint.
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Standards for tracking and reporting sustainability matters continue to advance and statements about our sustainability-
related initiatives and progress toward any sustainability objective may be based on standards that are still developing, internal
controls and processes that continue to evolve, and assumptions that may be subject to change in the future. Our election to
publicly report on sustainability matters in accordance with voluntary disclosure frameworks and standards, and the interpretation
or application of those frameworks and standards, may change from time to time or differ from those of others. Methodologies for
reporting sustainability data may be updated and previously reported sustainability data may be adjusted to reflect improvement in
availability and quality of data, changing assumptions, changes in the nature and scope of our operations and other changes in
circumstances. Our processes and controls for reporting sustainability matters are evolving alongside the multiple disparate
standards for identifying, measuring, and reporting sustainability metrics, including the standards for sustainability-related
disclosures required by the European Union’s Corporate Sustainability Reporting Directive (“CSRD”) or may be required by the
SEC and other regulators. The standards used to identify and collect the information and data required pursuant to the CSRD
continue to evolve, and this lack of certainty could result in increased compliance costs and a heightened risk of failing to comply
with the CSRD, as well as significant adjustments to previously reported sustainability data, including data regarding our current
goals, reported progress in achieving such goals, or ability to achieve such goals in the future. If our sustainability practices do not
meet evolving investor or other stakeholder expectations and standards, then our reputation or our attractiveness as an investment,
business partner, service provider or employer could be negatively impacted.
Our expansion into physical retail stores may not achieve sales or operations targets and may negatively impact our
financial results.
In 2024, we continued our expansion into physical retail with the opening of five new physical retail stores across our
family of brands, and two new outlet stores. We believe that expansion into new physical retail stores represents a growth
opportunity for us. Our growth strategy is dependent on our ability to identify and open future store locations in new and existing
markets. Our ability to open stores in a timely and successful manner depends on a number of factors, including: the availability
of desirable store locations; the availability and costs of construction labor and materials; local permitting timelines; the ability to
negotiate acceptable lease terms at reasonable rates, including the length of rental periods and renewal options and the ability to
obtain termination rights; our ability to obtain all required approvals and comply with other regulatory requirements; our
relationships with current and prospective landlords; the ability to secure and manage the inventory necessary for the launch and
operation of new stores; the availability of capital funding for expansion; and general economic conditions. Any or all of these
factors and conditions could materially adversely affect our business, financial condition and results of operations.
New store openings may negatively impact our financial results due to the costs of acquiring new store locations and
opening new stores and lower sales during the initial period following opening. New stores, particularly those in new markets,
build their brand recognition and customer base over time and, as a result, may have lower margins and incur higher operating
expenses relative to generated revenue. We may not anticipate all of the challenges posed by the expansion of our operations into
new asset classes and geographic markets. We may not manage our expansion effectively, and our failure to achieve or properly
execute our expansion plans could limit our growth or have a material adverse effect on our business, financial condition and
results of operations.
Our efforts to expand our business into new brands, channels, products, programs, services, technologies and geographic
markets will subject us to additional business, legal, financial and competitive risks and may not be successful.
Our business success depends to some extent on our ability to expand our customer offerings by launching new brands
and services and by expanding our existing offerings into new geographic markets from time to time. For example, we launched
Wayfair Rewards in 2024, Decorify in 2023, Wayfair.ie in Ireland in 2022 and the Kelly Clarkson Home Collection in 2020.
Launching new brands, programs and services or expanding internationally is time-consuming, requires significant amounts of
management time and resources, substantial upfront investments, including investments in marketing, information technology and
additional personnel. Expanding our brands internationally is particularly challenging because it requires us to gain country-
specific knowledge about consumers, regional competitors and local laws, construct catalogs specific to the country, build local
logistics capabilities and customize portions of our technology for local markets. We may not be able to generate satisfactory net
revenue from these efforts to offset these costs. Any lack of market acceptance of our efforts to launch new brands, programs and
services or to expand our existing offerings could have a material adverse effect on our business, prospects, financial condition
and operating results. For example, in October 2024, we introduced Wayfair Rewards, a new loyalty program that provides a
range of benefits to members in return for payment of an annual membership fee. Wayfair Rewards is new to our business and has
not been tested prior to its introduction. Given that this type of loyalty program is new and untested, there can be no certainty as to
exactly how our customers may react to the program over time or how the Wayfair Rewards’ rollout will affect our financial
results from quarter to quarter. Further, as we continue to expand our fulfillment capability or add new businesses with different
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requirements, our logistics networks become increasingly complex and operating them becomes more challenging. There can be
no assurance that we will be able to operate our networks effectively.
We have also entered and may continue to enter new markets or channels in which we have limited or no experience, which
may not be successful or appealing to our customers. These activities may present new and difficult technological and logistical
challenges, and resulting service disruptions, failures or other quality issues may cause customer dissatisfaction and harm our
reputation and brand. Further, our current and potential competitors in new market segments may have greater brand recognition,
financial resources, longer operating histories and larger customer bases than we do in these areas. As a result, we may not be
successful enough in these newer areas to recoup our investments in them. If this occurs, our business, financial condition and
operating results may be materially adversely affected.
Implementation of our key strategic initiatives, including our technology transformation, expansion into physical retail and
the continued expansion of our proprietary logistics network, require significant capital expenditures. A lack of available capital
resources due to business performance or other financial commitments could prevent or delay the deployment of innovations in
our business. We may reduce capital expenditures significantly or seek additional financing or issue additional securities, which
may affect the timing and scope of growth strategy. We cannot be certain that we will be able to obtain new financing on
favorable terms, or at all.
Our international operations subject us to various additional legal, regulatory, financial and other risks.
During 2024, our international net revenue accounted for approximately 12% of our total net revenue. Expanding our
international operations to grow our business will require significant management attention and resources and expose us to
additional risks. As we continue to expand our operations to other countries, we will also become subject to certain domestic laws,
including the Foreign Corrupt Practices Act, as well as the laws of the foreign countries in which we operate, which may impose
new or changing regulatory restrictions and requirements, including in the areas of data privacy and sustainability. Violations of
these laws could subject us to actions from government regulatory authorities, including sanctions, import restrictions, and tariffs
(including anti-dumping and countervailing duties), or other penalties that could have an adverse effect on our reputation,
operating results and financial condition. For example, the Canada Border Services Agency (“CBSA”) is examining Wayfair’s
payment of duties under the Special Measures Import Act (the “CBSA review”) for goods imported into Canada for the years
ended December 31, 2023 and 2022 and part of the year ended December 31, 2021. We believe we have substantial factual and
legal grounds to contest certain elements of the CBSA review, along with any claim for interest associated with such duty
payments.
Further, a failure to implement our expansion initiatives properly, or the adverse impact of political or economic risks in our
current or new international markets, could have a material adverse effect on our results of operations and financial condition. In
all international markets we face established local and international competitors. In many of these locations, the real estate, labor
and employment, transportation and logistics and other operating requirements differ dramatically from those in the locations
where we have more experience. Consumer demand and behavior, as well as tastes and purchasing trends, may differ
substantially, and as a result, sales of our products may not be successful, or the margins on those sales may not be in line with
those we currently anticipate. Our potential inability to anticipate and address differences that we encounter as we expand
internationally may divert financial, operational, and managerial resources from our existing operations, which could adversely
impact our financial condition and results of operations.
Fluctuations in currency exchange rates could adversely affect our financial performance and our reported results of
operations.
Because we generate net revenue in the local currencies of our international business, our financial results are impacted by
fluctuations in currency exchange rates. The results of operations of our international business are exposed to currency exchange
rate fluctuations as the financial results of the applicable subsidiaries are translated from the local currency to U.S. dollars for
financial reporting purposes. Our consolidated financial statements are denominated in U.S. dollars and as a result fluctuations in
currency exchange rates may adversely affect our results of operations or financial results. If the U.S. dollar weakens against
foreign currencies, the translation of these foreign currency denominated net revenues or expenses will result in increased U.S.
dollar denominated net revenues and expenses. Similarly, if the U.S. dollar strengthens against foreign currencies, particularly the
Euro, the British pound, or the Canadian dollar, our translation of foreign currency denominated net revenues or expenses will
result in lower U.S. dollar denominated net revenues and expenses. Additionally, global events as well as geopolitical
developments, including military conflicts in Ukraine and the Middle East, fluctuating commodity prices, trade tariff
developments and inflation have caused, and may in the future cause, global economic uncertainty and uncertainty about the
interest rate environment, which has recently and could continue to amplify the volatility of currency fluctuations. To date, we
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have not entered into any currency hedging contracts. As a result, we may not be able to effectively offset the adverse financial
impacts that may result from unfavorable movements in foreign currency exchange rates, and therefore fluctuations in foreign
exchange rates could significantly impact our financial results.
We have had a history of losses and we may be unable to achieve or sustain profitability and positive cash flow in the
future as we continue to expand our business.
We have had a history of losses and negative cash flow. We incurred losses in fiscal years 2022, 2023, and 2024 and we can
provide no assurance that we will be profitable in future years or achieve our goal of sustained profitability. Because the market
for purchasing home goods online is rapidly evolving, it is difficult for us to predict our future operating results. As a result, we
may incur future losses that may be larger than anticipated. Also, our operating expenses may increase if we continue to expand
internationally, add additional physical retail locations, grow our proprietary logistics network, experiment with paid marketing
channels, hire more employees and continue to develop new brands, features and services. Furthermore, if our future growth and
operating performance fail to meet investor or analyst expectations, or if we have future negative cash flow or losses resulting
from our investment in acquiring new customers, our financial condition and stock price could be materially adversely affected.
System interruptions that impair customer access to our sites or other performance failures or incidents involving our
logistics network, our technology infrastructure or our critical technology partners could damage our business, reputation and
brand and substantially harm our business and results of operations.
The satisfactory performance, reliability, integrity and availability of our sites, transaction processing systems, logistics
network and technology infrastructure are critical to our reputation and our ability to acquire and retain customers, as well as
maintain adequate customer service levels.
For example, if our cloud provider fails or suffers an interruption or degradation of services, we could lose customer data
and miss order fulfillment deadlines, which could harm our business. Our systems and operations, including our ability to fulfill
customer orders through our logistics network, are also vulnerable to damage or interruption from inclement weather, fire, flood,
power loss, telecommunications failure, terrorist attacks, labor disputes, cyber-attacks, data loss, acts of war, break-ins, other
physical security threats, earthquakes and similar events. In the event of a system outage or degradation, the failover to another
site or a back-up could take substantial time, during which time our sites could be completely shut down. Further, our back-up
services may not effectively process spikes in demand, may process transactions more slowly and may not support all of our sites'
functionality.
We use complex proprietary software in our technology infrastructure, which we seek to continually update and improve.
We may not always be successful in executing these upgrades and improvements, and the operation of our systems may be subject
to failure. In particular, we have in the past and may in the future experience slowdowns or interruptions in some or all of our sites
when we are updating them, and new technologies or infrastructures may not be fully integrated with existing systems on a timely
basis, or at all. Additionally, we have expanded our use of third-party services, including third-party “cloud” computing services,
and as a result, our technology infrastructure may be subject to slowdowns or interruptions as a result of integration with such
services and/or failures by such third-parties, which are out of our control. Our net revenue primarily depends on the number of
visitors who shop on our sites and the volume of orders we can handle. Unavailability of our sites or reduced order fulfillment
performance would reduce the volume of goods sold and could also materially adversely affect consumer perception of our brand.
We may experience periodic system interruptions from time to time. In addition, continued growth in our transaction
volume, as well as surges in online traffic and orders associated with promotional activities and seasonal trends in our business,
place additional demands on our technology platform and could cause or exacerbate slowdowns or interruptions. If there is a
substantial increase in the volume of traffic on our sites or the number of orders placed by customers, we may be required to
further expand and upgrade our technology, logistics network, transaction processing systems and network infrastructure. There
can be no assurance that we will be able to accurately project the rate or timing of increases, if any, in the use of our sites or
expand and upgrade our systems and infrastructure to accommodate such increases on a timely basis. In order to remain
competitive, we must continue to enhance and improve the responsiveness, functionality and features of our sites, which is
particularly challenging given the rapid rate at which new technologies, such as those related to artificial intelligence, customer
preferences and expectations, and industry standards and practices are evolving in the e-commerce industry. Accordingly, we
redesign and enhance various functions on our sites on a regular basis, and we may experience instability and performance issues
as a result of these changes.
Any slowdown, interruption or performance failure of our sites and the underlying technology and logistics infrastructure
could harm our business, reputation and our ability to acquire, retain and serve our customers, which could materially adversely
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affect our results of operations. Our disaster recovery plan may be inadequate, and our business interruption insurance may not be
sufficient to compensate us for the losses that could occur.
Our reliance on single service providers for certain business operations may result in disruptions to our business and
adversely affect our financial results.
We solely rely on Google Cloud to facilitate certain aspects of our business. Google Cloud provides a distributed computing
infrastructure platform for business operations, or what is commonly referred to as a “cloud” computing service. We have
architected our software and computer systems so as to also utilize data processing, storage capabilities and other services
provided across multiple Google Cloud data centers. Given this, along with our inability to rapidly switch our Google Cloud
operations to another cloud provider, any disruption of or interference with our use of Google Cloud or any widespread disruption
in Google Cloud itself would impact our operations and our business would be adversely affected. In addition, if hosting costs
increase over time, or we are unable to optimize our applications for a cloud environment, or we require more computing or
storage capacity, our costs could increase disproportionately. If we are unable to grow our revenues faster than the cost of
utilizing the services of Google or similar providers, our business and financial condition could be adversely affected.
Additionally, we primarily rely on a single delivery carrier, FedEx, for the delivery of our small parcel products. In the event
of an interruption or disruption in the delivery capabilities of FedEx, we may not be able to obtain an alternate delivery service
without incurring material additional costs and substantial delays for the delivery of our small parcel products, which could
adversely impact our business and operating results.
A cybersecurity attack, data breach or other security incident could impact our sites, networks, systems, platforms,
confidential information and assets causing damage and substantial harm to our business and operating results, reputation
and brand, and resulting in proceedings or actions against us by government regulatory bodies or private parties.
We collect, maintain, transmit and store data about our customers, employees, contractors, suppliers, vendors and others,
including payment information and personally identifiable information, as well as other personal, confidential and proprietary
information. In certain instances, we leverage and rely on third-party service providers to collect, maintain, transmit and store
certain proprietary, personal and confidential information on our behalf, such as credit card data. To protect such data and other
information from unauthorized acquisition or access, compromise or loss, we maintain and regularly assess against industry
standard cybersecurity safeguards and best practices.
Like many businesses, despite all of our efforts to defend against cyber threats and respond to incidents, we, and our third
party service providers, have in the past and will in the future continue to be subject to cyber-attacks, cybersecurity threats and
attempts to compromise and penetrate our data security systems and disrupt our operations. Cybersecurity incidents impacting
large institutions, including those resulting in the compromise of sensitive data and the disruption of critical systems, suggest that
the risk of such cyber events is significant, even when reasonable measures to protect the confidentiality, integrity, and
availability of information are implemented. This may be as a result of deliberate malicious attempts to infiltrate our systems,
including but not limited to, state-sponsored attackers or cybercriminal efforts such as ransomware attacks, zero-day
vulnerabilities, phishing attacks, software supply chain compromises, or non-malicious factors, including but not limited to,
disruptions during the process of upgrading or replacing computer software or hardware, errors by the vendors we rely upon, or
other disruptions that may jeopardize the security of our assets or information. We and our service providers may not anticipate,
detect, or prevent all types of attacks until after they have already been launched, particularly because the techniques used to
obtain unauthorized access are increasingly sophisticated, constantly evolving and may not be known in the market. For example,
as artificial intelligence continues to evolve, cyber-attackers could also use artificial intelligence to develop malicious code and
sophisticated phishing attempts. Security incidents such as ransomware attacks are becoming increasingly prevalent and severe, as
well as increasingly difficult to detect. In addition, security breaches or data and asset leaks can also occur as a result of non-
technical issues, including intentional or inadvertent actions by our employees or by persons with whom we have commercial
relationships. Further, the prevalence of remote work by some of our employees and those of our third-party service providers
creates increased risk that a cybersecurity incident may occur.
In addition to data loss and compromise, cybersecurity incidents or breaches of our security measures or those of our third-
party service providers could result in interruption, disruption or malfunction of operations; costs relating to breach remediation,
deployment or training of additional personnel and protection technologies, responses to governmental investigations and media
inquiries and coverage; engagement of third party experts and consultants; loss, litigation (including class action litigation) or
regulatory action and other potential liabilities. Any compromise or breach of our security measures, or those of our third-party
service providers, could violate applicable privacy, data security and other laws and regulations, and cause significant legal and
financial exposure, adverse publicity and a loss of confidence in our security measures, which could have a material adverse effect
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on our business, financial condition and operating results. Our reputation and brand could be damaged, our business may suffer,
and we could be required to expend significant capital and other resources to alleviate problems caused by such incidents.
Although we maintain cyber liability insurance, we cannot be certain that our coverage will be adequate for liabilities actually
incurred or that insurance will continue to be available to us on economically reasonable terms, or at all. We may need to devote
significant resources to protect against security breaches or to address problems caused by breaches, diverting resources from the
growth and expansion of our business.
See Part I, Item 1C, Cybersecurity, in this Annual Report on Form 10-K for more information regarding our cybersecurity
risk management, strategy, and governance.
Our failure to operate effectively in a highly competitive and evolving industry could have a material adverse effect on
our business.
Our business is rapidly evolving and intensely competitive, with numerous competitors including furniture stores, big box
retailers, department stores, specialty retailers and online retailers and marketplaces in the U.S., Canada, the United Kingdom, and
Ireland, including those listed in Part I, Item 1, Business.
We expect competition in e-commerce generally to continue to increase. We believe that our ability to compete successfully
depends upon many factors both within and beyond our control, including:
•
the size and composition of our customer base;
•
the number of suppliers and products we feature on our sites;
•
our selling and marketing efforts;
•
our ability to anticipate consumer demand and preferences;
•
the quality, price and reliability of products we offer;
•
the convenience of the shopping experience that we provide;
•
the adequacy of our customer service;
•
our ability to distribute our products and manage our operations;
•
our ability to effectively utilize technological advancements, including artificial intelligence; and
•
our reputation and brand strength.
Some of our current competitors have, and potential competitors may have, longer operating histories, greater brand
recognition, larger fulfillment infrastructures, greater technical capabilities, faster and less costly shipping, lower prices,
significantly greater financial, marketing and other resources and larger customer bases than we do. These factors may allow our
competitors to derive greater net revenue and profits from their existing customer base, acquire customers at lower costs or
respond more quickly than we can to new or emerging technologies and changes in consumer habits.
Our marketing efforts to help grow our business may not be effective, and failure to effectively develop and expand our
sales and marketing capabilities could harm our ability to increase our customer base and achieve broader market acceptance
of our e-commerce and omnichannel approach to shopping for home goods.
If the online market for home goods does not continue to gain acceptance, a significant portion of our business may suffer.
Our success will depend, in part, on our ability to attract consumers who have historically purchased home goods through
traditional retailers. Furthermore, we may have to incur significantly higher and more sustained advertising and promotional
expenditures in order to attract additional online consumers to our sites and convert them into purchasing customers online.
Specific factors that could impact consumers’ willingness to purchase home goods from us online, especially in markets where we
do not have physical stores, include:
•
concerns about buying products, and in particular larger products, without a physical storefront, face-to-face
interaction with sales personnel and the inability to physically handle, examine and compare products;
•
delivery time associated with online orders;
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•
actual or perceived lack of security of online transactions and concerns regarding the privacy or protection of
personal information;
•
delayed shipments or shipments of incorrect or damaged products;
•
inconvenience associated with returning or exchanging items purchased online;
•
usability, functionality and features of our sites; and
•
our reputation and brand strength.
In addition, if we do not have a clear and relevant promotional calendar to engage our customers, especially in the current
macroeconomic environment, our customers may purchase fewer goods from us or we may have to increase our promotional
activities. If the shopping experience we provide does not appeal to consumers or meet the expectations of existing customers, we
may not acquire new customers at sustainable rates, acquired customers may not become repeat customers and existing
customers’ buying patterns and levels may decrease.
We may be subject to product liability and other similar claims and lawsuits if people or property are harmed by the
products we sell.
Some of the products we sell may expose us to product recalls, product liability and other claims and litigation (including
class actions) or regulatory action relating to safety, personal injury, death or environmental or property damage. Some members
of our supply chain may not have sufficient resources or insurance to satisfy their product liability and other indemnity and
defense obligations. In addition, we are involved in lawsuits, claims and proceedings incident to the ordinary course of our
business. Litigation is inherently unpredictable. Any claims against us, whether meritorious or not, could result in costly litigation
that could adversely affect our business. Although we maintain liability insurance, we cannot be certain that our coverage will be
adequate for liabilities actually incurred or that insurance will continue to be available to us on economically reasonable terms, or
at all. If we do not have adequate contractual indemnification or insurance available, such claims could have an adverse effect on
our business, financial condition, and results of operations. Even with adequate insurance and indemnification, our reputation as a
provider of high-quality products and services could suffer, damaging our reputation and impacting customer loyalty.
Risks associated with the suppliers from whom our products are sourced could materially adversely affect our financial
performance as well as our reputation and brand.
We depend on our ability to provide our customers with a wide range of products from qualified suppliers in a timely and
efficient manner. Political and economic instability, global or regional adverse conditions, such as military conflicts, pandemics or
other disease outbreaks or natural disasters, the financial stability or insolvency of our suppliers, our suppliers’ ability to meet our
code of conduct and other business standards, labor problems experienced by our suppliers, the availability or cost of raw
materials, merchandise quality issues, currency exchange rates, trade tariff developments, imposition of anti-dumping and
countervailing duties or other trade-related sanctions, transport availability and cost, including import-related taxes, transport
security, labor inflation and other factors relating to our suppliers are beyond our control. For example, while we experienced
increased sales and order activity at times during the COVID-19 pandemic, the pandemic significantly disrupted the global supply
chain, including many of our suppliers due to factory closures, raw material and labor inflation and risks of labor shortages,
among other things. Any ongoing or future disruptions could materially and adversely affect our suppliers’ ability to provide
products in a timely manner, or at all, which may materially and adversely affect our business, financial condition and operating
results.
Our agreements with most of our suppliers do not provide for the long-term availability or exclusivity of merchandise or the
continuation of particular pricing practices. There can be no assurance that our current suppliers will continue to seek to sell us
products on current terms or that we will be able to establish new or otherwise extend current supply relationships to ensure
product availability on acceptable commercial terms. Our ability to develop and maintain relationships with reputable suppliers
and offer high quality merchandise to our customers is critical to our success. If we are unable to develop and maintain
relationships with suppliers that would allow us to offer a sufficient amount and variety of quality merchandise on acceptable
commercial terms, our ability to satisfy our customers’ needs, and therefore our long-term growth prospects, would be materially
adversely affected.
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Further, we rely on our suppliers’ representations of product quality, safety and compliance with applicable laws and
standards. If our suppliers or other vendors violate our agreements, applicable laws or regulations, or implement practices
regarded as fraudulent, unethical, unsafe, or hazardous to the environment, it could harm our business, reputation and brands and
our operating results may be negatively affected. Further, concerns regarding the safety and quality of products provided by our
suppliers could cause our customers to avoid purchasing those products from us, or avoid purchasing products from us altogether,
even if the basis for the concern is outside our control. As such, any issue, or perceived issue, regarding the quality and safety of
any items we sell, regardless of the cause, could adversely affect our brand, reputation, operations and financial results. We are
also subject to risks of fraud from our suppliers.
We also are unable to predict whether any of the countries in which our suppliers’ products are currently manufactured or
may be manufactured in the future will be subject to new, different, or additional trade restrictions imposed by the U.S. or foreign
governments or the likelihood, type or effect of any such restrictions. Significant portions of the merchandise we source are
manufactured outside of the U.S., and any event causing a disruption or delay of imports from suppliers with international
manufacturing operations, including the imposition of increased tariffs or quotas, additional import restrictions, or restrictions on
the transfer of funds, could increase the cost or reduce the supply of merchandise available to our customers and materially
adversely affect our financial performance as well as our reputation and brand. For example, the U.S. has recently imposed new
tariffs on China related to the importation of certain product categories and the U.S. has proposed additional tariffs on goods
shipped from China, including the home goods category. China has responded with retaliatory tariffs. These tariffs will likely
increase the cost of our products and negatively impact our operating results. Although we are currently seeking opportunities to
engage additional suppliers outside of China, there can be no assurance that we will be able to offset any increased costs or secure
any additional suppliers outside of China. Additionally, the availability of certain products could be affected if suppliers choose to
limit their exposure to U.S. markets in response to unfavorable trade policies, and we may be unable to source alternatives quickly
enough to avoid interruptions in product supply.
In addition, with respect to our business with foreign suppliers, particularly for our international sites, we have in the past
and may in the future be affected by changes in the value of the U.S. dollar relative to other foreign currencies. For example, any
movement by any other foreign currency against the U.S. dollar may result in higher costs to us for those goods. Declines in
foreign currencies and currency exchange rates might negatively affect the profitability and business prospects of one or more of
our foreign suppliers. This, in turn, has caused and may in the future cause such foreign suppliers to demand higher prices for
merchandise in their effort to offset any lost profits associated with any currency devaluation, delay merchandise shipments, or
discontinue selling to us altogether, any of which could ultimately reduce our sales or increase our costs.
We may be unable to source new suppliers or strengthen our relationships with current suppliers.
We have relationships with over 20 thousand suppliers. Our agreements with suppliers are generally terminable at will by
either party upon short notice. If we do not maintain our existing relationships or build new relationships with suppliers on
acceptable commercial terms, we may not be able to maintain a broad selection of merchandise, and our business and prospects
would suffer severely.
In order to attract quality suppliers to our platform, we must:
•
demonstrate our ability to help our suppliers increase their sales;
•
provide an effective and competitive supplier technology platform; and
•
offer suppliers a high quality, cost-effective fulfillment process.
If we are unable to provide our suppliers with a compelling return on investment and an ability to increase their sales, we
may be unable to maintain and/or expand our supplier network, which would negatively impact our business.
We depend on our suppliers and other third parties, including logistics service providers, customs brokers and carriers, to
perform certain services regarding the products that we offer.
As part of offering our suppliers’ products for sale, suppliers are often responsible for conducting a number of traditional
retail operations with respect to their respective products, including maintaining inventory, preparing merchandise for shipment to
our customers, and, in some cases, delivering products on our behalf. In these instances, we may be unable to ensure that suppliers
will perform these services to our or our customers' satisfaction in a manner that provides our customer with a unified brand
experience or on commercially reasonable terms. If our customers become dissatisfied with the services provided by our
suppliers, our business, reputation and brands could suffer.
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Additionally, we primarily rely on a single carrier, FedEx, for the delivery of our small parcel products, and third party
national, regional and local transportation companies deliver a portion of our large parcel products, including through our Wayfair
Delivery Network. Our ability to efficiently ship products to customers has been and may be in the future negatively affected by
factors beyond our and our carriers’ control, which may include inclement weather, natural disasters, system interruptions and
technology failures, labor activism, supply chain issues, including congestion and delays, labor inflation and increased costs,
political instability, military conflicts, health pandemics and epidemics or bioterrorism. We also use and rely on other services
from third parties, such as cloud computing services, telecommunications services, customs, consolidation and shipping services,
as well as warranty, installation, assembly and design services. We may be unable to maintain these relationships, and these
services have been in the past and may also be in the future subject to outages and interruptions that are not within our control.
Third parties may in the future determine they no longer wish to do business with us or may decide to take other actions that could
harm our business. We may also determine that we no longer want to do business with them. If products are not delivered in a
timely fashion or are damaged during the delivery process by any of our third party transportation companies, or if we are not able
to provide adequate customer support or other services or offerings, our customers could become dissatisfied and cease buying
products through our sites, which would adversely affect our operating results.
If our internal control over financial reporting or our disclosure controls and procedures are not effective, we may not be
able to accurately report our financial results, prevent fraud or file our periodic reports in a timely manner, which may cause
investors to lose confidence in our reported financial information and may lead to a decline in our stock price.
The Sarbanes-Oxley Act of 2002 requires that we maintain effective internal control over financial reporting and disclosure
controls and procedures. In particular, we must perform system and process evaluation, document our controls and perform
testing of our key control over financial reporting to allow management and our independent public accounting firm to report on
the effectiveness of our internal control over financial reporting, as required by Section 404 of the Sarbanes-Oxley Act. Our
testing, or the subsequent testing by our independent public accounting firm, may reveal deficiencies in our internal control over
financial reporting that are deemed to be material weaknesses. If we are not able to comply with the requirements of Section 404
in a timely manner, or if we or our accounting firm identify deficiencies in our internal control over financial reporting that are
deemed to be material weaknesses, the market price of our stock would likely decline and we could be subject to lawsuits,
sanctions or investigations by regulatory authorities, including SEC enforcement actions, and we could be required to restate our
financial results, any of which would require additional financial and management resources.
We continue to invest in more robust technology and resources to manage reporting requirements. For example, in the first
quarter of 2024, we transitioned to our new financial accounting system for financial reporting which is designed to enhance the
flow of financial information, improve data management and provide both accurate and timely financial reporting. Implementing
the appropriate changes to our internal controls may distract our officers and employees, result in substantial costs and require
significant time to complete. Any difficulties or delays in implementing these controls could impact our ability to timely report
our financial results. For these reasons, we may encounter difficulties in the timely and accurate reporting of our financial results,
which would impact our ability to provide our investors with information in a timely manner. As a result, our investors could lose
confidence in our reported financial information, and our stock price could decline.
In addition, any such changes do not guarantee that we will be effective in maintaining the adequacy of our internal
controls, and any failure to maintain that adequacy could prevent us from accurately reporting our financial results.
We may be unable to accurately forecast our financial and operating results and appropriately plan our expenses in the
future or we may fail to meet our publicly announced guidance about our business and future operating results.
Our financial and operating results are inherently uncertain and difficult to forecast because they generally depend on the
volume, timing and type of orders we receive, all of which are uncertain. In particular, we cannot be sure that our historical
growth rates, trends and other key performance metrics are meaningful predictors of future growth. In addition, our mix of
product offerings is highly variable from day-to-day and quarter-to-quarter. This variability makes it difficult to predict sales and
could result in significant fluctuations in our net revenue from period-to-period. Our business is also affected by economic and
business conditions globally, including inflation, slower growth or recession, new or increased tariffs and other changes to fiscal
and monetary policy, tighter credit, higher interest rates, high unemployment, consumer confidence in the economy, consumer
debt levels, energy prices, and currency fluctuations. As a result, forecasted financial and operating results may differ materially
from actual results, which may materially adversely affect our financial condition and stock price. For example, if certain of our
assumptions or estimates prove to be wrong, we may spend more than we anticipate acquiring and retaining customers or may
generate less net revenue per active customer than anticipated, which could cause us to miss our earnings guidance or negatively
impact the results we report, either of which could negatively impact our stock price.
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From time to time, we release earnings guidance or other financial guidance in our quarterly and annual earnings
conference calls or otherwise, regarding our future performance that represents our management’s estimates as of the date of
release. Our guidance includes forward-looking statements based on projections prepared by our management. Projections are
based upon a number of assumptions and estimates that are based on information known when they are issued, and, while
presented with numerical specificity, are inherently subject to significant business, economic, and competitive uncertainties and
contingencies relating to our business, many of which are beyond our control and are based upon specific assumptions with
respect to future business decisions, some of which will change. Some of those key assumptions include broader macroeconomic
conditions and the resulting impact of these factors on future consumer spending patterns and our business. These assumptions are
inherently difficult to predict, particularly in the long term.
We generally state possible outcomes as high and low ranges which are intended to provide a sensitivity analysis as
variables are changed but are not intended to imply that actual results could not fall outside of the suggested ranges. Furthermore,
analysts and investors may develop and publish their own projections of our business, which may form a consensus about our
future performance. Our actual business results may vary significantly from such guidance or estimates or that consensus due to a
number of factors, many of which are outside of our control, including global economic uncertainty and financial market
conditions, geopolitical events, rising inflation, and rising interest rates, potential recessionary factors, and foreign exchange rate
volatility, which could adversely affect our business and future operating results. We use the reports and models of economic
experts in making assumptions relating to consumer discretionary spending and predictions as to timing and pace of any future
economic impacts. If these models are incorrect or incomplete, or if we fail to accurately predict the full impact of certain factors,
such as macroeconomic factors, the guidance and other forward-looking statements we provide may also be incorrect or
incomplete. Furthermore, if we make downward revisions of our previously announced guidance, or if our publicly announced
guidance of future operating results fails to meet expectations of analysts, investors, or other interested parties, the price of our
common stock could decline. Guidance is necessarily speculative in nature, and it can be expected that some or all of the
assumptions underlying the guidance furnished by us will not materialize or will vary significantly from actual results. In light of
the foregoing, investors are urged not to rely upon our guidance in making an investment decision regarding our common stock.
Seasonal trends in our business create variability in our financial and operating results and place increased strain on
our operations.
Historically, we have experienced surges in online traffic and orders associated with promotional activities and seasonal
trends. This activity may place additional demands on our technology systems and logistics network and could cause or
exacerbate slowdowns or interruptions. Any such system, site or service interruptions could prevent us from efficiently receiving
or fulfilling orders, which may reduce the volume or quality of goods or services we sell and may cause customer dissatisfaction
and harm our reputation and brand.
Our business may be adversely affected if we are unable to respond and adapt to rapid changes in technology.
The number of people who access the Internet through devices other than personal computers, including mobile phones,
smartphones, smartwatches, handheld computers such as notebooks and tablets, video game consoles and television set-top
devices, has increased dramatically in the past few years. We continually upgrade existing technologies and business applications
to keep pace with these rapidly changing and continuously evolving technologies, and we may be required to implement new
technologies, such as those related to artificial intelligence, or business applications in the future. The implementation of these
upgrades and changes requires significant investments and as new devices, operating systems and platforms are released, it is
difficult to predict requirements or the problems we may encounter in developing applications for these alternative devices,
operating systems and platforms. Additionally, we may need to devote significant resources to the support and maintenance of
such applications once created. Our results of operations may be affected by the timing, effectiveness and costs associated with
the successful implementation of any upgrades or changes to our systems and infrastructure to accommodate such alternative
devices, operating systems and platforms. Further, in the event that it is more difficult or less compelling for our customers to buy
products from us on their mobile or other devices, or if our customers choose not to buy products from us on such devices or to
use mobile or other products that do not offer access to our sites or limit the effectiveness of our marketing or other offerings, our
customer growth could be harmed and our business, financial condition and operating results may be materially adversely
affected.
Additionally, our competitors may outpace us in incorporating new technologies, such as artificial intelligence, into their
product offerings and engagement with customers, which could affect our competitiveness and operational outcomes. Our efforts
to utilize these technological advancements may not be successful, may result in substantial integration and maintenance costs,
and may expose us to additional risks. The content, analyses, or recommendations generated by artificial intelligence programs, if
deficient, inaccurate, or biased, could adversely impact our business, financial condition, and operational results, as well as our
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reputation. Moreover, ethical concerns associated with artificial intelligence could lead to brand damage, competitive
disadvantages or legal repercussions. Any problems with our implementation or use of artificial intelligence or other technological
advancements could negatively impact our business or results of our operations.
Significant merchandise returns could harm our business.
We allow our customers to return products, subject to our return policy. If merchandise returns are significant, our business,
prospects, financial condition and results of operations could be harmed. Further, we modify our policies relating to returns from
time to time, which may result in customer dissatisfaction or an increase in the number of product returns. Many of our products
are large and require special handling and delivery. From time to time our products are damaged in transit, which can increase
return rates and harm our brand.
Our business relies heavily on email and other messaging services, and any restrictions on the sending of emails or
messages or an inability to timely deliver such communications could materially adversely affect our net revenue and business.
Our business is highly dependent upon email and other messaging services, including our mobile application, for promoting
our sites and products. Daily promotions offered through emails and other messages sent by us, or on our behalf by our vendors,
generate a significant portion of our net revenue. We provide daily emails and "push" communications to customers and other
visitors informing them of what is available for purchase on our sites that day, and we believe these messages are an important
part of our customer experience and operations strategy. If we are unable to successfully deliver emails or other messages to our
subscribers, or if subscribers decline to open our emails or other messages, our net revenue and profitability would be materially
adversely affected. Changes in how webmail applications organize and prioritize email may also reduce the number of subscribers
opening our emails. For example, Google's Gmail service has a feature that organizes incoming emails into categories and such
categorization or similar inbox organizational features may result in our emails being delivered in a less prominent location in a
subscriber's inbox or viewed as "spam" by our subscribers and may reduce the likelihood of that subscriber opening our emails.
Actions by third parties to block, impose restrictions on or charge for the delivery of emails or other messages could also
adversely impact our business. From time to time, Internet service providers or other third parties may block bulk email
transmissions or otherwise experience technical difficulties that result in our inability to successfully deliver emails or other
messages to third parties. Changes in the laws or regulations that limit our ability to send such communications or impose
additional requirements upon us in connection with sending such communications would also materially adversely impact our
business. Our use of email and other messaging services to send communications about our sites or other matters may also result
in legal claims against us, which may cause us increased expenses, and if successful might result in fines and orders with costly
reporting and compliance obligations or might limit or prohibit our ability to send emails or other messages. We also rely on
social networking messaging services to send communications and to encourage customers to send communications. Changes to
the terms of these social networking services to limit promotional communications, any restrictions that would limit our ability or
our customers' ability to send communications through their services, disruptions or downtime experienced by these social
networking services or decline in the use of or engagement with social networking services by customers and potential customers
could materially adversely affect our business, financial condition and operating results.
We are subject to risks related to online transactions and payment methods.
We accept payments using a variety of methods, including credit card, debit card, electronic and mobile payment
technologies, credit accounts (including promotional financing), installment loans, lease to own plans, gift cards and customer
invoicing. We rely on third parties to provide many of these payment methods and payment processing services, including certain
Wayfair-branded programs and promotional financing. If we offer new payment options to consumers, we may be subject to
additional regulations, compliance requirements and payment fraud. Additionally, changes to existing laws and regulations or
their interpretation, or the adoption of new laws or regulations could require mandatory changes to our payment options. For
certain payment methods, including credit and debit cards, we pay interchange and other fees, which may increase over time and
raise our operating costs and lower profitability. We also offer private label and/or co-branded credit card programs, which could
adversely affect our operating results if terminated. We are also subject to payment card association operating rules and
certification requirements, including the Payment Card Industry Data Security Standard and rules governing electronic funds
transfers, which could change or be reinterpreted to make it difficult or impossible for us to comply. As our business changes, we
may also be subject to different rules under existing standards, which may require new assessments that involve costs above what
we currently pay for compliance. If we fail to comply with the rules or requirements of any provider of a payment method we
accept, if the volume of fraud in our transactions limits or terminates our rights to use payment methods we currently accept, or if
a data breach occurs relating to our payment systems, we may, among other things, be subject to fines or higher transaction fees
and may lose, or face restrictions placed upon, our ability to accept credit card and debit card payments from consumers or to
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facilitate other types of online payments. If any of these events were to occur, our business, financial condition and operating
results could be materially adversely affected.
We occasionally receive orders placed with fraudulent credit card data. We have in the past, and may in the future, suffer
losses as a result of orders placed with fraudulent credit card data even if the associated financial institution approved payment of
the orders. Under current credit card practices, we may be liable for fraudulent credit card transactions. We have in the past, and
may in the future also suffer losses from other online transaction fraud, including fraudulent returns. If we are unable to detect or
control credit card or transaction fraud, our liability for these transactions could harm our business, financial condition and
operating results.
We rely on the performance of members of management and highly skilled personnel, and if we are unable to attract,
develop, motivate and retain well-qualified employees, our business could be harmed.
We believe our success has depended, and continues to depend, on the efforts and talents of Niraj Shah, one of our co-
founders, co-chairman of the board of directors (the “Board”) and our Chief Executive Officer, Steven Conine, one of our co-
founders and co-chairman of the Board, and the other members of our senior management team. The loss of any of our senior
management or other key employees could materially harm our business.
Our future success also depends on our continuing ability to attract, develop, motivate and retain highly qualified and
skilled employees, particularly mid-level managers, engineers and merchandising and technology personnel. In the past. we have
implemented reorganizations and workforce reductions and may in the future implement other reorganizations or reductions in
force. For example, in January 2025, we announced our decision to exit the German market, impacting approximately 730
employees, although we expect approximately half of these positions to relocate to other corporate offices. Any reorganization or
reduction in force may yield unintended consequences and costs, such as the loss of institutional knowledge, relationships and
expertise for certain critical roles, attrition beyond the intended plan, the distraction of employees, reduced employee morale and
adverse effects to our reputation as an employer, which could make it more difficult for us to hire new employees in the future,
and the risk that we may not achieve the anticipated benefits from the process.
The market for such positions in the Boston area and other cities in which we operate is competitive. Qualified individuals
are in high demand, and we may incur significant costs to attract them. Our inability to recruit and develop mid-level managers
could materially adversely affect our ability to execute our business plan, and we may not be able to find adequate replacements,
particularly in light of high attrition rates in some regions where we have operations. These risks to attracting and retaining the
necessary talent may be exacerbated by recent labor constraints and inflationary pressures on employee wages and benefits. All of
our officers and other U.S. employees are at-will employees, meaning that they may terminate their employment relationship with
us at any time, and their knowledge of our business and industry would be extremely difficult to replace. We use equity awards to
attract talented employees. If the value or liquidity of our common stock declines or remains depressed, that may prevent us from
recruiting and retaining qualified employees. If we do not succeed in attracting well-qualified employees or retaining and
motivating existing employees, our business, financial condition and operating results may be materially adversely affected.
Our business could suffer if we are unsuccessful in making, integrating and maintaining acquisitions and investments.
As part of our business strategy, we may acquire other companies, businesses or assets. However, we may not be able to
find suitable acquisition candidates, and we may not be able to complete acquisitions on favorable terms, if at all. Acquisitions
involve numerous risks, any of which could harm our business, including: difficulties in integrating the technologies, operations,
existing contracts and personnel of an acquired company; difficulties in supporting and transitioning customers and suppliers, if
any, of an acquired company; diversion of financial and management resources from existing operations or alternative acquisition
opportunities; failure to realize the anticipated benefits or synergies of a transaction; failure to identify all of the problems,
liabilities or other shortcomings or challenges of an acquired company or technology, including issues related to intellectual
property, regulatory compliance practices, liabilities related to data security and privacy of customer data, the acquired company's
internal controls over financial reporting, including revenue recognition or other accounting practices; employee or customer
issues; risks of entering new markets in which we have limited or no experience; potential loss of senior management or other key
employees, customers and suppliers from either our current business or an acquired company's business; inability to generate
sufficient net revenue to offset acquisition costs; additional costs or equity dilution associated with funding the acquisition; and
possible write-offs or impairment charges relating to acquired businesses, and these liabilities may be greater than the warranty
and indemnity limitations we negotiate.
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In addition, our investments in properties may not be fully realized. We continually review our operations and facilities in
an effort to reduce costs and increase efficiencies. For strategic or other operational reasons, we may decide to consolidate or co-
locate certain aspects of our business operations or dispose of one or more of our properties. For example, we have increasingly
moved to virtualize certain customer service centers. If we decide to fully or partially vacate a leased property, we may incur
significant costs, including facility closing costs, employee separation and retention expenses, lease termination fees, rent expense
in excess of sublease income, impairment charges for right-of-use (“ROU”) assets and leasehold improvements and accelerated
depreciation of assets. Any of these events may materially adversely affect our business, financial condition and operating results.
We may not be able to adequately protect our intellectual property rights.
We regard our customer lists, trademarks, domain names, copyrights, patents, trade dress, trade secrets, proprietary
technology and similar intellectual property as critical to our success, and we rely on a combination of trademark, copyright and
patent law, trade dress, trade secret protection, agreements, and other methods together with the diligence our employees and
others to protect our proprietary rights. We might not be able to obtain broad protection in the U.S. or internationally for all of our
intellectual property, and we might not be able to obtain effective intellectual property protection in every country in which we
sell products or perform services. For example, we are the registrant of marks for our brands in numerous jurisdictions and of the
Internet domain name for our websites at Wayfair.com, Wayfair.ca, Wayfair.co.uk, and Wayfair.ie and our other sites, as well as
various related domain names. However, we have not registered our marks or domain names in all major international
jurisdictions and may not be able to register or use such domain names in all of the countries in which we currently or intend to
conduct business. Further, we might not be able to prevent third parties from registering, using or retaining domain names that
interfere with our consumer communications or infringe or otherwise decrease the value of our marks, domain names and other
proprietary rights.
The protection of our intellectual property rights may require the expenditure of significant financial, managerial and
operational resources. We have in the past and may in the future initiate claims or litigation against others for infringement,
misappropriation or violation of our intellectual property rights or proprietary rights or to establish the validity of such rights. Any
litigation, whether or not it is resolved in our favor, could result in significant expense to us and divert the efforts of our technical
and management personnel, which may materially adversely affect our business, financial condition and operating results.
Moreover, the steps we take to protect our intellectual property may not adequately protect our rights or prevent third parties from
infringing or misappropriating our proprietary rights, and we may not be able to broadly enforce all of our trademarks or patents.
Any of our patents, marks or other intellectual property rights may be challenged by others or invalidated through administrative
process or litigation. Our patent and trademark applications may never be granted. Additionally, the process of obtaining
intellectual property protections is expensive and time-consuming, and we may not be able to pursue all necessary or desirable
actions at a reasonable cost or in a timely manner. Even if issued, there can be no assurance that these protections will adequately
safeguard our intellectual property, as the legal standards relating to the validity, enforceability and scope of protection of patent
and other intellectual property rights are uncertain. We also cannot be certain that others will not independently develop or
otherwise acquire equivalent or superior technology or intellectual property rights. We may also be exposed to claims from third
parties claiming infringement of their intellectual property rights, demanding the release or license of open source software or
derivative works that we developed using such software (which could include our proprietary code) or otherwise seeking to
enforce the terms of the applicable open source license. These claims could result in litigation and could require us to purchase a
costly license, publicly release the affected portions of our source code, be limited in or cease using the implicated software unless
and until we can re-engineer such software to avoid infringement or change the use of the implicated open source software.
We have been, and may again be, accused of infringing intellectual property rights of third parties.
The e-commerce industry is characterized by vigorous protection and pursuit of intellectual property rights, which has
resulted in protracted and expensive litigation for many companies. We are subject to claims and litigation by third parties that we
infringe their intellectual property rights, and we expect additional claims and litigation with respect to infringement to occur in
the future. The costs of supporting such litigation and disputes are considerable, and there can be no assurances that favorable
outcomes will be obtained. As our business expands and the number of competitors in our market increases and overlaps occur,
we expect that infringement claims may increase in number and significance. Any claims or proceedings against us, whether
meritorious or not, could be time-consuming, result in considerable litigation costs, require significant amounts of management
time or result in the diversion of significant operational resources, any of which could materially adversely affect our business,
financial condition and operating results.
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Legal claims regarding intellectual property rights are subject to inherent uncertainties due to the oftentimes complex issues
involved, and we cannot be certain that we will be successful in defending ourselves against such claims. In addition, some of our
larger competitors have extensive portfolios of issued patents. Many potential litigants, including patent holding companies, have
the ability to dedicate substantially greater resources to enforce their intellectual property rights and to defend claims that may be
brought against them. Furthermore, a successful claimant could secure a judgment that requires us to pay substantial damages or
prevents us from conducting our business as we have historically done or may desire to do in the future. We might also be
required to seek a license and pay royalties for the use of such intellectual property, which may not be available on commercially
acceptable terms, or at all. Alternatively, we may be required to develop non-infringing technology or intellectual property, which
could require significant effort and expense and may ultimately not be successful.
We have received in the past, and we may receive in the future, communications alleging that certain items posted on or
sold through our sites violate third-party copyrights, designs, marks and trade names or other intellectual property rights or other
proprietary rights. Brand and content owners and other proprietary rights owners have actively asserted their purported rights
against online companies, including Wayfair. In addition to litigation from rights owners, we may be subject to regulatory, civil or
criminal proceedings and penalties if governmental authorities believe we have aided and abetted in the sale of counterfeit or
infringing products.
Such claims, whether or not meritorious, may result in the expenditure of significant financial, managerial and operational
resources, injunctions against us or the payment of damages by us. We may need to obtain licenses from third parties who allege
that we have violated their rights, but such licenses may not be available on terms acceptable to us, or at all. These risks have been
amplified by the increase in third parties whose sole or primary business is to assert such claims.
We are engaged in legal proceedings from time to time that could cause us to incur unforeseen expenses and could
occupy a significant amount of our management's time and attention.
From time to time, we are subject to litigation or claims that could negatively affect our business operations and financial
position. As we have grown, we have seen a rise in the number of litigation matters against us. These matters have included
intellectual property claims, employment related litigation, as well as consumer and securities class actions, each of which are
typically expensive to defend. Litigation disputes could cause us to incur unforeseen expenses, result in site unavailability, service
disruptions and otherwise occupy a significant amount of our management's time and attention, any of which could negatively
affect our business operations and financial position. We also from time to time receive inquiries and subpoenas and other types
of information requests from government authorities and we may become subject to related claims and other actions related to our
business activities. While the ultimate outcome of investigations, inquiries, information requests and related legal proceedings is
difficult to predict, such matters can be expensive, time-consuming and distracting, and adverse resolutions or settlements of those
matters may result in, among other things, modification of our business practices, reputational harm or costs and significant
payments, any of which could negatively affect our business operations and financial position.
We cannot guarantee that our stock repurchase program will be fully consummated or that it will enhance long-term
shareholder value. Stock repurchases could also increase the volatility of the trading price of our stock and could diminish our
cash reserves.
In August 2020, the Board authorized a stock repurchase program of up to $700 million of our Class A common stock in
the open market, through privately negotiated transactions, or otherwise, including pursuant to a Rule 10b5-1 plan (the “2020
Repurchase Program”). On August 10, 2021, the Board authorized a new $1.0 billion stock repurchase program on the same terms
(the “2021 Repurchase Program” together with the 2020 Repurchase Program, the “Repurchase Programs”). Wayfair will begin
repurchasing shares under the 2021 Repurchase Program upon the completion of the 2020 Repurchase Program. Although the
Board has authorized the Repurchase Programs, the programs do not obligate us to repurchase any specific dollar amount or to
acquire any specific number of shares. The amount, timing, and purchases under our stock repurchase program, if any, are
influenced by many factors and may fluctuate based on our operating results, cash flows, and priorities for the use of cash, the
market price of our common stock, and our possession of potentially material nonpublic information. Even if our Repurchase
Programs are fully implemented, we cannot guarantee that the Repurchase Programs will be fully consummated or that the
programs will enhance long-term stockholder value. The programs could affect the trading price of our Class A common stock
and increase volatility, and any announcement of a termination of either program may result in a decrease in the trading price of
our Class A common stock. In addition, the amount, timing, and execution of our Repurchase Programs may fluctuate based on
our priorities for the use of cash for other purposes, and because of changes in cash flows, tax laws, and the market price of our
Class A common stock, the Repurchase Programs could diminish our cash reserves.
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Risks Related to our Indebtedness and Capital Raising
Our outstanding indebtedness, or additional indebtedness that we may incur, could limit our operating flexibility and
adversely affect our financial condition.
As of December 31, 2024, we had $3.2 billion of principal indebtedness outstanding, $236 million of which is characterized
as short-term debt and presented within other current liabilities in the consolidated balance sheets. Our indebtedness includes
unsecured 0.625% Convertible Senior Notes due 2025 that mature on October 1, 2025 (the “2025 Notes”), unsecured 1.00%
Convertible Senior Notes due 2026 that mature on August 15, 2026 (the “2026 Notes”), unsecured 3.25% Convertible Senior
Notes due 2027 that mature on September 15, 2027 (the “2027 Notes”), unsecured 3.50% Convertible Senior Notes due 2028 that
mature on November 15, 2028 (the “2028 Notes”, and together with the 2025 Notes, 2026 Notes and 2027 Notes, the “Non-
Accreting Notes”), and 7.250% Senior Secured Notes due 2029 that mature on October 31, 2029 (the “2029 Secured Notes” and
together with the Non-Accreting Notes, the “Notes”). At maturity of the Non-Accreting Notes, unless earlier purchased, redeemed
or converted, we will settle any conversions in cash, shares of Wayfair’s Class A common stock or a combination thereof, at our
election. If any of the Non-Accreting Notes are not converted at or prior to maturity, we will be required to pay the holder thereof
the principal amount in cash. At maturity of the 2029 Secured Notes, unless earlier purchased, we will be required to pay the
holders thereof the principal amount in cash. We pay interest semiannually in arrears at fixed rates per annum of 0.625% for the
2025 Notes, 1.00% for the 2026 Notes, 3.25% for the 2027 Notes, 3.50% for the 2028 Notes and 7.250% for the 2029 Secured
Notes. Under certain circumstances, the holders of the Notes may require us to repay all or a portion of the principal and interest
outstanding under the Notes in cash prior to the maturity date, which could have an adverse effect on our liquidity and financial
condition.
We have the ability to borrow up to $600 million under our senior secured revolving credit facility (the “Revolver”) to
finance working capital and provide funds for permitted acquisitions, repurchases of equity interests and other general corporate
purposes. If we draw down on this facility, our interest expense and principal repayment requirements will increase, which could
have an adverse effect on our financial results and our ability to make payments on the Notes. Further, the agreements governing
the Revolver contain numerous requirements, including affirmative, negative and financial covenants. As a result of these
covenants, our ability to respond to changes in business and economic conditions and engage in beneficial transactions, including
to obtain additional financing as needed, may be restricted. Our failure to comply with any of these covenants or to meet any
payment obligations under the Revolver could result in an event of default which, if not cured or waived, would result in any
amounts outstanding, including any accrued interest and unpaid fees, becoming immediately due and payable. We might not have
sufficient working capital or liquidity to satisfy any repayment obligations in the event of an acceleration of those obligations.
Our business may not be able to generate sufficient cash flow from operations, and we can give no assurance that future
borrowings will be available to us in amounts sufficient to enable us to pay our indebtedness as such indebtedness matures,
including the Notes, and to fund our other liquidity needs. If this occurs, we will need to refinance all or a portion of our
indebtedness on or before maturity. Any new or refinanced debt may be subject to substantially higher interest rates and
restrictive covenants that could reduce our operational flexibility, and there can be no assurance that we will be able to refinance
any of our indebtedness on commercially reasonable terms, or at all. We may need to adopt one or more alternatives, such as
reducing or delaying planned expenses and capital expenditures, selling assets, restructuring debt, or obtaining additional equity
or debt financing. We may sell Class A common stock, convertible securities and other equity securities in one or more
transactions at prices and in a manner as we may determine from time to time. Our Non-Accreting Notes are and any future
issuance of equity or equity-linked securities would be dilutive to holders of our Class A common stock. New investors in such
subsequent transactions could gain rights, preferences and privileges senior to those of holders of our Class A common stock or
our Non-Accreting Notes. These alternative strategies may not be implemented on satisfactory terms, if at all. Our ability to
refinance our indebtedness or obtain additional financing, or to do so on commercially reasonable terms, may depend on, among
other things, our financial condition at the time, our credit rating, restrictions in agreements governing our indebtedness, and other
factors, including the condition of the financial markets and the markets in which we compete.
Further, we may from time to time seek to retire, restructure, repurchase or redeem, or otherwise mitigate the equity dilution
associated with, our outstanding convertible debt, through cash purchases, stock buybacks of some or all of the shares underlying
the Non-Accreting Notes, and/or exchanges for equity or debt, in open-market purchases, privately negotiated transactions or
otherwise. Such repurchases, exchanges or liability management exercises, if any, will be upon such terms and at such prices and
sizes as we may determine, and will depend on prevailing market conditions, our liquidity requirements, contractual restrictions
and other factors. The amounts involved may be material.
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Current capital market conditions, including the impact of inflation, have increased borrowing rates and can be expected to
significantly increase our cost of capital as compared to prior periods should we seek additional funding. Quantitative tightening
by the U.S. Federal Reserve, along with other central banks around the world, may further negatively affect our short-term ability
or desire to incur debt. Moreover, global capital markets have undergone periods of significant volatility and uncertainty in the
past, and there can be no assurance that such financing alternatives will be available to us on favorable terms or at all, should we
determine it necessary or advisable to seek additional capital.
If we do not generate sufficient cash flow from operations, and additional borrowings, refinancings or proceeds from equity
or debt issuances or asset sales are not available to us, we may not have sufficient cash to enable us to meet all of our obligations,
including our obligations under the Revolver or the Notes. Further, our failure to service our existing and future indebtedness or
other liabilities or maintain compliance with the financial covenants in our debt agreements could result in default under the
related debt agreements or other alternatives that could result in our stockholders losing some or all of their equity investment in
us.
The conditional conversion feature of any series of the Non-Accreting Notes, if triggered, may adversely affect our
financial condition and operating results.
If the conditional conversion feature of any series of our Non-Accreting Notes is triggered, holders of such series of Non-
Accreting Notes will be entitled to convert the applicable series of Non-Accreting Notes at any time during specified periods at
their option. If one or more holders elect to convert their Non-Accreting Notes, unless we elect to satisfy our conversion
obligation by delivering solely shares of our Class A common stock (other than paying cash in lieu of delivering any fractional
share), we would be required to settle a portion or all of our conversion obligation through the payment of cash, which could
adversely affect our liquidity. To the extent we satisfy our conversion obligation of the Non-Accreting Notes by delivering shares
of our Class A common, we would be required to deliver a significant number of shares, which would cause dilution to our
existing stockholders. In addition, even if holders do not elect to convert their Notes in such circumstances, we could be required
under applicable accounting rules to reclassify all or a portion of the outstanding principal of the applicable series of Notes as a
current rather than long-term liability, which would result in a material reduction of our net working capital.
Risks Related to Laws and Regulations
Government regulation of the Internet and e-commerce is evolving, and unfavorable changes or failure by us to comply
with these regulations could substantially harm our business and operating results.
We are subject to general business regulations and laws as well as regulations and laws specifically governing the Internet
and e-commerce. Existing and future regulations and laws could impede the growth of the Internet, e-commerce or mobile
commerce. These regulations and laws may involve taxes, tariffs, privacy and data security, anti-spam, content protection,
artificial intelligence, electronic contracts and communications, consumer protection, Internet neutrality and gift cards. It is not
clear how existing laws governing issues such as property ownership, sales and other taxes and consumer privacy apply to the
Internet as the vast majority of these laws were adopted prior to the advent of the Internet and do not contemplate or address the
unique issues raised by the Internet or e-commerce. It is possible that general business regulations and laws, or those specifically
governing the Internet or e-commerce, may be interpreted and applied in a manner that is inconsistent from one jurisdiction to
another and may conflict with other rules or our practices. We cannot be sure that our practices have complied, comply or will
comply fully with all such laws and regulations. Any failure, or perceived failure, by us to comply with any of these laws or
regulations could result in damage to our reputation, a loss in business and proceedings or actions against us by governmental
entities or others. Any such proceeding or action could hurt our reputation, force us to spend significant amounts in defense of
these proceedings, distract our management, increase our costs of doing business, decrease the use of our sites by consumers and
suppliers and may result in the imposition of monetary liability. We may also be contractually liable to indemnify and hold
harmless third parties from the costs or consequences of non-compliance with any such laws or regulations. In addition, it is
possible that governments of one or more countries may seek to censor content available on our sites or may even attempt to
completely block access to our sites. Adverse legal or regulatory developments could substantially harm our business. In
particular, in the event that we are restricted, in whole or in part, from operating in one or more countries, our ability to retain or
increase our customer base may be adversely affected, and we may not be able to maintain or grow our net revenue and expand
our business as anticipated. For instance, since 2022 the U.S. and other countries have implemented a series of sanctions against
Russia in response to the conflict in Ukraine and U.S. agencies have enhanced trade restrictions. Further, as we enter new market
segments or channels or geographical areas and expand the products and services we offer, we may be subject to additional laws
and regulatory requirements or prohibited from conducting our business, or certain aspects of it, in certain jurisdictions. We will
incur additional costs complying with these additional obligations and any failure or perceived failure to comply would adversely
affect our business and reputation.
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In addition, there is also uncertainty regarding potential laws, regulations and policies related to sustainability, climate
change laws and regulations, and global environmental sustainability matters, including disclosure obligations and reporting on
such matters. Changes in the legal or regulatory environment affecting sustainability, climate change, and sustainability
disclosure, responsible sourcing, supply chain transparency, or environmental protection, among others, including regulations to
limit carbon dioxide and other GHG emissions, to discourage the use of plastic or to limit or to impose additional costs on
commercial water use may result in increased compliance costs for us and our business partners, all of which may negatively
impact our results of operations, financial condition and cash flows. The expectations related to sustainability matters are rapidly
evolving, and from time to time, we announce certain initiatives and goals related to these matters. We could fail, or be perceived
to fail to act responsibly, in our efforts, or we could fail in accurately reporting our progress on such initiatives and goals.
Additionally, the rapid evolution and increased adoption of artificial intelligence technologies and our obligations to comply with
emerging laws and regulations may require us to develop additional artificial intelligence-specific governance programs.
As these new laws, regulations, treaties and similar initiatives and programs are adopted and implemented, we will be
required to comply or potentially face market access limitations or restrictions on our products entering certain jurisdictions,
sanctions or other penalties, including fines. Such burdens or costs may result in an adverse effect on our financial condition,
results of operations and cash flows. We could also face significant compliance and operational burdens and incur significant
costs in our efforts to comply with or rectify non-compliance with these laws or regulations.
Failure to comply with federal, state and international laws and regulations relating to privacy, data protection and
consumer protection, or the expansion of current, or the enactment of new laws or regulations relating to privacy, data
protection and consumer protection, could adversely affect our business reputation and our financial condition.
We are subject to a variety of federal, state and international privacy laws and regulations that govern the collection, use,
retention, sharing, processing, export and security of personal information. New laws and regulations are rapidly coming into
effect while existing legislation is continuously evolving. Among others, we are subject to several global and state laws,
including, but not limited to, the General Data Protection Regulation (“GDPR”) in the European Union (“EU”) and the California
Consumer Privacy Act, as amended by the California Privacy Rights Act (“CPRA”), all of which give new data privacy rights to
their respective residents and impose significant obligations on controllers and processors of consumer data. The SEC adopted
new rules requiring public companies to disclose information about a material cybersecurity incident, including any breach of
personal data, within four business days of determining that it has experienced a material cybersecurity incident. The potential
effects of these laws, and any other regulations under consideration around the globe, are far-reaching, uncertain, and evolving,
and may require us to modify our data processing practices and policies and incur substantial costs and expenses in an effort to
comply. These laws are complex and subject to potentially differing interpretations and there is no harmonized approach to
maintaining compliance. Requirements may be interpreted and applied in a manner that is inconsistent from one jurisdiction to
another or may conflict with other rules or our practices.
As a result, we may need to limit the way we use personal information and may have difficulty maintaining a single,
compliant operating model. Further, many of these laws may require consent from consumers for the use of data for various
purposes, including marketing, which may limit our ability to market our products. Compliance with such laws and regulations
will result in additional costs and may necessitate changes to our business practices and divergent operating models, which may
adversely affect our business and financial condition. Our practices may not comply, or may not comply in the future, with all
such laws, regulations, requirements and obligations. Any failure, or perceived failure, by us to comply with our posted privacy
policies or with any federal, state or international privacy or consumer protection-related laws, regulations, or regulatory guidance
or other legal obligations relating to privacy or consumer protection could adversely affect our reputation, brand and business, and
may result in claims, proceedings or actions against us by governmental entities and other third parties or other liabilities or
require us to change our operations and/or cease using certain data sets. Any such claim, proceeding or action, including a
complaint by an activist to a regulatory authority or other public statement criticizing our practices could hurt our reputation,
brand and business, force us to incur significant expenses in defense of such proceedings, distract our management, increase our
costs of doing business, result in a loss of customers and suppliers and may result in the imposition of monetary penalties and
otherwise adversely affect our financial condition and operating results. We may also be contractually required to indemnify and
hold harmless third parties from the costs or consequences of non-compliance with any laws, regulations or other legal obligations
relating to privacy or consumer protection or any inadvertent or unauthorized use or disclosure of data that we store or handle as
part of operating our business.
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If the use of “cookie” tracking technologies is further restricted, regulated, or blocked, or if changes in technology cause
cookies to become less reliable or acceptable as a means of tracking consumer behavior, the amount or accuracy of Internet
user information we collect would decrease, which could harm our business and operating results.
Cookies are small data files that are sent by websites and stored locally on an Internet user’s computer or mobile device.
We, and third parties who work on our behalf, collect data via cookies that is used to track the behavior of visitors to our sites, to
provide a more personal and interactive experience, and to increase the effectiveness of our marketing. However, Internet users
can easily disable, delete and block cookies directly through browser settings or through other software, browser extensions or
hardware platforms that physically block cookies from being created and stored.
Federal, state and international governmental authorities continue to evaluate the privacy implications inherent in the use of
proprietary or third-party "cookies" and other methods of online tracking for behavioral advertising, analytics and other purposes.
U.S. and foreign governments have enacted, have considered or are considering legislation or regulations that could significantly
restrict the ability of companies and individuals to engage in these activities, such as by regulating the level of consumer notice
and consent required before a company can employ cookies or other electronic tracking tools or the use of data gathered with such
tools. In the U.S., online tracking technologies are regulated by state privacy laws, such as the CPRA, federal laws, and self-
regulatory frameworks that may be binding on companies that provide online advertising technology services. These laws and
frameworks may require companies to offer consumers the right to opt out of many of these activities. Online tracking
technologies are regulated in the EU and U.K. via the ePrivacy Directive, which the EU legislature is considering updating via the
ePrivacy Regulation (EPR), and the EPR may restrict the way we conduct online advertising and other online communications.
Additionally, some providers of consumer devices and web browsers have implemented, or announced plans to implement, means
to make it easier for Internet users to prevent the placement of cookies, to block other tracking technologies or to require new
permissions from users for certain activities, which could if widely adopted significantly reduce the effectiveness of such
practices and technologies. For example, Google previously proposed phasing out third-party cookies in its Chrome browser. We
may have to develop alternative systems, which may be less effective, to analyze our customers’ behavior and preferences,
customize their online experience, or efficiently market to them if customers block cookies or regulations introduce additional
barriers to collecting cookie data. The regulation of the use of cookies and other current online tracking and advertising practices
or a loss in our ability to make effective use of services that employ such technologies could increase our costs of operations and
limit our ability to acquire new customers on cost-effective terms and consequently, materially adversely affect our business,
financial condition and operating results.
We may incur additional tax expense or become subject to additional tax exposure, which may adversely affect the
commercial use of our sites and our financial rights.
We are subject to the tax laws and regulations of the U.S. and numerous other jurisdictions in which we do business. Many
judgments are required in determining our worldwide provision for income taxes and other tax liabilities, and we are regularly
under audit by the applicable tax authorities, which may not agree with our tax positions. In addition, our tax liabilities are subject
to other significant risks and uncertainties, including those arising from potential changes in laws and regulations in the countries
in which we do business, the possibility of adverse determinations with respect to the application of existing laws (in particular
with respect to full realization of the incentives contemplated by the Inflation Reduction Act), changes in our business or structure
and changes in the valuation of our deferred tax assets and liabilities. Any unfavorable resolution of these and other uncertainties
may have a significant adverse impact on our tax rate and results of operations. If our tax expense were to increase, or if the
ultimate determination of our taxes owed is for an amount in excess of amounts previously accrued, our operating results, cash
flows and financial condition could be adversely affected.
Due to the global nature of the Internet, it is possible that various states or foreign countries might attempt to impose
additional or new regulation on our business or levy additional or new sales, income or other taxes relating to our activities. New
or revised international, federal, state or local tax regulations or court decisions may subject us or our customers to additional
sales, income and other taxes. For example, the U.S. Supreme Court's decision in South Dakota v. Wayfair, Inc., removed a
significant impediment to the enactment of laws imposing sales tax collection obligations on out-of-state e-commerce companies.
After the Wayfair decision, several U.S. states imposed an economic presence standard with respect to the imposition of taxes.
These new rules often have uncertainty with respect to the level of activity necessary to cause a taxable presence for taxpayers
within the state. A successful assertion by one or more states requiring us to collect sales taxes where we currently do not, or to
collect additional sales taxes in a state in which we currently collect them, could result in substantial tax liabilities (including
penalties and interest). Other new or revised taxes, such as digital taxes, sales taxes, VAT and similar taxes could increase the cost
of doing business online and decrease the attractiveness of selling products over the Internet. New taxes and rulings could also
create significant increases in internal costs necessary to capture data and collect and remit taxes. Any of these events could have
a material adverse effect on our business, financial condition and operating results.
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Our Bylaws and Charter generally provide that the Court of Chancery for the State of Delaware will be the exclusive
forum for certain legal actions concerning the internal affairs of Wayfair, including but not limited to stockholder derivative
litigation, and our Bylaws provide that the U.S. federal district courts will be the exclusive forum for legal actions arising
under the Securities Act, which could increase costs to bring such claims, discourage such claims or limit the ability of
Wayfair’s stockholders to bring such claims in a judicial forum viewed by the stockholders as more favorable.
Our Bylaws provide that, unless we consent in writing to the selection of an alternative forum, the sole and exclusive forum
for any (A) (i) derivative action or proceeding brought on behalf of Wayfair; (ii) action asserting a claim of breach of a fiduciary
duty owed by any current or former director, officer, other employee or stockholder of Wayfair to Wayfair or Wayfair’s
stockholders; (iii) action asserting a claim against Wayfair or its current directors, officers, employees or stockholders arising
pursuant to any provision of the Delaware General Corporation Law (“DGCL”), the Charter, or the Bylaws or as to which the
DGCL confers jurisdiction on the Court of Chancery for the State of Delaware; or (iv) action asserting a claim against
Wayfair or its current or former directors, officers, employees or stockholders governed by the internal affairs doctrine of the
State of Delaware, in each case, will, to the fullest extent permitted by law, be the Court of Chancery for the State of Delaware or,
solely if such court does not have subject matter jurisdiction thereof, in the other courts of competent jurisdiction in the State of
Delaware or the U.S. District Court for the District of Delaware, and (B) complaint asserting a cause of action arising under the
Securities Act will be the U.S. federal district courts. Our Charter also contains exclusive forum provisions for the Court of
Chancery for the State of Delaware that are consistent with the exclusive forum provisions for the Court of Chancery for the State
of Delaware summarized above. These exclusive forum provisions may increase costs to bring a claim, discourage claims or limit
a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with the Company or Wayfair’s
current or former directors, officers, other employees or stockholders, which may discourage such lawsuits against Wayfair or
Wayfair’s current or former directors, officers, other employees and stockholders. Alternatively, if a court were to find the
exclusive forum provisions contained in our Bylaws or Charter to be inapplicable or unenforceable in an action, we may incur
additional costs associated with resolving such action in other jurisdictions, which could adversely affect our business and
financial condition.
Risks Related to Ownership of our Class A Common Stock
The price of our Class A common stock has been and may in the future be volatile. This volatility may affect the price at
which you could sell your Class A common stock, and the sale of substantial amounts of our Class A common stock could
adversely affect the price of our Class A common stock.
Our stock price is likely to continue to be volatile and subject to significant price and volume fluctuations in response to
market and other factors, including the other factors discussed in this Risk Factors section. The sale of substantial amounts of our
Class A common stock in the public market, or the perception that these sales might occur, could adversely affect the price of our
Class A common stock.
In addition, stock markets have experienced extreme price and volume fluctuations that have affected and continue to affect
the market prices of equity securities of many technology companies, including e-commerce companies. Stock prices of many
technology companies, including e-commerce companies, have fluctuated in a manner unrelated or disproportionate to the
operating performance of those companies. Volatility in our stock price could adversely affect our business and financing
opportunities and expose us to litigation. Securities litigation can subject us to substantial costs, divert resources and the attention
of management from our business and materially adversely affect our business, financial condition and operating results.
Further, our management generally has broad discretion over the use of our cash resources, and you will be relying on the
judgment of our management regarding the application of these resources. Our management might not apply these resources in
ways that increase the value of your investment.
The dual class structure of our common stock has the effect of concentrating voting control with our co-founders, which
will limit your ability to influence corporate matters.
Our Class B common stock has ten votes per share, and our Class A common stock, which is the stock that is publicly
traded, has one vote per share. Following our initial public offering (the “IPO”), our Class B common stock was held primarily by
our co-founders, other executive officers, directors and their affiliates. Due to optional conversions of Class B common stock into
Class A common stock following the IPO, our Class B common stock is currently held primarily by our co-founders and their
affiliates. As of December 31, 2024, our co-founders and their affiliates owned shares representing approximately 21.4% of the
economic interest and 69.6% of the voting power of our outstanding capital stock. This concentrated control limits your ability to
influence corporate matters for the foreseeable future. For example, these stockholders are able to control elections of directors,
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amendments of our Charter or Bylaws, increases to the number of shares available for issuance under our equity incentive plans or
adoption of new equity incentive plans and approval of any merger or sale of assets for the foreseeable future. This control may
materially adversely affect the market price of our Class A common stock. Additionally, holders of our Class B common stock
may cause us to make strategic decisions or pursue acquisitions that could involve risks to you or may not be aligned with your
interests. The holders of our Class B common stock are also entitled to a separate vote if we seek to amend our certificate of
incorporation to increase or decrease the par value of a class of our common stock or in a manner that alters or changes the
powers, preferences or special rights of the Class B common stock in a manner that affects its holders adversely.
Future transfers by holders of Class B common stock will generally result in those shares converting on a 1:1 basis to
Class A common stock, which will have the effect, over time, of increasing the relative voting power of those holders of Class B
common stock who retain their shares in the long-term, which may include our executive officers.
Short selling could increase the volatility of our stock price.
We believe our Class A common stock has been the subject of significant short selling efforts by certain market
participants. Short sales are transactions in which a market participant sells a security that it does not own. To complete the
transaction, the market participant must borrow the security to make delivery to the buyer. The market participant is then
obligated to replace the security borrowed by purchasing the security at the market price at the time of required replacement. If
the price at the time of replacement is lower than the price at which the security was originally sold by the market participant, then
the market participant will realize a gain on the transaction. Thus, it is in the market participant’s interest for the market price of
the underlying security to decline as much as possible during the period prior to the time of replacement. Short selling may
negatively affect the value of our stock to the detriment of our stockholders.
In addition, market participants with disclosed short positions in our stock have published, and may in the future continue to
publish, negative information regarding us. We believe that the publication of this negative information may in the future lead to
downward pressure on the price of our stock.
The capped calls expose us to counterparty risk and may affect the value of our common stock.
In connection with the issuance of each series of Non-Accreting Notes, we entered into capped calls with certain financial
institutions, which we refer to as the option counterparties. The capped calls are expected generally to reduce the potential dilution
upon conversion of the Non-Accreting Notes and/or offset any cash payments we are required to make in excess of the principal
amount of converted Non-Accreting Notes, as the case may be, with such reduction and/or offset subject to a cap. From time to
time, the option counterparties or their respective affiliates may modify their hedge positions by entering into or unwinding
various derivative transactions with respect to our Class A common stock and/or purchasing or selling our Class A common stock
or other securities of ours in secondary market transactions. This activity could cause a decrease in the market price of our Class
A common stock.
In addition, the option counterparties are financial institutions, and we will be subject to the risk that one or more of the
option counterparties may default or otherwise fail to perform, or may exercise certain rights to terminate, their obligations under
the capped calls. Our exposure to the credit risk of the option counterparties will not be secured by any collateral. If an option
counterparty becomes subject to insolvency proceedings, we will become an unsecured creditor in those proceedings with a claim
equal to our exposure at the time under such transaction. Our exposure will depend on many factors but, generally, our exposure
will increase if the market price or the volatility of our Class A common stock increases. In addition, upon a default or other
failure to perform, or a termination of obligations, by an option counterparty, we may suffer more dilution than we currently
anticipate with respect to our Class A common stock. We can provide no assurances as to the financial stability or viability of the
option counterparties.
If securities or industry analysts do not publish research or reports about our business, or publish negative reports about
our business, our share price and trading volume could decline.
The trading market for our Class A common stock depends in part on the research and reports that securities or industry
analysts publish about us or our business, our market and our competitors. We do not have any control over these analysts. If one
or more of the analysts who cover us downgrade our shares or change their opinion of our shares, our share price would likely
decline. If one or more of these analysts cease coverage of our company or fail to regularly publish reports on us, we could lose
visibility in the financial markets, which could cause our share price or trading volume to decline.
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Anti-takeover provisions in our charter documents and under Delaware law could make an acquisition of our company
more difficult, limit attempts by our stockholders to replace or remove our current management and limit the market price of
our Class A common stock.
Provisions in our Charter and Bylaws may have the effect of delaying or preventing a change of control or changes in our
management. Our Charter and Bylaws include provisions that:
•
permit the Board to establish the number of directors and fill any vacancies and newly created directorships;
•
when the outstanding shares of our Class B common stock represent less than 10% of the then outstanding shares of
Class A common stock and Class B common stock, provide that the Board will be classified into three classes with
staggered, three year terms and that directors may only be removed for cause;
•
require super-majority voting to amend some provisions in our Charter and Bylaws;
•
authorize the issuance of “blank check” preferred stock that the Board could use to implement a stockholder rights
plan;
•
eliminate the ability of our stockholders to call special meetings of stockholders;
•
when the outstanding shares of our Class B common stock represent less than 10% of the then outstanding shares of
Class A common stock and Class B common stock, prohibit stockholder action by written consent, which requires
all stockholder actions to be taken at a meeting of our stockholders;
•
provide that the Board is expressly authorized to make, alter or repeal our Bylaws;
•
our Charter and Bylaws restrict the forum for certain litigation against us to Delaware, and our Bylaws restrict the
forum for certain other litigation against us to the U.S. District Court for the District of Delaware or the U.S. federal
district courts;
•
reflect the dual class structure of our common stock, as discussed above; and
•
establish enhanced advance notice requirements for nominations for election to the Board or for proposing matters
that can be acted upon by stockholders at annual stockholder meetings.
These provisions may frustrate or prevent any attempts by our stockholders to replace or remove our current management
by making it more difficult for stockholders to replace members of the Board, which is responsible for appointing the members of
our management. In addition, because we are incorporated in Delaware, we are governed by the provisions of Section 203 of the
Delaware General Corporation Law, which generally prohibits a Delaware corporation from engaging in any of a broad range of
business combinations with any holder of at least 15% of our capital stock for a period of three years following the date on which
the stockholder became a 15% stockholder.
Item 1B. Unresolved Staff Comments
None.
Item 1C. Cybersecurity
Risk Management and Strategy
We recognize the importance of assessing, identifying and managing material risks associated with cybersecurity threats, as
our business depends on customers trusting that their shopping experience with us is both reliable and safe. We have integrated
cybersecurity risk management into our broader risk management framework through various mechanisms, including (i) our
regular enterprise risk management updates to the Audit Committee, (ii) our information technology and security related internal
controls and (iii) our global incident response and vulnerability management programs.
We view cybersecurity as a shared responsibility across the company and this integration ensures that cybersecurity
considerations are an integral part of our decision-making processes at every level. All employees are required to complete yearly
security training, and we periodically perform tabletop exercises with management participation. Further, our cybersecurity,
privacy, procurement, legal and other cross-functional teams work together to continuously evaluate and address cybersecurity
risks in alignment with our business objectives and operational needs. We use various security tools and processes to help prevent,
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identify, escalate, investigate, resolve and recover from identified vulnerabilities and security incidents in a timely manner,
including, but not limited to, internal reporting, monitoring and detection tools and a vulnerability identification program.
Recognizing the complexity and evolving nature of cybersecurity threats, Wayfair engages with a range of external experts,
including cybersecurity assessors, consultants and auditors in evaluating and testing our risk management systems. Working with
these external experts enables us to leverage specialized knowledge and insights, with a goal of ensuring our cybersecurity
strategies and processes remain at the forefront of industry best practices. Our collaboration with these third parties includes
regular audits, threat assessments and consultation on security enhancements.
In order to mitigate data or security incidents that may originate from third party vendors or suppliers, we conduct both
privacy and security assessments to properly identify, prioritize, assess and remediate any third party risks, and require security
and privacy addenda to our contracts where applicable.
The nature of our business exposes us to cybersecurity threats and attacks that can lead to the unauthorized acquisition or
access, compromise, loss, misuse or theft of our data, including personal information, confidential information or intellectual
property. To date risks from cybersecurity threats, including as a result of any previous cybersecurity incidents, have not
materially affected the company, including our business strategy, results of operations or financial condition. See Part 1, Item 1A,
Risk Factors, in this Annual Report on Form 10-K for a discussion of cybersecurity risks.
Governance
Our Board is ultimately responsible for the risk oversight of the company, including, cybersecurity and privacy risks. Our
Board has delegated responsibility for oversight of cybersecurity risks to the Audit Committee. The Audit Committee is
composed of board members with diverse expertise including risk management, technology and finance, equipping them to
oversee cybersecurity risks effectively. Our Audit Committee is charged with reviewing and discussing our policies with respect
to risk assessment and risk management, which includes overseeing our major financial, privacy, security, cybersecurity and
technology risk exposures and the steps our management has taken to monitor and control these exposures. At the management
level, our Head of Cybersecurity and the cybersecurity teams are primarily responsible for identifying, assessing, monitoring and
managing our cybersecurity. Our current Head of Cybersecurity has 20 years of industry experience, including serving as an
enterprise Chief Information Security Officer for many years and having extensive experience in developing and leading risk
management programs. Additionally, our Head of Cybersecurity holds multiple industry standard security certifications, including
CISSP (Certified Information Systems Security Professional) and CISM (Certified Information Security Manager).
The Audit Committee receives reports, briefings and presentations from senior management, including our Head of
Cybersecurity, at periodic committee meetings, including, on a rotating basis, in-depth presentations on specific areas of risk and
regular enterprise risk management updates.
In addition to our scheduled meetings, our Global Incident Response Plan ensures that significant developments or incidents,
even if immaterial to us, are reviewed regularly by a cross-functional team to determine whether further escalation to the Audit
Committee is appropriate, ensuring the committee's and the Board’s oversight is timely and responsive. Our Global Incident
Response Plan also includes immediate actions to mitigate the impact and long-term strategies for remediation and prevention of
future incidents.
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Item 2. Properties
As of December 31, 2024, we operated the following facilities:
Leased Square
Footage (1)
Reportable
Segment
(square footage in thousands)
Description of Use:
Logistics
18,878 United States
Logistics
3,510 International
Customer service
125 United States
Customer service
30 International
Retail
420 United States
Boston headquarters
1,341 United States
Office space
132 United States
Office space
311 International
Total
24,747
(1) Represents the total leased space excluding subleases and leases that have not yet commenced.
Item 3. Legal Proceedings
From time to time, we are involved in litigation matters and other legal claims that arise during the ordinary course of
business. Litigation and legal claims are inherently unpredictable and cannot be predicted with certainty. An unfavorable
resolution of one or more of these matters could have a material adverse effect on our results of operations or financial condition,
and regardless of the outcome, these matters can be costly and time consuming, as they can divert management's attention from
important business matters and initiatives, negatively impacting our overall operations. In addition, we may be at greater risk to
outside party claims as we increase our operations in jurisdictions where the laws with respect to the potential liability of online
retailers are uncertain, unfavorable or unclear.
We do not believe that the outcome of any legal matters to which we are presently a party will have a material adverse effect
on our results of operations or financial condition.
Item 4. Mine Safety Disclosures
Not applicable.
PART II
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity
Securities
Certain Information Regarding the Trading of Our Common Stock
Our Class A common stock is traded on the New York Stock Exchange (“NYSE”) under the symbol “W”.
Holders of Our Common Stock
As of February 13, 2025, there were 205 holders of record of shares of our Class A common stock and 257 holders of
record of shares of our Class B common stock. The actual number of stockholders is greater than the number of record holders,
and includes stockholders who are beneficial owners, whose shares are held of record by banks, brokers and other financial
institutions.
Dividends
We have never declared or paid any cash dividends on our capital stock, and we do not currently anticipate paying any cash
dividends in the foreseeable future.
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38
Securities Authorized for Issuance Under Equity Compensation Plans
Information regarding our equity compensation plans and securities authorized for issuance thereunder is set forth under
Part III, Item 12, Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters, in this
Annual Report on Form 10-K.
Recent Purchases of Equity Securities
On August 21, 2020, the board of directors (the “Board”) authorized the repurchase of up to $700 million of Wayfair’s Class
A common stock in the open market, through privately negotiated transactions, or otherwise, including pursuant to a Rule 10b5-1
plan (the “2020 Repurchase Program”). On August 10, 2021, the Board authorized a new $1.0 billion share repurchase program
on the same terms (the “2021 Repurchase Program,” together with the 2020 Repurchase Program, the “Repurchase Programs”).
There is no stated expiration for the Repurchase Programs. Wayfair will begin repurchasing shares under the 2021 Repurchase
Program upon the completion of the 2020 Repurchase Program.
As of December 31, 2024, the approximate aggregate dollar value of shares that may yet be purchased under the authorized
Repurchase Programs is $1.1 billion. There were no repurchases made during the three months ended December 31, 2024.
Item 6. Reserved
Not applicable.
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations
The following Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is
intended to help the reader understand the company, our operations and our present business environment. Our MD&A is
provided as a supplement to — and should be read in conjunction with — our consolidated financial statements and the
accompanying Notes thereto contained in Part II, Item 8, Financial Statements and Supplementary Data, in this Annual Report on
Form 10-K.
All dollar and percentage comparisons made in our MD&A refer to the year ended December 31, 2024 financial results,
compared with the year ended December 31, 2023 financial results, unless otherwise noted. Refer to Part II, Item 7,
Management’s Discussion and Analysis of Financial Condition and Results of Operations, in our Annual Report on Form 10-K
for the year ended December 31, 2023 for a comparative discussion of our year ended December 31, 2023 financial results as
compared to our year ended December 31, 2022 financial results filed with the SEC on February 22, 2024.
The following discussion contains forward-looking statements that are subject to risks and uncertainties. Actual
results may differ from those referred to herein due to a number of factors, including but not limited to risks described in
Part I, Item 1A, Risk Factors in this Annual Report on Form 10-K.
Overview
Wayfair is the destination for all things home. Through our e-commerce business model, we offer visually inspired
browsing, compelling merchandising, easy product discovery and attractive prices for over 30 million products from over
20 thousand suppliers.
We believe an increasing portion of the dollars spent on home goods will be spent online and that there is an opportunity for
acquiring more market share. Our business model is designed to grow our net revenue by acquiring new customers as well as
stimulating repeat purchases from our existing customers. Through increasing brand awareness as well as paid and unpaid
advertising, we attract new and repeat customers to our family of sites. We aim to turn these customers into recurring shoppers by
creating a seamless shopping experience across their entire journey — offering best-in-class product discovery, purchasing,
fulfillment and customer service.
During the year ended December 31, 2024, net revenue decreased by 1.3% compared to the same period in 2023. As of
December 31, 2024, we had 21 million active customers and during the year ended December 31, 2024, 80.1% of orders came
from repeat buyers. The lower sales were due to lower order volume, which was driven by challenges in the category such as
macroeconomic pressures, including consumer spending patterns and housing market conditions, compared to the same period in
2023. We also continued to manage our advertising spend according to a return on investment-oriented approach that carefully
tracks and monitors the results of advertising campaigns as we seek to maintain appropriate return targets.
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39
Global Considerations
We closely monitor macroeconomic conditions, including, but not limited to, economic instability, changes in tax laws,
regulations and new or increased tariffs, including based on the recent United States (“U.S.”) presidential election, sustained
higher interest rates and inflationary pressures, on our business, results of operations and financial results. These developments
have and may continue to negatively impact global economic activity and consumer behavior, which have and may continue to
adversely affect our business and our results of operations. As our customers react to these global economic conditions, we may
take additional precautionary measures to limit or delay expenditures and preserve capital and liquidity.
While it is difficult to quantify and predict all of the impacts these global economic events, including fluctuating interest
rates and inflationary pressures, will have on our business and to predict consumer spending in the near term, we believe the long-
term opportunity that we see for shopping for the home online remains unchanged.
We will continue to monitor economic conditions as we work to manage our business to meet the evolving needs of our
customers, employees, suppliers, partners, stockholders and communities.
Germany Restructuring
On January 10, 2025, we announced our decision to exit the German market (the “Germany Restructuring”), including a
workforce reduction impacting approximately 730 employees, although we expect approximately half of these positions to
relocate to other corporate offices. As a result of the Germany Restructuring, we expect to incur aggregate charges of
approximately $102 million to $111 million, consisting of (i) approximately $40 million to $44 million in employee-related costs,
including severance, benefits, relocation and transition costs and (ii) approximately $62 million to $67 million of other primarily
non-cash charges, including gross impairment charges related to facility closures and other wind-down activities and excluding
any recoveries that may be recognized related to our leases.
During the year ended December 31, 2024, Wayfair recorded impairment charges of $34 million associated with weakened
macroeconomic conditions in connection with our German operations. This is inclusive of $21 million related to ROU assets and
$13 million related to property, plant and equipment. Wayfair expects to incur the remainder of the aggregate charges during the
first quarter of 2025.
Factors Affecting our Performance
We believe that our performance and future success depend on a number of factors that present significant opportunities for
us but also pose risks and challenges, including those discussed in Part I, Item 1A, Risk Factors, in this Annual Report on Form
10-K for the year ended December 31, 2024.
Key Financial Statement and Operating Metrics
We measure our business using the key financial statement and operating metrics that are reflected in the below table. See
“Non-GAAP Financial Measures” below for more information regarding our use of Adjusted EBITDA, Free Cash Flow and
Adjusted Diluted Earnings or Loss per Share and a reconciliation of these non-GAAP financial measures to the most directly
comparable GAAP financial measure that is prepared in accordance with accounting principles generally accepted in the United
States of America or “GAAP.”
Our Free Cash Flow and Adjusted Diluted Earnings or Loss per Share are measured on a consolidated basis, while our
Adjusted EBITDA is measured on a consolidated and reportable segment basis. All other key financial statement and operating
metrics are derived and reported from our consolidated net revenue.
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We use the following metrics to assess the near and longer-term performance of our overall business:
Year Ended December 31,
2024
2023
2022
(in millions, except LTM net revenue per active
customer, average order value and per share data)
Key Financial Statement Metrics:
Net revenue
$
11,851 $
12,003 $
12,218
Gross profit
$
3,574 $
3,667 $
3,416
Loss from operations
$
(461) $
(813) $
(1,384)
Net loss
$
(492) $
(738) $
(1,331)
Loss per share:
Basic
$
(4.01) $
(6.47) $
(12.54)
Diluted
$
(4.01) $
(6.47) $
(12.54)
Net cash provided by (used in) operating activities
$
317 $
349 $
(674)
Key Operating Metrics:
Active customers (1)
21
22
22
LTM net revenue per active customer (2)
$
555 $
537 $
553
Orders delivered (3)
40
41
40
Average order value (4)
$
300 $
292 $
305
Non-GAAP Financial Measures:
Adjusted EBITDA
$
453 $
306 $
(416)
Free Cash Flow
$
83 $
(2) $
(1,132)
Adjusted Diluted Earnings (Loss) per Share
$
0.13 $
(1.13) $
(7.71)
(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. The change in active customers in a reported period
captures both the inflow of new customers as well as the outflow of existing customers who have not made a purchase in the
last twelve months. We view the number of active customers as a key indicator of our growth.
(2) Last twelve months (“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. We view LTM net revenue
per active customer as a key indicator of our customers’ purchasing patterns, including their initial and repeat purchase
behavior.
(3) Orders delivered represent the total orders delivered in any period, inclusive of orders that may eventually be returned. As
we ship a large volume of packages through multiple carriers, actual delivery dates may not always be available, and as such
we estimate delivery dates based on historical data. We recognize net revenue when an order is delivered, and therefore
orders delivered, together with average order value, is an indicator of the net revenue we expect to recognize in a given
period. We view orders delivered as a key indicator of our growth.
(4) We define average order value as total net revenue in a given period divided by the orders delivered in that period. We
view average order value as a key indicator of the mix of products on our sites, the mix of offers and promotions and the
purchasing behavior of our customers.
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Results of Consolidated Operations
Net revenue
During the year ended December 31, 2024, net revenue decreased by $152 million, or 1.3%, compared to the same period in
2023, which reflects continued macroeconomic pressures felt by consumers. The decrease in net revenue is due to lower order
volume, which was driven by challenges in the category such as macroeconomic pressures, including consumer spending patterns
and housing market conditions, compared to the same period in 2023.
During the year ended December 31, 2024, our U.S. net revenue decreased by 1.0% and International net revenue decreased
by 2.8% compared to the same period in 2023. During the year ended December 31, 2024, International Net Revenue Constant
Currency Growth was (2.7)% (see “Non-GAAP Financial Measures” below for more information regarding our use of Net
Revenue Constant Currency Growth).
Year Ended December 31,
2024
2023
% Change
(in millions)
U.S. net revenue
$
10,373 $
10,482
(1.0) %
International net revenue
1,478
1,521
(2.8) %
Net revenue
$
11,851 $
12,003
(1.3) %
For more information on our segments, see Note 13, Segment and Geographic Information, in the notes to the consolidated
financial statements, included in Part II, Item 8, Financial Statements and Supplementary Data, in this Annual Report on Form
10-K.
Cost of goods sold
Cost of goods sold is sensitive to many factors, including quarter-to-quarter variability in product mix, pricing strategies,
changes in wholesale, shipping and fulfillment costs, including associated applicable customs duties and fees earned for supplier
services rendered. During the year ended December 31, 2024, cost of goods sold decreased by $59 million, or 0.7%, compared to
the same period in 2023. The decrease in cost of goods sold is driven by a combination of operational cost savings initiatives and
lower order volume, which was driven by challenges in the category such as macroeconomic pressures, including consumer
spending patterns and housing market conditions, compared to the same period in 2023.
As a percentage of net revenue, cost of goods sold increased to 69.8% for the year ended December 31, 2024, compared to
69.4% in the same period in 2023 due to mix shifts and lower net revenue.
Year Ended December 31,
2024
2023
% Change
(in millions)
Cost of goods sold
$
8,277
$
8,336
(0.7) %
As a percentage of net revenue
69.8 %
69.4 %
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Operating expenses
Operating expenses are comprised of customer service and merchant fees, advertising, selling, operations, technology,
general and administrative expenses, impairment and other related net charges and restructuring charges. We disclose separately
the equity-based compensation and related taxes that are included in customer service and merchant fees and selling, operations,
technology and general and administrative expenses.
Year Ended December 31,
2024
2023
% Change
(in millions)
Customer service and merchant fees (1)
$
470
$
557
(15.6) %
Advertising
1,472
1,397
5.4 %
Selling, operations, technology, general and administrative (1)
1,977
2,447
(19.2) %
Impairment and other related net charges
37
14
164.3 %
Restructuring charges
79
65
21.5 %
Total operating expenses
$
4,035
$
4,480
(9.9) %
As a percentage of net revenue:
Customer service and merchant fees (1)
4.0 %
4.6 %
Advertising
12.4 %
11.6 %
Selling, operations, technology, general and administrative (1)
16.7 %
20.4 %
Impairment and other related net charges
0.3 %
0.1 %
Restructuring charges
0.7 %
0.5 %
34.1 %
37.2 %
(1) Includes equity-based compensation and related taxes as follows:
Year Ended December 31,
2024
2023
(in millions)
Customer service and merchant fees
$
19 $
29
Selling, operations, technology, general and administrative
$
382 $
584
During the year ended December 31, 2024, our equity-based compensation and related taxes included in customer
service and merchant fees and selling, operations, technology, general and administrative decreased by $212 million, or
34.6%, compared to the same period in 2023, driven by a decrease in vested restricted stock units during the year ended
December 31, 2024, compared to the same period in 2023.
The following table summarizes operating expenses as a percentage of net revenue, excluding equity-based
compensation and related taxes:
Year Ended December 31,
2024
2023
Customer service and merchant fees
3.8 %
4.4 %
Selling, operations, technology, general and administrative
13.5 %
15.5 %
Customer Service and Merchant Fees
During the year ended December 31, 2024, excluding the impact of equity-based compensation, our expenses for customer
service and merchant fees decreased by $77 million, or 14.6%, compared to the same period in 2023. The decrease in customer
service and merchant fees is primarily due to decreased compensation costs during the year ended December 31, 2024, compared
to the same period in 2023.
As a percentage of net revenue, total customer service and merchant fees decreased to 4.0% for the year ended
December 31, 2024, compared to 4.6% in the same period in 2023 due to decreased compensation costs.
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Advertising
During the year ended December 31, 2024, our advertising expenses increased by $75 million, or 5.4%, compared to the
same period in 2023. The increase reflects our response to changing market conditions and renewed investment opportunities, as
we sought to maintain our return targets across various channels.
As a percentage of net revenue, advertising expenses increased to 12.4% for the year ended December 31, 2024 compared to
11.6% in the same period in 2023 due to changes in our advertising channel mix as we seek to maximize returns on advertising
spend within our efficiency parameters.
Selling, operations, technology, general and administrative
During the year ended December 31, 2024, excluding the impact of equity-based compensation and related taxes, our
expenses for selling, operations, technology, general and administrative activities decreased by $268 million, or 14.4% compared
to the same period in 2023. The decrease is primarily due to decreased compensation costs.
As a percentage of net revenue, total selling, operations, technology, general and administrative expenses decreased to
16.7% for the year ended December 31, 2024, compared to 20.4% in the same period in 2023, primarily due to decreased
compensation costs.
Impairment and other related net charges
During the year ended December 31, 2024, impairment and other related charges increased by $23 million, or 164.3%
compared to the same period in 2023. As a percentage of net revenue, impairment and other related net charges increased to 0.3%
from 0.1% in the same period in 2023.
During the year ended December 31, 2024, we recorded net charges of $37 million, inclusive of $34 million associated with
weakened macroeconomic conditions in connection with our German operations, $2 million related to changes in sublease market
conditions and $1 million related to construction in progress assets at identified U.S. locations.
During the year ended December 31, 2023, we recorded net charges of $14 million, inclusive of $5 million related to
consolidation of certain customer service centers and $9 million related to construction in progress assets at identified U.S.
locations.
Restructuring charges
During the year ended December 31, 2024, restructuring charges increased by $14 million, or 21.5%, compared to the same
period in 2023. As a percentage of net revenue, restructuring charges increased to 0.7% from 0.5% in the same period in 2023.
During the year ended December 31, 2024, we incurred $79 million of charges consisting primarily of one-time employee
severance and benefit costs associated with the January 2024 workforce reductions. During the year ended December 31, 2023,
we incurred $65 million of charges consisting primarily of one-time employee severance and benefit costs associated with the
January 2023 workforce reductions.
Interest expense, net
During the year ended December 31, 2024, interest expense, net increased to $29 million, compared to $17 million in the
same period in 2023, primarily driven by the issuances of the 2029 Secured Notes and 2028 Notes (as defined below) in October
2024 and May 2023, respectively.
Year Ended December 31,
2024
2023
% Change
(in millions)
Interest expense, net
$
(29) $
(17)
70.6 %
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Other (expense) income, net
During the year ended December 31, 2024, other (expense) income, net increased by $22 million, or 2,200.0%, compared to
the same period in 2023, primarily driven by foreign currency rate fluctuations between the U.S. Dollar and the Canadian Dollar.
Included in other (expense) income, net are changes in foreign currency transaction gains and losses and long-term investment
income or losses.
Year Ended December 31,
2024
2023
% Change
(in millions)
Other (expense) income, net
$
(21) $
1
(2,200.0) %
Gain on debt extinguishment
During the year ended December 31, 2024, gain on debt extinguishment decreased by $71 million, or 71.0%, compared to
the same period in 2023.
During the year ended December 31, 2024, we recorded a $29 million gain on debt extinguishment, representing the
difference between the cash paid for principal, plus accrued and unpaid interest and transaction fees of $741 million and the
combined net carrying value of the 2025 Notes, 2026 Notes and 2025 Accreting Notes (as defined below) of $770 million.
During the year ended December 31, 2023, we recorded a $100 million gain on debt extinguishment, representing the
difference between the cash paid for principal of $514 million and the combined net carrying value of the 2024 Notes and 2025
Notes (as defined below) of $614 million.
Refer to Note 6, Debt and Other Financing, in the notes to the consolidated financial statements, included in Part II, Item 8,
Financial Statements and Supplementary Data, in this Annual Report on Form 10-K for additional information.
Year Ended December 31,
2024
2023
% Change
(in millions)
Gain on debt extinguishment
$
29 $
100
(71.0) %
Provision for income taxes, net
During the year ended December 31, 2024, our provision for income taxes, net increased by $1 million, or 11.1%, compared
to the same period in 2023, primarily related to the level and mix of income earned in the U.S. and certain foreign jurisdictions
and U.S. state income taxes. Refer to Note 11, Income Taxes,in the notes to the consolidated financial statements, included in Part
II, Item 8, Financial Statements and Supplementary Data, in this Annual Report on Form 10-K for additional information.
Year Ended December 31,
2024
2023
% Change
(in millions)
Provision for income taxes, net
$
10 $
9
11.1 %
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Liquidity and Capital Resources
Sources of Liquidity
As of December 31, 2024, our principal source of liquidity was cash and cash equivalents and short-term investments
totaling $1.4 billion. Additionally, we have a $600 million senior secured revolving credit facility that matures on March 24, 2026
(the “Revolver”). As of December 31, 2024, there were no revolving loans outstanding under the Revolver. We had outstanding
letters of credit, primarily as security for certain lease agreements, for $71 million as of December 31, 2024, which reduced the
availability of credit under the Revolver. Excluding liquidity available through our Revolver, the following table shows sources of
liquidity for the periods presented:
December 31,
2024
2023
(in millions)
Cash and cash equivalents
$
1,316 $
1,322
Short-term investments
56
29
Total liquidity
$
1,372 $
1,351
We believe that our existing cash and cash equivalents and investments, cash generated from operations and the borrowing
availability under our Revolver will be sufficient to meet our anticipated cash needs for at least the foreseeable future including
planned capital expenditures, contractual obligations and other such requirements. However, our liquidity assumptions may prove
to be incorrect, and we could exhaust our available financial resources sooner than we currently expect. In addition, we may elect
to raise additional funds at any time through equity, equity-linked or debt financing arrangements. Further, we may from time to
time seek to retire, restructure, repurchase or redeem, or otherwise mitigate the equity dilution associated with our outstanding
convertible debt through cash purchases, stock buybacks of some or all of the shares underlying convertible notes and/or
exchanges for equity or debt in open-market purchases, privately negotiated transactions or otherwise. Such repurchases,
exchanges or liability management exercises, if any, will be upon such terms and at such prices and sizes as we may determine,
and will depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors. The
amounts involved may be material.
Our future capital requirements and the adequacy of available funds will depend on many factors, including those described
herein and in our other filings with the SEC, including those set forth in Part I, Item 1A, Risk Factors in this Annual Report on
Form 10-K. In addition, macroeconomic events have caused disruption in the capital markets, including increased inflation and
interest rates, which could make obtaining financing more difficult and/or expensive. As a consequence, we may not be able to
secure additional financing to meet our operating requirements on acceptable terms, or at all. If we raise additional funds through
the issuance of equity, equity-linked or debt financing arrangements, those securities and instruments may have rights, preferences
or privileges senior to the rights of our common stock, and the holders of our equity securities may experience dilution. We will
continue to monitor our liquidity during this time of historic disruption and volatility in the global capital markets.
Credit Agreement and Debt Arrangements
As of December 31, 2024, we had $3.2 billion principal amount of indebtedness outstanding. Our indebtedness includes
unsecured 0.625% Convertible Senior Notes due 2025 that mature on October 1, 2025 (the “2025 Notes”), unsecured 1.00%
Convertible Senior Notes due 2026 that mature on August 15, 2026 (the “2026 Notes”), unsecured 3.25% Convertible Senior
Notes due 2027 that mature on September 15, 2027 (the “2027 Notes”), unsecured 3.50% Convertible Senior Notes due 2028 that
mature on November 15, 2028 (the “2028 Notes”, and together with the 2025 Notes, 2026 Notes and 2027 Notes, the “Non-
Accreting Notes”), and 7.250% Senior Secured Notes due 2029 that mature on October 31, 2029 (the “2029 Secured Notes” and
together with the Non-Accreting Notes, the “Notes”)
Under the terms of our Revolver, we may use proceeds to finance working capital, to refinance existing indebtedness and to
provide funds for permitted acquisitions, repurchases of equity interests and other general corporate purposes. Any amounts
outstanding under the Revolver are due at maturity.
On October 8, 2024, Wayfair LLC (the “Issuer”), a subsidiary of Wayfair, issued $800 million aggregate principal amount
of the 2029 Secured Notes. The 2029 Secured Notes will mature on October 31, 2029, unless earlier redeemed, in accordance
with their terms or repurchased. The indenture contains covenants that restrict the Issuer’s ability and the ability of its restricted
subsidiaries to, among other things, incur additional indebtedness, declare or pay dividends, redeem stock or make other
distributions or restricted payments, make certain investments, create certain liens, enter into certain transactions with affiliates,
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agree to certain restrictions on the ability of the Issuer’s restricted subsidiaries to make certain payments, sell or transfer certain
assets and consolidate, merge, sell or otherwise dispose of all or substantially all of the Issuer’s or its restricted subsidiaries’
assets.
On November 1, 2024, our 1.125% Convertible Senior Notes due 2024 (the “2024 Notes”) matured and we paid in cash the
remaining outstanding principal amount of $117 million to the holders of the 2024 Notes.
On November 11, 2024, we repurchased $518 million in aggregate principal amount of the 2025 Notes, $215 million in
aggregate principal amount of the 2026 Notes and the remaining $39 million in aggregate principal amount of the 2025 Accreting
Notes, in privately negotiated transactions. See Note 6, Debt and Other Financing, in the notes to the consolidated financial
statements, included in Part II, Item 8, Financial Statements and Supplementary Data, in this Annual Report on Form 10-K for
additional information on debt and other financing transactions.
The conditional conversion features of the 2025 Notes, 2026 Notes, 2027 Notes and 2028 Notes were not triggered during
the calendar quarter ended December 31, 2024, therefore, the 2025 Notes, 2026 Notes, 2027 Notes and 2028 Notes are not
convertible during the calendar quarter ended March 31, 2025 pursuant to the applicable last reported sales price conditions.
Whether any of the Non-Accreting Notes will be convertible in future quarters will depend on the satisfaction of the
applicable last reported sales price condition or another conversion condition in the future. If one or more holders elect to convert
their Non-Accreting Notes at a time when any such Non-Accreting Notes are convertible, unless we elect to satisfy our
conversion obligation by delivering solely shares of our Class A common stock (other than paying cash in lieu of delivering any
fractional share), we would be required to settle a portion or all of our conversion obligation through the payment of cash, which
could adversely affect our liquidity.
The credit agreement and indentures governing our convertible notes contain restrictions and covenants that may limit our
operating flexibility. Specifically, the Revolver contains affirmative and negative covenants customarily applicable to senior
secured credit facilities, including covenants that, among other things, limit or restrict our ability, subject to negotiated exceptions,
to incur additional indebtedness and additional liens on our assets, engage in mergers or acquisitions or dispose of assets, pay
dividends or make other distributions, voluntarily prepay other indebtedness, enter into transactions with affiliated persons, make
investments, or change the nature of our businesses. The Revolver also requires us to maintain certain levels of performance in
order to maintain our access to the Revolver. For instance, we are required to maintain a Consolidated Senior Secured Debt to
Consolidated EBITDA Ratio (as defined in the credit agreement governing the Revolver) of 4.0 to 1.0, subject to a 0.5 step-up
following certain permitted acquisitions. For information regarding our credit agreement and other notes, see Note 6, Debt and
Other Financing, in the notes to the consolidated financial statements, included in Part II, Item 8, Financial Statements and
Supplementary Data, in this Annual Report on Form 10-K. As of December 31, 2024, we were in compliance with all the terms
and conditions of our debt agreements.
Stock Repurchase Program
On August 21, 2020, the board of directors (the “Board”) authorized the repurchase of up to $700 million of our Class A
common stock in the open market, through privately negotiated transactions, or otherwise, including pursuant to a Rule 10b5-1
plan (the “2020 Repurchase Program”). On August 10, 2021, the Board authorized a new $1.0 billion share repurchase program
on the same terms (the “2021 Repurchase Program” together with the 2020 Repurchase Program, the “Repurchase Programs”).
There is no stated expiration date for the Share Repurchase Programs. We will begin repurchasing shares under the 2021
Repurchase Program upon the completion of the 2020 Repurchase Program.
The Repurchase Programs do not obligate us to purchase any shares of our Class A common stock and have no expiration
but may be suspended or terminated by the Board at any time. The actual timing, number and value of shares repurchased under
the Repurchase Programs in the future will be determined by us in our discretion and will depend on a number of factors,
including market conditions, applicable legal requirements, our capital needs and whether there is a better alternative use of
capital. As of December 31, 2024, we have repurchased 2,354,491 shares of Class A common stock for approximately
$612 million under the Repurchase Programs.
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47
Trends and Historical Cash Flows
Year Ended December 31,
2024
2023
2022
(in millions)
Net loss
$
(492) $
(738) $
(1,331)
Net cash provided by (used in) operating activities
$
317 $
349 $
(674)
Net cash (used in) provided by investing activities
$
(262) $
(152) $
1
Net cash (used in) provided by financing activities
$
(69) $
77 $
16
Operating Activities
Cash flows in connection with operating activities consisted of net loss adjusted for certain non-cash items including
depreciation and amortization, equity-based compensation and certain other non-cash expenses, as well as the effect of changes in
working capital and other activities. Operating cash flows can be volatile and are sensitive to many factors, including changes in
working capital and our net loss.
Cash flows provided by operating activities decreased by $32 million during the year ended December 31, 2024, compared
to the same period in 2023, primarily due to a decrease of $135 million for cash changes in operating assets and liabilities partially
offset by an increase in net loss adjusted for non-cash items of $103 million.
Investing Activities
Cash flows used in investing activities increased by $110 million during the year ended December 31, 2024, compared to
the same period in 2023, primarily due to decreases in sales and maturities of short- and long-term investments of $194 million,
increases in purchases of short- and long-term investments of $31 million and decreases of other investing activities of $2 million,
partially offset by decreases in purchases of property and equipment and site and software development costs of $117 million.
Purchases of property and equipment and site and software development costs (collectively, “Capital Expenditures”) were
2.0% of net revenue for the year ended December 31, 2024 and related primarily to equipment purchases and improvements for
leased warehouses within our expanding logistics network and ongoing investments, including our physical retail store expansion,
proprietary technology and operational platform.
Financing Activities
Cash flows used in financing activities increased by $146 million during the year ended December 31, 2024, compared to
the same period in 2023. The increase in cash used is primarily due to increases in payments for extinguishments of debt of
$227 million and debt maturities of $117 million. These are partially offset by increases in proceeds from the issuance of debt of
$108 million, decreases in premiums paid for capital call confirmations of $87 million and other financing inflows of $3 million.
Off-Balance Sheet Arrangements
We do not engage in any off-balance sheet activities. We do not have any off-balance sheet interest in variable interest
entities, which include special purpose entities and other structured finance entities.
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Contractual Obligations
The following table summarizes our contractual obligations as of December 31, 2024:
Payment Due by Period
Total
Less than
1 year
1 - 3
Years
3 - 5
Years
More than
5 Years
(in millions)
Short-term and long-term debt (1)
$
3,622 $
349 $
1,640 $
1,633 $
—
Operating leases (2)
$
1,437 $
224 $
466 $
291 $
456
Purchase obligations (3)
$
311 $
249 $
57 $
5 $
—
Other commitments (4)
$
16 $
— $
3 $
4 $
9
(1) Represents future interest and principal payments on the Notes. For information regarding the Notes, see Note 6, Debt and
Other Financing, in the notes to the consolidated financial statements, included in Part II, Item 8, Financial Statements and
Supplementary Data, in this Annual Report on Form 10-K.
(2) Represents the future minimum lease payments under non-cancellable leases. For information regarding our lease
obligations, see Note 5, Leases, in the notes to the consolidated financial statements, included in Part II, Item 8, Financial
Statements and Supplementary Data, in this Annual Report on Form 10-K.
(3) Represents the future payments for enforceable and legally binding software license and freight commitments. For
information regarding our purchase obligations, see Note 7, Commitments and Contingencies, in the notes to the
consolidated financial statements, included in Part II, Item 8, Financial Statements and Supplementary Data, in this Annual
Report on Form 10-K.
(4) Represents the future minimum lease payments for additional, non-cancellable operating leases, primarily related to
warehouse and retail leases that have not yet commenced. For more information see Note 5, Leases, in the notes to the
consolidated financial statements, included in Part II, Item 8, Financial Statements and Supplementary Data, in this Annual
Report on Form 10-K.
Non-GAAP Financial Measures
To provide investors with additional information regarding our financial results, we have disclosed in this Annual Report on
Form 10-K the following non-GAAP financial measures: Adjusted EBITDA, Free Cash Flow, Adjusted Diluted Earnings or Loss
per Share and Net Revenue Constant Currency Growth.
Adjusted EBITDA
We calculate Adjusted EBITDA as net income or loss before depreciation and amortization, equity-based compensation and
related taxes, interest income or expense, net, other income or expense, net, provision or benefit for income taxes, net, non-
recurring items and other items not indicative of our ongoing operating performance. We have provided a reconciliation below of
Adjusted EBITDA to net income or loss, the most directly comparable GAAP financial measure.
We disclose Adjusted EBITDA because it is a key measure used by our management and the Board to evaluate our
operating performance, generate future operating plans and make strategic decisions regarding the allocation of capital. In
particular, we believe 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 the Board.
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49
Adjusted EBITDA has limitations as an analytical tool, and you should not consider it in isolation or as a substitute for
analysis of our results as reported under GAAP. Some of these limitations are:
•
Although depreciation and amortization are non-cash charges, the assets being depreciated and amortized may have to be
replaced in the future, and Adjusted EBITDA does not reflect cash capital expenditure requirements for such
replacements or for new capital expenditure requirements;
•
Adjusted EBITDA does not reflect equity-based compensation and related taxes;
•
Adjusted EBITDA does not reflect changes in our working capital;
•
Adjusted EBITDA does not reflect income tax payments that may represent a reduction in cash available to us;
•
Adjusted EBITDA does not reflect interest expenses associated with our borrowings;
•
Adjusted EBITDA does not include other items not indicative of our ongoing operating performance; and
•
Other companies, including companies in our industry, may calculate Adjusted EBITDA differently, which reduces its
usefulness as a comparative measure.
Because of these limitations, you should consider Adjusted EBITDA alongside other financial performance measures,
including various cash flow metrics, net income or loss and our other GAAP results.
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The following table reflects the reconciliation of net income or loss to Adjusted EBITDA for each of the periods indicated:
Year Ended December 31,
2024
2023
2022
(in millions)
Reconciliation of Adjusted EBITDA:
Net loss
$
(492) $
(738) $
(1,331)
Depreciation and amortization
387
417
371
Equity-based compensation and related taxes
411
623
527
Interest expense, net
29
17
27
Other expense (income), net
21
(1)
4
Provision for income taxes, net
10
9
12
Other:
Impairment and other related net charges (1)
37
14
39
Restructuring charges (2)
79
65
31
Gain on debt extinguishment (3)
(29)
(100)
(96)
Adjusted EBITDA
$
453 $
306 $
(416)
(1) During the year ended December 31, 2024, we recorded net charges of $37 million, inclusive of $34 million associated
with weakened macroeconomic conditions in connection with our German operations, $2 million related to changes in
sublease market conditions and $1 million related to construction in progress assets at identified U.S. locations. During
the year ended December 31, 2023, we recorded net charges of $14 million, inclusive of $5 million related to
consolidation of certain customer service centers and $9 million related to construction in progress assets at identified
U.S. locations. During the year ended December 31, 2022, we recorded net charges of $39 million, inclusive of $31
million of lease impairment and other net charges related to changes in market conditions around future sublease income
for one office location in the U.S. and charges of $8 million related to construction in progress assets at an International
warehouse.
(2) During the year ended December 31, 2024, we incurred $79 million of charges consisting primarily of one-time
employee severance and benefit costs associated with the January 2024 workforce reductions. During the year ended
December 31, 2023, we incurred $65 million of charges consisting primarily of one-time employee severance and benefit
costs associated with the January 2023 workforce reductions. During the year ended December 31, 2022, we incurred
$31 million of charges consisting primarily of one-time employee severance and benefit costs associated with the August
2022 workforce reductions.
(3) During the year ended December 31, 2024, we recorded a $29 million gain on debt extinguishment upon repurchase of
$518 million in aggregate principal amount of the 2025 Notes, $215 million in aggregate principal amount of the 2026
Notes and the remaining $39 million in aggregate principal amount of the 2025 Accreting Notes. During the year ended
December 31, 2023, we recorded a $100 million gain on debt extinguishment upon repurchase of $83 million in
aggregate principal amount of the 2024 Notes and $535 million in aggregate principal amount of the 2025 Notes. During
the year ended December 31, 2022, we recorded a $96 million gain on debt extinguishment upon repurchase of
$375 million in aggregate principal amount of the 2024 Notes and $229 million in aggregate principal amount of the
2025 Notes.
Free Cash Flow
We calculate Free Cash Flow as net cash provided by or used in operating activities less Capital Expenditures. We have
provided a reconciliation below of Free Cash Flow to net cash provided by or used in operating activities, the most directly
comparable GAAP financial measure.
We disclose Free Cash Flow because it 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.
Free Cash Flow has limitations as an analytical tool because it omits certain components of the cash flow statement and does
not represent the residual cash flow available for discretionary expenditures. Further, other companies, including companies in our
industry, may calculate Free Cash Flow differently. Accordingly, you should not consider Free Cash Flow in isolation or as a
substitute for analysis of our results as reported under GAAP. Because of these limitations, you should consider Free Cash Flow
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alongside other financial performance measures, including net cash provided by or used in operating activities, Capital
Expenditures, and our other GAAP results.
The following table presents a reconciliation of net cash provided by or used in operating activities to Free Cash Flow for
each of the periods indicated:
Year Ended December 31,
2024
2023
2022
(in millions)
Net cash provided by (used in) operating activities
$
317 $
349 $
(674)
Purchase of property and equipment
(73)
(148)
(186)
Site and software development costs
(161)
(203)
(272)
Free Cash Flow
$
83 $
(2) $
(1,132)
Net Revenue Constant Currency Growth
We calculate Net Revenue Constant Currency Growth by translating the current period local currency net revenue by the
currency exchange rates used to translate our financial statements in the comparable prior-year period.
We disclose Net Revenue Constant Currency Growth because it is an important indicator of our operating results.
Accordingly, we believe that Net Revenue Constant Currency Growth provides useful information to investors and others in
understanding and evaluating trends in our operating results in the same manner as our management.
Net Revenue Constant Currency Growth has limitations as an analytical tool, and you should not consider it in isolation or
as a substitute for analysis of our results as reported under GAAP. For example, Net Revenue Constant Currency Growth rates, by
their nature, exclude the impact of foreign exchange, which may have a material impact on net revenue.
Adjusted Diluted Earnings or Loss per Share
We calculate Adjusted Diluted Earnings or Loss per Share as net income or loss plus equity-based compensation and related
taxes, provision or benefit for income taxes, net, non-recurring items, 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 earnings or loss per share.
Accordingly, we believe that these adjustments to our adjusted diluted net income or loss before calculating per share amounts for
all periods presented provide a more meaningful comparison between our operating results from period to period.
Adjusted Diluted Earnings or Loss per Share has limitations as an analytical tool, and you should not consider it in isolation
or as a substitute for analysis of our results as reported under GAAP. For example, Adjusted Diluted Earnings or Loss per Share,
by their nature, excludes equity-based compensation and related taxes, provision or benefit for income taxes, net, non-recurring
items, other items not indicative of our ongoing operating performance, and, if dilutive, interest expense associated with
convertible debt instruments under the if-converted method.
Because of these limitations, you should consider Adjusted Diluted Earnings or Loss per Share alongside other financial
performance measures.
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52
A reconciliation of the numerator and denominator for diluted earnings or loss per share, the most directly comparable
GAAP financial measure, to the numerator and denominator for Adjusted Diluted Earnings or Loss per Share in order to calculate
Adjusted Diluted Earnings or Loss per Share, is as follows:
Year Ended December 31,
2024
2023
2022
(in millions, except per share data)
Numerator:
Numerator for basic and diluted loss per share - net loss
$
(492) $
(738) $
(1,331)
Adjustments to net loss
Equity-based compensation and related taxes
411
623
527
Provision for income taxes, net
10
9
12
Other:
Impairment and other related net charges
37
14
39
Restructuring charges
79
65
31
Gain on debt extinguishment
(29)
(100)
(96)
Numerator for Adjusted Diluted Earnings (Loss) per Share - Adjusted net
income (loss)
$
16 $
(127) $
(818)
Denominator:
Denominator for basic and diluted loss per share - weighted-average
number of shares of common stock outstanding
123
114
106
Adjustments to effect of dilutive securities:
Restricted stock units
1
—
—
Denominator for Adjusted Diluted Earnings (Loss) per Share - Adjusted
weighted-average number of shares of common stock outstanding after
the effect of dilutive securities
124
114
106
Diluted Loss per Share
$
(4.01) $
(6.47) $
(12.54)
Adjusted Diluted Earnings (Loss) per Share
$
0.13 $
(1.13) $
(7.71)
Critical Accounting Policies and Estimates
Our financial statements are prepared in accordance with accounting principles generally accepted in the U.S. The
preparation of our financial statements and related disclosures requires us to make estimates, assumptions and judgments that
affect the reported amount of assets, liabilities, net revenue, costs and expenses and related disclosures. We believe that the
estimates, assumptions and judgments involved in the accounting policies described below have the greatest potential impact on
our financial statements and, therefore, we consider these to be our critical accounting policies. Accordingly, we evaluate our
estimates and assumptions on an ongoing basis. Our actual results may differ from these estimates under different assumptions
and conditions. See Note 1, Summary of Significant Accounting Policies, in the notes to the consolidated financial statements
included in Part II, Item 8, Financial Statements and Supplementary Data, in this Annual Report on Form 10-K for information
about these critical accounting policies, as well as a description of our other significant accounting policies.
Revenue Recognition
We recognize revenue using the gross method for product sales generated through our family of sites only when we have
concluded that Wayfair controls the product before it is transferred to the customer. Wayfair controls products when it is the entity
responsible for fulfilling the promise to the customer and takes responsibility for the acceptability of the goods, assumes inventory
risk from shipment through the delivery date, has discretion in establishing prices and selects the suppliers of products sold. We
recognize net revenue when the product has been delivered to the customer.
Allowances for sales returns are estimated and recorded based on prior returns history, recent trends and projections for
returns on sales in the current period. These estimates are based on historical rates of customer returns and allowances as well as
the specific identification of outstanding returns that have not yet been received by us. The actual amount of customer returns and
allowances are inherently uncertain and may differ from our estimates. If we determine that actual or expected returns or
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allowances are significantly higher or lower than the reserves established, we record a reduction or increase, as appropriate to net
revenue in the period in which we make such a determination.
Leases
Lease liabilities and their corresponding right-of-use (“ROU”) assets are recorded based on the present value of lease
payments over the expected lease term at the lease commencement date. As most of our leases do not provide an implicit rate, we
use an estimated incremental borrowing rate (“IBR”) based on the information available at the commencement date to determine
the present value of future payments. The determination of the IBR requires judgment and is primarily based on publicly-available
information for companies within the same industry and with similar credit profiles. We adjust the rate for the impact of
collateralization, the lease term and other specific terms included in each lease arrangement. The IBR is determined at lease
commencement and is subsequently reassessed upon a modification to the lease arrangement.
Recent Accounting Pronouncements
For information about recent accounting pronouncements, see Note 1, Summary of Significant Accounting Policies, in the
notes to the consolidated financial statements included in Part II, Item 8, Financial Statements and Supplementary Data, in this
Annual Report on Form 10-K.
Item 7A. Quantitative and Qualitative Disclosure About Market Risk
We have operations both within the United States (“U.S.”) and internationally, and we are exposed to market risks in the
ordinary course of our business, including the effects of interest rate changes, foreign currency fluctuations and inflation.
Information relating to quantitative and qualitative disclosures about these market risks is below.
Interest Rate Sensitivity
Cash and cash equivalents and short-term investments were held primarily in cash deposits, certificates of deposit, money
market funds and investment grade corporate debt. The fair value of our cash, cash equivalents and short-term investments will
fluctuate with movements of interest rates, increasing in periods of declining rates of interest and declining in periods of
increasing rates of interest.
Our 2025 Notes, which were issued in August 2020, carry a fixed interest rate of 0.625% per year, our 2026 Notes, which
were issued in August 2019, carry a fixed interest rate of 1.00% per year, our 2027 Notes, which were issued in September 2022,
carry a fixed interest rate of 3.250%, our 2028 Notes, which were issued in May 2023, carry a fixed interest rate of 3.500% and
our 2029 Secured Notes, which were issued in November 2024, carry a fixed interest rate of 7.250% per year. Since the Notes
bear interest at a fixed rate, we have no direct financial statement risk associated with changes in interest rates.
Interest on the revolving line of credit incurred pursuant to the credit agreements described herein would accrue at a floating
rate based on a formula tied to certain market rates at the time of incurrence; however, we do not expect that any changes in
prevailing interest rates will have a material impact on our results of operations.
Foreign Currency Risk
Most of our sales are denominated in U.S. dollars, and therefore, our total net revenue is not currently subject to significant
foreign currency risk. However, as our international business has grown, fluctuations in foreign currency exchange rates have
started to have a greater impact. Our operating expenses are denominated in the currencies of the countries in which our
operations are located or in which net revenue is generated, and as a result we face exposure to adverse movements in foreign
currency exchange rates, particularly changes in the British Pound, Euro and Canadian Dollar, as the financial results of our
international operations are translated from local currency, or functional currency, into U.S. dollars upon consolidation.
Fluctuations in foreign currency exchange rates may cause us to recognize transaction gains and losses in our consolidated
statements of operations. To date, foreign currency transaction gains and losses have not been material to our financial statements,
and we have not engaged in any foreign currency hedging transactions, but we may do so in the future. The effect of foreign
currency exchange on our business historically has varied from quarter to quarter and may continue to do so, potentially
materially. In addition, global economic conditions may result in changes in exchange rates, and in particular a weakening of
foreign currencies relative to the U.S. dollar may negatively affect our net revenue as expressed in U.S. dollars.
Inflation
In fiscal 2024, we continued to see normalization of inflationary pressures in the supply chain. We continue to monitor the
impact of inflation in order to minimize its effects through pricing strategies, productivity improvements and cost reductions. If
our costs were to be subject to more significant inflationary pressures, we may not be able to fully offset such higher costs through
price increases or other cost efficiency measures. Our inability or failure to do so could harm our business, financial condition and
results of operations.
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Item 8. Financial Statements and Supplementary Data
WAYFAIR INC.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Report of Independent Registered Public Accounting Firm (PCAOB ID: 42)
56
Consolidated Balance Sheets
58
Consolidated Statements of Operations
59
Consolidated Statements of Comprehensive Loss
60
Consolidated Statement of Stockholders' Deficit
61
Consolidated Statements of Cash Flows
62
Notes to Consolidated Financial Statements
64
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55
Report of Independent Registered Public Accounting Firm
To the Stockholders and the Board of Directors of Wayfair Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Wayfair Inc. (the Company) as of December 31, 2024 and
2023, the related consolidated statements of operations, comprehensive loss, stockholders’ deficit and cash flows for each of the
three years in the period ended December 31, 2024, and the related notes (collectively referred to as the “consolidated financial
statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of
the Company at December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the three years in the
period ended December 31, 2024, in conformity with U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)
(PCAOB), the Company’s internal control over financial reporting as of December 31, 2024, based on criteria established in
Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission
(2013 framework), and our report dated February 20, 2025 expressed an unqualified opinion thereon.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the
Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are
required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable
rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error
or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements,
whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a
test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the
accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the
financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was
communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are
material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The
communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as
a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit
matter or on the accounts or disclosures to which it relates.
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Completeness of Sales Return Reserves
Description of
the Matter
As described in Note 1 and Note 2 to the consolidated financial statements, the Company had
sales return reserves of $49 million, which were recorded as a reduction to net revenue for the
year ended December 31, 2024.
Auditing the Company's measurement of sales return reserves on product revenue under its
contracts with customers was especially challenging because the calculation involves
subjective management assumptions about the quantity of products delivered as of the balance
sheet date that are estimated to be returned in future periods under the Company's returns
policy. Management bases the sales returns estimate on prior returns history, recent trends,
and projections for returns on sales in the current period.
How We
Addressed the
Matter in Our
Audit
We obtained an understanding, evaluated the design and tested the operating effectiveness of
internal controls over the Company's sales return reserve process. For example, we tested
controls over management's assessment of the assumptions about expected returns related to
products sold as of the balance sheet date. To test the Company’s reserves for returns on
product revenue, our audit procedures included, among others, testing the accuracy and
completeness of the underlying data used in the calculations and evaluating the significant
assumptions used by management to estimate its reserves.
To test management’s significant assumptions, we performed procedures which included (1)
agreeing revenues used in the analysis to the Company’s general ledger, (2) examining sales
return levels for the 12 months before year end and the period subsequent to year end for
trends not consistent with the Company’s historical analysis of product returns, and (3) testing
the historical accuracy of the Company’s estimates of returns on product revenue recorded in
prior periods by comparing the reserve to returns actually processed. We also compared the
Company’s projections of future sales returns as of the balance sheet date with actual returns
made subsequent to year end.
/s/ Ernst & Young LLP
We have served as the Company’s auditor since 2012.
Boston, Massachusetts
February 20, 2025
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57
WAYFAIR INC.
CONSOLIDATED BALANCE SHEETS
December 31,
2024
2023
(in millions, except share and per
share data)
Assets:
Current assets
Cash and cash equivalents
$
1,316 $
1,322
Short-term investments
56
29
Accounts receivable, net
155
140
Inventories
76
75
Prepaid expenses and other current assets
274
289
Total current assets
1,877
1,855
Operating lease right-of-use assets
925
820
Property and equipment, net
603
748
Other non-current assets
54
51
Total assets
$
3,459 $
3,474
Liabilities and Stockholders' Deficit:
Current liabilities
Accounts payable
$
1,246 $
1,234
Other current liabilities
1,124
949
Total current liabilities
2,370
2,183
Long-term debt
2,882
3,092
Operating lease liabilities, net of current
929
862
Other non-current liabilities
33
44
Total liabilities
6,214
6,181
Commitments and contingencies (Note 7)
Stockholders’ deficit:
Convertible preferred stock, $0.001 par value per share: 10,000,000 shares authorized and
none issued at December 31, 2024 and December 31, 2023
—
—
Class A common stock, par value $0.001 per share, 500,000,000 shares authorized,
100,762,581 and 92,457,562 shares issued and outstanding at December 31, 2024 and
December 31, 2023, respectively
—
—
Class B common stock, par value $0.001 per share, 164,000,000 shares authorized,
24,658,295 and 25,691,295 shares issued and outstanding at December 31, 2024 and
December 31, 2023, respectively
—
—
Additional paid-in capital
1,751
1,316
Accumulated deficit
(4,510)
(4,018)
Accumulated other comprehensive income (loss)
4
(5)
Total stockholders' deficit
(2,755)
(2,707)
Total liabilities and stockholders' deficit
$
3,459 $
3,474
See notes to consolidated financial statements.
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58
WAYFAIR INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
Year Ended December 31,
2024
2023
2022
(in millions, except per share data)
Net revenue
$
11,851 $
12,003 $
12,218
Cost of goods sold
8,277
8,336
8,802
Gross profit
3,574
3,667
3,416
Operating expenses:
Customer service and merchant fees
470
557
632
Advertising
1,472
1,397
1,473
Selling, operations, technology, general and administrative
1,977
2,447
2,625
Impairment and other related net charges
37
14
39
Restructuring charges
79
65
31
Total operating expenses
4,035
4,480
4,800
Loss from operations
(461)
(813)
(1,384)
Interest expense, net
(29)
(17)
(27)
Other (expense) income, net
(21)
1
(4)
Gain on debt extinguishment
29
100
96
Loss before income taxes
(482)
(729)
(1,319)
Provision for income taxes, net
10
9
12
Net loss
$
(492) $
(738) $
(1,331)
Loss per share:
Basic
$
(4.01) $
(6.47) $
(12.54)
Diluted
$
(4.01) $
(6.47) $
(12.54)
Weighted-average number of shares of common stock outstanding used
in computing per share amounts:
Basic
123
114
106
Diluted
123
114
106
See notes to consolidated financial statements
.
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59
WAYFAIR INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
Year Ended December 31,
2024
2023
2022
(in millions)
Net loss
$
(492) $
(738) $
(1,331)
Other comprehensive income:
Foreign currency translation adjustments
9
1
1
Net unrealized gain (loss) on available-for-sale investments
—
1
(1)
Comprehensive loss
$
(483) $
(736) $
(1,331)
See notes to consolidated financial statements.
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60
WAYFAIR INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT
Class A and Class B
Common Stock
Shares
Amount
Additional
Paid-In
Capital
Accumulated
Deficit
Accumulated
Other
Comprehensive
(Loss) Income
Total
Stockholders'
Deficit
(in millions)
Balance at December 31, 2021
105 $
— $
337 $
(1,949) $
(7) $
(1,619)
Net loss
—
—
—
(1,331)
—
(1,331)
Issuance of common stock upon
vesting of RSUs
5
—
—
—
—
—
Equity-based compensation
—
—
555
—
—
555
Repurchase of common stock
(1)
—
(75)
—
—
(75)
Premiums paid for capped calls
—
—
(80)
—
—
(80)
Balance at December 31, 2022
109
—
737
(3,280)
(7)
(2,550)
Net loss
—
—
—
(738)
—
(738)
Other comprehensive income
—
—
—
—
2
2
Issuance of common stock upon
vesting of RSUs
9
—
—
—
—
—
Equity-based compensation
—
—
666
—
—
666
Premiums paid for capped calls
—
—
(87)
—
—
(87)
Balance at December 31, 2023
118
—
1,316
(4,018)
(5)
(2,707)
Net loss
—
—
—
(492)
—
(492)
Other comprehensive income
—
—
—
—
9
9
Issuance of common stock upon
vesting of RSUs
7
—
—
—
—
—
Equity-based compensation
—
—
432
—
—
432
Unwind of capped calls
—
—
3
—
—
3
Balance at December 31, 2024
125 $
— $
1,751 $
(4,510) $
4 $
(2,755)
See notes to consolidated financial statements.
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61
WAYFAIR INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Year Ended December 31,
2024
2023
2022
(in millions)
Cash flows from (for) operating activities:
Net loss
$
(492) $
(738) $
(1,331)
Adjustments to reconcile net loss to net cash provided by (used in)
operating activities:
Depreciation and amortization
387
417
371
Equity-based compensation expense
395
605
513
Amortization of debt discount and issuance costs
9
8
8
Impairment and other related net charges
37
14
39
Gain on debt extinguishment
(29)
(100)
(96)
Other non-cash adjustments
(1)
(3)
41
Changes in operating assets and liabilities:
Accounts receivable, net
(35)
132
(48)
Inventories
(2)
16
(21)
Prepaid expenses and other assets
10
16
27
Accounts payable and other liabilities
38
(18)
(177)
Net cash provided by (used in) operating activities
317
349
(674)
Cash flows (for) from investing activities:
Purchase of short- and long-term investments
(67)
(36)
(430)
Sale and maturities of short- and long-term investments
39
233
889
Purchase of property and equipment
(73)
(148)
(186)
Site and software development costs
(161)
(203)
(272)
Other investing activities, net
—
2
—
Net cash (used in) provided by investing activities
(262)
(152)
1
Cash flows (for) from financing activities:
Repurchase of common stock
—
—
(75)
Proceeds from issuance of debt, net of issuance costs
786
678
678
Premiums paid for capped call confirmations
—
(87)
(80)
Payment of principal upon maturity of debt
(117)
—
(3)
Payments to extinguish debt
(741)
(514)
(504)
Other financing activities, net
3
—
—
Net cash (used in) provided by financing activities
(69)
77
16
Effect of exchange rate changes on cash, cash equivalents and
restricted cash
8
2
1
Net (decrease) increase in cash, cash equivalents and restricted cash
(6)
276
(656)
Cash, cash equivalents and restricted cash
Beginning of year
$
1,326 $
1,050 $
1,706
End of year
$
1,320 $
1,326 $
1,050
See notes to consolidated financial statements
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62
WAYFAIR INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Year Ended December 31,
2024
2023
2022
(in millions)
Supplemental cash flow information:
Cash paid for interest on long-term debt
$
63 $
53 $
27
Purchase of property and equipment included in accounts payable and
other liabilities
$
7 $
19 $
(6)
Reconciliation of cash, cash equivalents and restricted cash to
consolidated balance sheets
Cash and cash equivalents
$
1,316 $
1,322 $
1,050
Restricted cash included within prepaid expenses and other current
assets
4
4
—
Total cash, cash equivalents and restricted cash
$
1,320 $
1,326 $
1,050
See notes to consolidated financial statements
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63
Wayfair Inc.
Notes to Consolidated Financial Statements
1. Summary of Significant Accounting Policies
Description of Business and Basis of Presentation
Wayfair Inc. is the destination for all things home. Through its e-commerce business model, Wayfair offers visually inspired
browsing, compelling merchandising, easy product discovery and attractive prices for over 30 million products from over
20 thousand suppliers. These financial statements consolidate the operations and accounts of Wayfair Inc. and its wholly-owned
subsidiaries. Unless the context indicates otherwise, “Wayfair,” “the Company,” or similar terms refer to Wayfair Inc. and its
subsidiaries. All intercompany accounts and transactions have been eliminated.
Use of Estimates
The consolidated financial statements are prepared in conformity with accounting principles generally accepted in the
United States of America (“GAAP”). Any reference in these notes to applicable guidance is meant to refer to the authoritative
GAAP as found in the Accounting Standards Codification (“ASC”) and Accounting Standards Update (“ASU”) of the Financial
Accounting Standards Board (“FASB”). The preparation of financial statements in conformity with GAAP requires management
to make estimates and assumptions that affect the reported amounts of assets and liabilities, as well as the disclosure of contingent
assets and liabilities, at the date of and during the reported period of the consolidated financial statements. Actual results could
differ from those estimates.
Cash, Cash Equivalents and Restricted Cash
Wayfair considers all highly liquid investments purchased with an original maturity (at the date of purchase) of three months
or less to be the equivalent of cash. Cash equivalents, which consist primarily of money market accounts and certificates of
deposits with original maturities of three months or less, are carried at cost, which approximates fair value. Wayfair’s restricted
cash is primarily restricted to funds held in collateral, which is recorded within prepaid expenses and other current assets on the
consolidated balance sheets.
Investments
Wayfair classifies investments in certificates of deposits and marketable securities with original maturities of greater than
three months as short-term investments on the consolidated balance sheets. Short-term investments mature in less than twelve
months from the balance sheet date. The cost basis of an investment sold is determined using the specific identification method.
Wayfair classifies its debt investments with readily determinable market values as available-for-sale. These investments are
classified as investments on the consolidated balance sheets and are carried at fair market value, with unrealized gains and losses
reported within accumulated other comprehensive income or loss, within total stockholders’ deficit. To the extent the amortized
cost basis of the available-for-sale debt securities exceeds the fair value, management assesses the debt securities for credit loss.
However, management considers the risk of credit loss to be minimized by Wayfair’s policy of investing in financial instruments
issued by highly-rated financial institutions. When assessing the risk of credit loss, management considers factors such as the
severity and the reason for the decline in value (i.e., any changes to the rating of the security by a rating agency or other adverse
conditions specifically related to the security) and management’s intended holding period and time horizon for selling.
From time to time, Wayfair may enter into equity investments that align with organizational strategies and growth
initiatives. Equity investments in companies for which the Company does not have the ability to exercise significant influence are
accounted for as equity securities. These are measured at fair value and classified as other non-current assets within the
consolidated balance sheets with observable changes recorded within other income or expense, net on the consolidated statements
of operations.
Equity Method Investments
Wayfair accounts for investments using the equity method of accounting when the Company has the ability to exercise
significant influence, but not controlling financial interest over an investee. The equity method investments are classified as other
non-current assets within the consolidated balance sheets and the proportional share of income or loss is recorded within other
income or expense, net on the consolidated statements of operations. Equity method investments are reviewed for indicators of
impairment on a quarterly basis. An equity method investment is written down to the estimated fair value if there is evidence of a
loss in value which is other-than-temporary.
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64
Concentrations of Credit Risk
Financial instruments that subject Wayfair to credit risk consist of cash, cash equivalents, restricted cash, short-term
investments and accounts receivable. The risk for cash, cash equivalents and restricted cash is minimized by Wayfair's policy to
maintain these balances with major financial institutions of high-credit quality. At times, cash balances may exceed federally
insured limits; however, to date, Wayfair has not incurred any losses on these balances. As of December 31, 2024 and 2023,
Wayfair had $183 million and $111 million, respectively, in bank deposits located outside of the United States (“U.S.”). The risk
for short-term investments is minimized by Wayfair's policy of investing in financial instruments issued by highly-rated financial
institutions.
Accounts Receivable, Net
Accounts receivable are stated net of the allowance for credit losses, which are recorded based on historical losses as well as
management's expectation of future collections. Uncollectible amounts are written off against the allowance after all collection
efforts have been exhausted. Wayfair's exposure to credit loss is minimized through customer risk assessments performed prior to
customer checkout and Wayfair's policy of monitoring the creditworthiness of its customers to which it grants credit terms in the
normal course of business. Further, management believes credit risk is mitigated since approximately 98.9% of the net revenue
recognized for the year ended December 31, 2024 was collected in advance of recognition.
Inventories
Inventories consisting of finished goods are stated at the lower of cost or net realizable value, determined by the first-in,
first-out (“FIFO”) method, and consist of product for resale. Inventory costs consist of cost of product and inbound shipping and
handling costs. Inventory costs also include direct and indirect labor costs, rent and depreciation expense associated with
Wayfair's fulfillment centers. Inventory valuation requires Wayfair to make judgments, based on currently available information,
about the likely method of disposition, such as through sales to individual customers, liquidations and expected recoverable values
of each disposition category.
Deferred Costs In-Transit
Deferred costs in-transit to customers are recorded in prepaid expenses and other current assets.
Property and Equipment, Net
Property and equipment are stated at cost, net of depreciation. Expenditures for maintenance and repairs are charged to
expense as incurred, whereas betterments are capitalized as additions to property and equipment. Depreciation on property and
equipment is calculated on the straight-line method over the estimated useful lives of the assets as follows:
Class
Range of Life
(In Years)
Furniture and equipment
3 to 7
Site and software development costs
2
Leasehold improvements
The lesser of useful life or lease term
Site and Software Development Costs
Wayfair capitalizes certain costs associated with the development of its sites and internal-use software products after the
preliminary project stage is complete and until the site enhancements or software is ready for its intended use. Upgrades and
enhancements are capitalized if they will result in added functionality. Capitalized costs are amortized over a two-year period.
Costs incurred in the preliminary stages of development, after the software is ready for its intended use and for maintenance of
internal-use software are expensed as incurred.
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65
Long-Lived Assets
Wayfair reviews long-lived assets for impairment whenever events or changes in circumstances, such as weakened
macroeconomic conditions or brand awareness, service discontinuance or technological obsolescence, indicate that the carrying
amount of the long-lived asset may not be recoverable. When such events occur, Wayfair compares the carrying amount of the
asset to the undiscounted expected future cash flows related to the asset. If the comparison indicates that an impairment exists, the
amount of the impairment is calculated as the difference between the excess of the carrying amount over the fair value of the
asset. If a readily determinable market price does not exist, fair value is estimated using discounted expected cash flows
attributable to the asset or market rate rent assumptions.
Leases
Wayfair generally leases office, retail and warehouse facilities under non-cancellable agreements. Upon each agreement's
commencement date, Wayfair determines if the agreement is part of an arrangement that is or that contains a lease, the lease
classification and recognizes the right-of-use (“ROU”) assets and lease liabilities for all leases with the exception of leases with
terms of 12 months or less. Wayfair has arrangements with lease and non-lease components, and accounts for lease and non-lease
components as a single lease component for corporate headquarters offices and field offices. All other lease arrangements for
lease and non-lease components are accounted for separately. Operating lease ROU assets are classified in operating lease right-
of-use assets within the consolidated balance sheets. Operating lease liabilities are classified as other current liabilities and
operating lease liabilities based on when lease payments are due. As of December 31, 2024 and 2023 Wayfair did not have any
material finance lease arrangements.
Lease liabilities and their corresponding ROU assets are recorded based on the present value of lease payments over the
expected lease term at the lease commencement date. As most of the leases do not provide an implicit rate, Wayfair uses an
estimated incremental borrowing rate (“IBR”) based on the information available at the commencement date of the respective
lease to determine the present value of future payments. The determination of the IBR requires judgment and is primarily based
on publicly available information for companies within the same industry and with similar credit profiles. Wayfair adjusts the rate
for the impact of collateralization, the lease term and other specific terms included in each lease arrangement. The IBR is
determined at lease commencement and is subsequently reassessed as necessary upon a modification to the lease arrangement.
The ROU asset also includes any lease payments made prior to the commencement date and excludes lease incentives and initial
direct costs incurred.
Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term. Lease terms may
include options to extend or terminate the lease when it is reasonably certain that Wayfair will exercise that option.
Contingent Liabilities
Certain contingent liabilities that arise in the ordinary course of business activities are accrued for as loss contingencies
when losses become probable and are reasonably estimable. If the reasonable estimate of the loss is a range and no amount within
the range is a better estimate, the minimum amount of the range is recorded as a liability. After applying judgement, Wayfair does
not accrue for contingent losses that are considered to be reasonably possible, but not probable; however, the range of such
reasonably possible losses is disclosed.
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66
Foreign Currency Translation
These financial statements are consolidated and presented in the U.S. dollar. Subsidiaries with non-U.S. dollar functional
currencies are translated to the U.S. dollar using year-end exchange rates for assets and liabilities and average exchange rates for
revenue and expenses. Capital accounts are translated at their historical exchange rates when the capital transaction occurred.
Translation adjustments arising from the use of differing exchange rates from period to period are included in other
comprehensive income or loss below net income or loss and accumulated other comprehensive income or loss within total
stockholders’ deficit. Transaction gains and losses are included in other income or expense, net, which is reflected in net income
or loss.
Revenue Recognition
Wayfair generates net revenue primarily through product sales on its family of sites.
Wayfair recognizes net revenue on product sales through Wayfair's family of sites using the gross method when Wayfair has
concluded it controls the product before it is transferred to the customer. Wayfair controls products as it is the entity responsible
for fulfilling the promise to the customer and takes responsibility for the acceptability of the goods, assumes inventory risk from
shipment through the delivery date, has discretion in establishing prices and selects the suppliers of products sold. Wayfair
recognizes net revenue from sales of its products upon delivery to the customer. As Wayfair ships a large volume of packages
through multiple carriers, actual delivery dates may not always be available and as such Wayfair estimates delivery dates based on
historical data.
Net revenue from product sales includes shipping costs charged to the customer and is recorded net of taxes collected from
customers, which are recorded in other current liabilities and are remitted to governmental authorities. Cash discounts and rebates
earned by customers at the time of purchase and estimates for sales return allowances are recorded as a deduction to net revenue.
Allowances for sales returns are estimated and recorded based on prior returns history, recent trends and projections for returns on
sales in the current period. These estimates are based on historical rates of customer returns and allowances as well as the specific
identification of outstanding returns that have not yet been received by Wayfair.
Wayfair maintains a membership rewards program: Wayfair Rewards. As part of this program, Wayfair provides customers
with benefits for purchases made using its credit card program. In exchange for providing intellectual property as part of its credit
card program, Wayfair records net revenue based on spending activity and the profitability of the card portfolio. Spending activity
of the underlying accounts represents customer purchases used with their respective cards, and the profitability of the card
portfolio is based on the financial performance of the underlying credit portfolio.
Net revenue from contracts with customers is disaggregated by geographic region because this manner of disaggregation
best depicts how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors. Refer to
Note 13, Segment and Geographic Information, for additional detail.
Wayfair primarily has three types of contractual liabilities: (i) cash collections from its customers prior to delivery of
products purchased, which are initially recorded in unearned revenue within other current liabilities, and are recognized as net
revenue when the products are delivered, (ii) unredeemed gift cards and site credits, which are initially recorded in unearned
revenue within other current liabilities, and are recognized in the period they are redeemed, and (iii) membership rewards
redeemable for future purchases, which are earned by customers on purchases made through its credit card program and are
initially recorded in other current liabilities, and recognized as net revenue when redeemed. The portion of gift cards and store
credits not expected to be redeemed are recognized as net revenue based on a pattern of historical redemptions, which are
substantially within twenty-four months from the date of issuance.
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67
Cost of Goods Sold
Costs of goods sold consists of:
Product Costs: Wayfair capitalizes into inventory the price paid to suppliers for products purchased by Wayfair, direct and
indirect labor costs, rent, depreciation and inbound shipping and handling costs. Product costs are offset by rebates Wayfair earns
through allowances and supplier incentive programs. Wayfair earns rebates when goods are shipped, and amounts earned and due
from suppliers under these rebate programs are included in other current assets and are reflected as a reduction of cost of goods
sold. Wayfair receives vendor allowances or discounts from certain vendors. These vendor allowances reduce the carrying cost of
the inventory and related cost of goods sold when the inventory is sold. Product costs are also offset by media and merchandising
offerings provided to suppliers, which are not considered distinct from the purchase of goods from those suppliers.
Shipping and Fulfillment Costs: Shipping costs include outbound shipping costs, including associated applicable customs
duties. Fulfillment costs include costs incurred to operate and staff the fulfillment centers and provide other inbound supply chain
services such as ocean freight and drayage. Costs to operate and staff the CastleGate and Wayfair Delivery Network (“WDN”)
include rent and depreciation expenses associated with various facilities, costs to receive, inspect, pick, package and prepare
customer orders for delivery, and direct and indirect labor costs including compensation, compensation-related benefits and
equity-based compensation. Shipping and fulfillment costs are offset by fees earned by providing logistic services to suppliers
including order fulfillment, warehousing and inbound supply chain services such as ocean freight and drayage through Wayfair's
CastleGate business. Fulfillment fees are earned upon completion of preparing customer orders for shipment, warehousing fees
are earned upon completion of each storage date and inbound supply chain services are earned on a straight-line basis as the
shipments move from origin to destination. Shipping and fulfillment costs were $1.9 billion, $1.9 billion and $2.2 billion, for the
years ended December 31, 2024, 2023 and 2022.
Customer Service and Merchant Fees
Customer service and merchant fees consist of labor-related costs, including compensation, compensation-related benefits
and equity-based compensation of employees involved in customer service activities, merchant processing fees associated with
customer payments made by credit cards and debit cards and other variable fees. Merchant processing fees totaled $254 million,
$256 million and $258 million in the years ended December 31, 2024, 2023 and 2022.
Advertising
Advertising consists of direct response performance marketing costs, such as display advertising, paid search advertising,
social media advertising, search engine optimization, comparison shopping engine advertising, television advertising, direct mail,
catalog and print advertising. Costs for advertising are expensed as incurred. Prepayments for advertising that has not been
incurred are included in prepaid expenses and other current assets, and advertising costs that have been incurred but not paid are
included in other current liabilities.
Selling, Operations, Technology, General and Administrative
Selling, operations, technology, general and administrative expenses primarily include labor-related costs, including equity-
based compensation, of the operations group, which includes the supply chain and logistics team, the technology team that builds
and supports sites, category managers, buyers, site merchandisers, merchants, marketers and the team who executes the
advertising strategy and the corporate general and administrative team, which includes human resources, finance and accounting
personnel. Also included are administrative and professional service fees which include audit and legal fees, insurance,
depreciation, rent and other corporate expenses.
Equity-Based Compensation
Wayfair recognizes its equity-based payments to employees and non-employees as gross expense over the service period
based on their grant date fair values with actual forfeitures recognized as they occur. Wayfair has restricted common stock and
restricted stock units. Restricted stock values are determined based on the quoted market price of Wayfair’s Class A common
stock on the date of grant.
Income Tax
Income taxes are accounted for under the asset and liability method. Under the asset and liability method, deferred tax assets
and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying
amounts of existing assets and liabilities and their respective tax bases.
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68
Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in
which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a
change in tax rates is recognized in income in the period that includes the enactment date. Wayfair records valuation allowances
to reduce deferred income tax assets to the amount that is more likely than not to be realized.
Wayfair determines whether it is more likely than not that a tax position will be sustained upon examination. If it is not more
likely than not that a position will be sustained, no amount of benefit attributable to the position is recognized. The tax benefit to
be recognized of any tax position that meets the more likely than not recognition threshold is calculated as the largest amount that
is more than 50% likely of being realized upon resolution of the contingency.
Wayfair evaluates at the end of each reporting period whether some or all of the undistributed earnings of foreign
subsidiaries are permanently reinvested. The position is based upon several factors including management's evaluation of Wayfair
and its subsidiaries' financial requirements, the short- and long-term operational and fiscal objectives of Wayfair and the tax
consequences associated with the repatriation of earnings.
Earnings or Loss per Share
Wayfair follows the two-class method when computing earnings or loss per share for its two issued classes of common stock
- Class A and Class B. Basic earnings or loss per share is computed using the weighted-average number of shares of common
stock outstanding during the period. Diluted earnings or loss per share is computed using the weighted-average number of shares
of common stock outstanding during the period plus, if dilutive, common stock equivalents outstanding during the period and
stock issuable upon conversion of the convertible debt instruments. Wayfair's common stock equivalents consist of shares
issuable upon the release of restricted stock units. The dilutive effect of these common stock equivalents is reflected in diluted
earnings or loss per share by application of the treasury stock method. The dilutive effect of shares issuable upon conversion of
the convertible debt instruments are included in the calculation of diluted earnings or loss per share under the if-converted
method.
For periods in which Wayfair has reported net losses, diluted loss per share is the same as basic loss per share, as the effects
of common stock equivalents outstanding and shares issuable upon conversion of convertible debt instruments are antidilutive and
therefore excluded from the calculation of diluted loss per share.
Wayfair allocates undistributed earnings between the classes on a one-to-one basis when computing earnings or loss per
share. As a result, basic and diluted earnings or loss per share per Class A and Class B shares are equivalent.
Adoption of New Accounting Principles
Segment Reporting
Wayfair adopted ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures on
January 1, 2024 retrospectively to all prior periods presented in the financial statements. The new standard updates
reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses.
Refer to Note 13, Segment and Geographic Information.
Recently Issued Accounting Pronouncements
Income Taxes
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax
Disclosures, to update reportable income tax disclosure requirements, primarily through enhanced disclosures on the rate
reconciliation table and other disclosures, including total income taxes paid by jurisdiction. The amendment is effective for annual
periods beginning after December 15, 2024, with early adoption permitted. The amendment should be applied prospectively, with
retrospective adoption permitted. Wayfair is currently evaluating the impact that the adoption of this standard will have on its
consolidated financial statements and related disclosures.
Disaggregation of Income Statement Expenses
In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense
Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, which requires disclosure of
specific expense categories in the notes to the financial statements. The amendment is effective for annual periods beginning after
December 15, 2026, with early adoption permitted. The amendment should be applied prospectively to financial statements issued
for reporting periods after the effective date or this ASU or retrospectively to any or all prior periods presented in the financial
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statements. Wayfair is currently evaluating the impact that the adoption of this standard will have on its consolidated financial
statements and related disclosures.
2. Supplemental Financial Statement Disclosures
Accounts Receivable, Net
As of December 31, 2024, accounts receivable was $155 million, net of allowance for credit losses of $18 million. As of
December 31, 2023, accounts receivable was $140 million, net of allowance for credit losses of $22 million. The changes in the
allowance for credit losses were not material for the year ended December 31, 2024. Management believes credit risk is mitigated
for the year ended December 31, 2024, as approximately 98.9% of the net revenue recognized was collected in advance of
recognition.
Prepaid Expenses and Other Current Assets
The following table presents the components of prepaid expenses and other current assets as of December 31,
2024 and 2023:
December 31,
2024
2023
(in millions)
Prepaid expenses and other current assets:
Deferred costs in transit
$
32 $
79
Prepaid expenses
66
81
Supplier receivables and credits receivable
131
90
Restricted cash
4
4
Other current assets
41
35
Total prepaid expenses and other current assets
$
274 $
289
Other Non-current Assets
The following table presents the components of other non-current assets as of December 31, 2024 and 2023:
December 31,
2024
2023
(in millions)
Other non-current assets:
Goodwill and intangible assets, net
$
13 $
14
Long-term investments
15
14
Other non-current assets
26
23
Total other non-current assets
$
54 $
51
Amortization expense related to intangible assets was $1 million for the years ended December 31, 2024, 2023 and 2022.
Goodwill was $0.4 million for the years ended December 31, 2024 and 2023. For the years ended December 31, 2024, 2023 and
2022, no indicators of impairment of goodwill or intangible assets were identified and therefore no impairment has been recorded.
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Other Current Liabilities
The following table presents the components of other current liabilities as of December 31, 2024 and 2023:
December 31,
2024
2023
(in millions)
Other current liabilities:
Unearned revenue
$
212 $
195
Employee compensation and related benefits
79
80
Current operating lease liabilities (Note 5)
174
133
Advertising
100
92
Sales tax payable
70
65
Sales return allowance
49
45
Short-term debt (Note 6)
236
117
Other accrued expenses and current liabilities
204
222
Total other current liabilities
$
1,124 $
949
Contract Liabilities
Contract liabilities included in unearned revenue and other accrued expenses and current liabilities were $212 million and
$12 million at December 31, 2024, respectively, and $195 million and $9 million at December 31, 2023, respectively.
During the year ended December 31, 2024, Wayfair recognized $136 million and $8 million of net revenue that was
included in unearned revenue and other accrued expenses and current liabilities, respectively, as of December 31, 2023.
Net revenue from contracts with customers is disaggregated by geographic region because this manner of disaggregation
best depicts how the nature, amount, timing and uncertainty of net revenue and cash flows are affected by economic factors. Refer
to Note 13, Segment and Geographic Information, for additional information.
Restructuring Charges
In January 2024, Wayfair announced a workforce realignment plan, including a workforce reduction involving
approximately 1,650 employees. As a result, during the year ended December 31, 2024, Wayfair incurred $79 million of charges
recorded within restructuring charges on the consolidated statements of operations. Wayfair does not expect to incur any further
material charges related to this workforce reduction. The charges consisted primarily of one-time employee severance and benefit
costs.
Germany Restructuring
On January 10, 2025, Wayfair announced its decision to exit the German market (the “Germany Restructuring”), including a
workforce reduction impacting approximately 730 employees, although Wayfair expects approximately half of these positions to
relocate to other corporate offices.
As a result of the Germany Restructuring, Wayfair expects to incur aggregate charges of approximately $102 million to
$111 million, consisting of (i) approximately $40 million to $44 million in employee-related costs, including severance, benefits,
relocation and transition costs and (ii) approximately $62 million to $67 million of other primarily non-cash charges, including
gross impairment charges related to facility closures and other wind-down activities and excluding any recoveries that may be
recognized related to our leases.
During the year ended December 31, 2024, Wayfair recorded impairment charges of $34 million associated with weakened
macroeconomic conditions in connection with our German operations. This is inclusive of $21 million related to ROU assets and
$13 million related to property, plant and equipment. Wayfair expects to incur the remainder of the aggregate charges during the
first quarter of 2025.
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3. Cash, Cash Equivalents and Restricted Cash, Investments and Fair Value Measurements
Investments
As of December 31, 2024 and 2023, Wayfair’s marketable securities, which primarily consisted of corporate bonds and
other government obligations that are priced at fair value, were classified as available-for-sale investments. During the years
ended December 31, 2024, 2023 and 2022, Wayfair did not have any realized gains or losses. Interest income includes interest
earned from cash and cash equivalents and marketable securities. During the years ended December 31, 2024, 2023 and 2022,
Wayfair recorded $54 million, $47 million and $13 million of interest income, respectively.
During the years ended December 31, 2024, 2023 and 2022, Wayfair did not recognize any credit losses related to its
available-for-sale debt securities. As of December 31, 2024 and 2023, Wayfair did not have an allowance for credit losses
recorded related to its available-for-sale debt securities.
The following table presents details of Wayfair’s investment securities as of December 31, 2024 and 2023:
December 31, 2024
Amortized
Cost
Gross
Unrealized
Gains
Gross
Unrealized
Losses
Estimated
Fair Value
(in millions)
Short-term:
Investment securities
$
56 $
— $
— $
56
Total
$
56 $
— $
— $
56
December 31, 2023
Amortized
Cost
Gross
Unrealized
Gains
Gross
Unrealized
Losses
Estimated
Fair Value
(in millions)
Short-term:
Investment securities
$
29 $
— $
— $
29
Total
$
29 $
— $
— $
29
Fair Value Measurements
Wayfair's financial assets and liabilities are measured at fair value, which is defined as the price that would be received to
sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit
price). The three levels of inputs used to measure fair value are as follows:
▪
Level 1—Unadjusted quoted prices in active markets for identical assets or liabilities
▪
Level 2—Unadjusted quoted prices in active markets for similar assets or liabilities, unadjusted quoted prices for
identical or similar assets or liabilities in markets that are not active, or inputs other than quoted prices that are
observable or can be corroborated by observable market data for substantially the full-term of the asset or liability
▪
Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to the fair value
of the asset or liability
This hierarchy requires Wayfair to use observable market data, when available, and to minimize the use of unobservable
inputs when determining fair value. Wayfair classifies cash equivalents and certificate of deposits within Level 1 because these
are valued using quoted market prices. The fair value of Level 1 financial assets is based on quoted market prices of the identical
underlying security. Wayfair classifies short-term investments within Level 2 because unadjusted quoted prices for identical or
similar assets in markets are not active. Wayfair does not have assets that are classified as Level 3.
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The following tables set forth the fair value of Wayfair's financial assets measured at fair value on a recurring basis as of
December 31, 2024 and 2023:
December 31, 2024
Level 1
Level 2
Level 3
Total
(in millions)
Cash and cash equivalents:
Cash
$
461 $
— $
— $
461
Cash equivalents
855
—
—
855
Total cash and cash equivalents
1,316
—
—
1,316
Short-term investments:
Investment securities
—
56
—
56
Prepaid expenses and other current assets:
Certificate of deposit (1)
4
—
—
4
Total
$
1,320 $
56 $
— $
1,376
December 31, 2023
Level 1
Level 2
Level 3
Total
(in millions)
Cash and cash equivalents:
Cash
$
407 $
— $
— $
407
Cash equivalents
915
—
—
915
Total cash and cash equivalents
1,322
—
—
1,322
Short-term investments:
Investment securities
—
29
—
29
Prepaid expenses and other current assets:
Certificate of deposit (1)
4
—
—
4
Total
$
1,326 $
29 $
— $
1,355
(1) The certificate of deposit is classified as restricted cash that is primarily restricted to funds held in collateral.
4. Property and Equipment, net
The following table summarizes property and equipment, net as of December 31, 2024 and 2023:
December 31,
2024
2023
(in millions)
Furniture and equipment
$
654 $
631
Site and software development costs
1,000
960
Leasehold improvements
644
570
Construction in progress
5
70
2,303
2,231
Less: Accumulated depreciation and amortization
(1,700)
(1,483)
Property and equipment, net
$
603 $
748
For the years ended December 31, 2024, 2023 and 2022, depreciation and amortization expense was $386 million, $416
million and $370 million, respectively, of which $257 million, $279 million and $224 million, respectively, was attributable to the
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amortization expense of site and software development costs. Total costs capitalized of site and software development costs, net
of accumulated amortization, totaled $201 million and $265 million as of December 31, 2024 and 2023, respectively.
Impairment and other related net charges
During the year ended December 31, 2024, Wayfair recorded charges of $14 million for the non-cash impairment of fixed
assets. This is inclusive of $13 million associated with weakened macroeconomic conditions in connection with our German
operations and $1 million related to construction in progress assets at identified U.S. locations.
During the year ended December 31, 2023, Wayfair recorded charges of $9 million for the non-cash impairment of fixed
assets, related to construction in progress assets at identified U.S. locations.
During the year ended December 31, 2022, Wayfair recorded charges of $15 million for the non-cash impairment of fixed
assets. This is inclusive of $7 million related to an impairment of a U.S. office location due to current sublease market conditions
and $8 million related to construction in progress assets at an International warehouse.
5. Leases
Wayfair has lease arrangements for warehouses, WDN facilities, which includes consolidation centers, cross docks and last
mile delivery facilities and office spaces. These leases expire at various dates through 2044. Operating lease expense was $217
million, $190 million and $180 million for the years ended December 31, 2024, 2023 and 2022, respectively. Sublease income
was $6 million, $2 million and $14 million for the years ended December 31, 2024, 2023 and 2022, respectively.
The following table presents other information related to leases:
Year Ended December 31,
2024
2023
(in millions)
Supplemental cash flow information:
Cash payments included in operating cash flows from lease arrangements
$
236
$
195
Right-of-use assets obtained in exchange for lease obligations
$
290
$
100
Right-of-use asset amortization
$
140
$
130
December 31,
2024
December 31,
2023
Additional lease information:
Weighted average remaining lease term
7 years
7 years
Weighted average discount rate
7.0 %
7.5 %
Future minimum lease payments under non-cancellable leases as of December 31, 2024 were as follows:
Amount
(in millions)
2025
$
224
2026
247
2027
219
2028
165
2029
126
Thereafter
456
Total future minimum lease payments
1,437
Less: Imputed interest
(334)
Total
$
1,103
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The following table presents total operating leases liabilities:
December 31,
2024
2023
(in millions)
Balance sheet line item:
Other current liabilities
$
174 $
133
Operating lease liabilities, net of current
929
862
Total operating leases liabilities
$
1,103 $
995
As of December 31, 2024, Wayfair has entered into $16 million of additional operating leases, primarily related to
warehouse and retail leases that have not yet commenced. As there is no control of the underlying assets during the construction
period, Wayfair is not considered the owner of the construction project for accounting purposes. These operating leases will
commence during 2025 with lease terms of 6 to 10 years.
Impairment and other related net charges
During the year ended December 31, 2024, Wayfair recorded charges of $23 million for lease impairment. This is inclusive
of $21 million associated with weakened macroeconomic conditions in connection with our German operations and $2 million
related to changes in sublease market conditions for identified U.S. office locations.
During the years ended December 31, 2023 and 2022, Wayfair recorded net charges of $5 million and $23 million,
respectively, primarily related to changes in sublease market conditions for identified U.S. office locations.
6. Debt and Other Financing
The following table presents the outstanding principal amount and carrying value of debt and other financing:
December 31, 2024
December 31, 2023
Debt Instrument
Principal
Amount
Unamortized
Debt Discount
Net Carrying
Amount
Principal
Amount
Unamortized
Debt Discount
Net Carrying
Amount
(in millions)
Revolving Credit Facility
$
—
$
—
2024 Notes
$
— $
—
— $
117 $
—
117
2025 Notes
237
(1)
236
754
(3)
751
2026 Notes
734
(3)
731
949
(5)
944
2027 Notes
690
(7)
683
690
(10)
680
2028 Notes
690
(9)
681
690
(11)
679
2029 Secured Notes
800
(13)
787
—
—
—
2025 Accreting Notes
—
—
—
38
—
38
Total Debt
$
3,118
$
3,209
Short-term debt (1)
236
117
Long-term debt
$
2,882
$
3,092
(1) Short-term debt consists of $236 million for the 2025 Notes as of December 31, 2024, and $117 million for the 2024 Notes as
of December 31, 2023. Short-term debt and is presented within other current liabilities in the consolidated balance sheets.
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Revolving Credit Facility
On March 24, 2021, Wayfair and certain of its subsidiaries (together, the “Guarantors”), and Wayfair’s wholly-owned
subsidiary Wayfair LLC, as borrower (the “Borrower”), entered into a new credit agreement (the “Credit Agreement”) with the
lending institutions from time-to-time parties thereto and Citibank, N.A., in its capacity as administrative agent, collateral agent,
swingline lender and a letter of credit issuer. The Credit Agreement provides for a $600 million senior secured revolving credit
facility that matures on March 24, 2026 (the “Revolver”). Debt issuance costs for the Revolver are included in other non-current
assets and are amortized to interest expense over the Revolver’s term. As of December 31, 2024, there were no revolving loans
outstanding under the Revolver.
Under the Credit Agreement, the Borrower may, from time to time, request letters of credit, which reduce the availability of
credit under the Revolver. Wayfair had $71 million outstanding letters of credit as of December 31, 2024, primarily as security for
lease agreements, which reduced the availability of credit under the Revolver. Any amounts outstanding under the Revolver are
due at maturity. In addition, subject to the terms and conditions set forth in the Credit Agreement, the Borrower is required to
make certain mandatory prepayments prior to maturity.
The proceeds of the Revolver may be used to finance working capital, to refinance existing indebtedness and to provide
funds for permitted acquisitions, repurchases of equity interests and other general corporate purposes. The Borrower’s obligations
under the Revolver are guaranteed by the Guarantors. The obligations of the Borrower and the Guarantors are secured by first-
priority liens on substantially all of the assets of the Borrower and the Guarantors, including, with certain exceptions, all of the
capital stock of Wayfair’s domestic subsidiaries and 65% of the capital stock of Wayfair’s first-tier foreign subsidiaries.
On October 11, 2021, the parties amended the Credit Agreement (“Amendment No. 1”) to reflect technical and
administrative changes related to the phaseout of LIBOR and the implementation of SONIA with respect to loans denominated in
Pounds Sterling. Following Amendment No. 1, the Revolver borrowings bear interest through maturity at a variable rate based
upon, at the Borrower’s option, (i) the LIBOR rate, (ii) the base rate (which is the highest of (x) the prime rate, (y) one-half of
1.00% in excess of the federal funds effective rate and (z) 1.00% in excess of the one-month LIBOR rate) or (iii) with respect to
loans denominated in Pounds Sterling, the RFR rate (which is the greater of (x) the SONIA rate and (y) 0.00%), plus, in each case
an applicable margin.
On June 13, 2023, the parties amended the Credit Agreement (“Amendment No. 2”) to reflect the phaseout of USD LIBOR
and the implementation of Adjusted Term SOFR. Following Amendment No. 2, the Revolver borrowings bear interest through
maturity at a variable rate based upon, at the Borrower’s option, (i) Adjusted Term SOFR, (ii) the base rate (which is the highest
of (x) the prime rate, (y) the NYFRB Rate in effect plus one-half of 1.00% and (z) Adjusted Term SOFR for a one-month interest
period plus 1.00%), or (iii) with respect to loans denominated in an Alternative Currency (other than Pounds Sterling), the
Adjusted Eurocurrency Rate (which is equal to (x) the Eurocurrency Rate for such interest period multiplied by (y) the Statutory
Reserve Rate).
As of December 31, 2024, the applicable margin for Adjusted Term SOFR or Eurocurrency loans is 1.25% per annum, the
applicable margin for base rate loans is 0.25% per annum and the applicable margin for RFR loans is 1.2826% per annum. The
applicable margin is subject to specified changes depending on Wayfair’s Consolidated Senior Secured Debt to Consolidated
EBITDA Ratio, as defined in the Credit Agreement.
The Credit Agreement contains affirmative and negative covenants customarily applicable to senior secured credit facilities,
including covenants that, among other things, limit or restrict the ability of the Borrower and the Guarantors, subject to negotiated
exceptions, to incur additional indebtedness and additional liens on their assets, engage in mergers or acquisitions or dispose of
assets, pay dividends or make other distributions, voluntarily prepay other indebtedness, enter into transactions with affiliated
persons, make investments, or change the nature of their businesses. The Revolver also contains customary events of default,
subject to thresholds and grace periods, including, among others, payment default, covenant default, cross default to other
material indebtedness and judgment default. In addition, the Credit Agreement requires Wayfair to maintain a Consolidated
Senior Secured Debt to Consolidated EBITDA Ratio (as defined in the Credit Agreement) of 4.0 to 1.0, subject to a 0.5 step-up
following certain permitted acquisitions. Wayfair does not expect any of these restrictions to affect or limit the ability to conduct
business in the ordinary course. As of December 31, 2024, Wayfair was in compliance with all covenants.
Senior Secured Notes
On October 8, 2024, Wayfair LLC (the “Issuer”), a subsidiary of Wayfair, issued $800.0 million aggregate principal amount
of 7.250% senior secured notes due 2029 (the “2029 Secured Notes”, together with the Convertible Notes (as defined below), the
“Notes”). The 2029 Secured Notes are governed by an indenture between the Issuer, the guarantors named therein (including
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Wayfair) and U.S. Bank Trust Company, National Association, as trustee and notes collateral agent. The indenture provides,
among other things, that the 2029 Secured Notes will be senior secured obligations of the Issuer. Interest on the 2029 Secured
Notes is payable semi-annually, in arrears, on April 15 and October 15 of each year, commencing on April 15, 2025, at a rate of
7.250% per annum. The annual effective interest rate of the 2029 Secured Notes is 7.5%. Transaction costs to issue the 2029
Secured Notes were recorded as direct deductions from the related debt liabilities and amortized to interest expense, net using the
effective interest method over the terms of the corresponding 2029 Secured Notes. The 2029 Secured Notes will mature on
October 31, 2029, unless earlier redeemed, in accordance with their terms or repurchased.
The indenture contains covenants that restrict the Issuer’s ability and the ability of its restricted subsidiaries to, among other
things, incur additional indebtedness, declare or pay dividends, redeem stock or make other distributions or restricted payments,
make certain investments, create certain liens, enter into certain transactions with affiliates, agree to certain restrictions on the
ability of the Issuer’s restricted subsidiaries to make certain payments, sell or transfer certain assets and consolidate, merge, sell or
otherwise dispose of all or substantially all of the Issuer’s or its restricted subsidiaries’ assets.
These covenants are subject to a number of important limitations, qualifications and exceptions. In addition, certain of these
covenants, including the limitation on indebtedness, will cease to apply to the 2029 Secured Notes for so long as the 2029 Secured
Notes have investment grade ratings from any two of the prescribed rating agencies. If a change of control occurs, the Issuer may
be required to offer the holders of the 2029 Secured Notes an opportunity to sell all or part of their 2029 Secured Notes at a
purchase price of 101% of the principal amount of such 2029 Secured Notes, plus accrued and unpaid interest, if any, to, but
excluding, the date of repurchase. In addition, if Wayfair sells assets under certain circumstances, the Issuer may be required to
make an offer to purchase a portion of the 2029 Secured Notes. As of December 31, 2024, Wayfair was in compliance with all
covenants in the indenture.
The indenture provides for customary events of default, which include (subject in certain cases to customary grace and cure
periods) nonpayment of principal or interest; breach of other agreements in the indenture; defaults in failure to pay certain other
indebtedness; certain events of bankruptcy or insolvency; the failure to pay final judgments in excess of certain amounts of money
against the Issuer and its significant subsidiaries; the failure of certain guarantees to be enforceable (other than in accordance with
the terms of the indenture); and the assertion by the Issuer, Wayfair or any guarantor that is a significant subsidiary in any
pleading that any security interest related to the 2029 Secured Notes is invalid or unenforceable.
Convertible Non-Accreting Notes
The following table summarizes certain terms related to the Company’s current outstanding non-accreting convertible notes
(collectively, the “Non-Accreting Notes,” together with the 2025 Accreting Notes, the “Convertible Notes” and together with the
2029 Secured Notes, the “Notes”):
Non-Accreting Notes
Maturity Date
Annual Coupon Rate
Annual Effective
Interest Rate
Payment Dates for Semi-Annual
Interest Payments in Arrears
2025 Notes
October 1, 2025
0.625%
0.9%
April 1 and October 1
2026 Notes
August 15, 2026
1.000%
1.2%
February 15 and August 15
2027 Notes
September 15, 2027
3.250%
3.6%
March 15 and September 15
2028 Notes
November 15, 2028
3.500%
3.8%
May 15 and November 15
In November 2018, Wayfair issued $575.0 million in aggregate principal amount of 1.125% Convertible Senior Notes due
2024 (the “2024 Notes”), which included the exercise in full of a $75.0 million option granted to the initial purchasers. On
November 1, 2024, the 2024 Notes matured and Wayfair paid in cash the remaining outstanding principal amount of $117 million
to the holders of the 2024 Notes.
In August 2020, Wayfair issued $1.518 billion in aggregate principal amount of 0.625% Convertible Senior Notes due 2025
(the “2025 Notes”), which included the exercise in full of a $198.0 million option granted to the initial purchasers. In connection
with the issuance of the 2025 Notes, Wayfair entered into capped calls that covered, initially, the number of shares of Wayfair’s
Class A common stock underlying the 2025 Notes, subject to anti-dilution adjustments substantially similar to those applicable to
the 2025 Notes (the “2025 Capped Calls”). In September 2022, in connection with the issuance of the 2027 Notes, as defined
below, Wayfair repurchased for cash $229 million aggregate principal amount of the 2025 Notes. In May 2023, in connection
with the issuance of the 2028 Notes, as defined below, Wayfair repurchased for cash $535 million aggregate principal amount of
the 2025 Notes. On November 11, 2024, Wayfair repurchased for cash $518 million aggregate principal amount of the 2025
Notes. For more information, see “Partial Extinguishment the Convertible Notes” below.
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In August 2019, Wayfair issued $948.75 million in aggregate principal amount of 1.000% Convertible Senior Notes due
2026 (the “2026 Notes”), which included the exercise in full of a $123.75 million option granted to the initial purchasers. In
connection with the 2026 Notes, Wayfair entered into capped calls that covered, initially, the number of shares of Wayfair’s Class
A common stock underlying the 2026 Notes, subject to anti-dilution adjustments substantially similar to those applicable to the
2026 Notes (the “2026 Capped Calls”). On November 11, 2024, Wayfair repurchased for cash $215 million aggregate principal
amount of the 2026 Notes. For more information, see “Partial Extinguishment the Convertible Notes” below.
In September 2022, Wayfair issued $690.0 million in aggregate principal amount of 3.250% Convertible Senior Notes due
2027 (the “2027 Notes”), which included the exercise in full of a $90.0 million option granted to the initial purchasers. In
connection with the issuance of the 2027 Notes, Wayfair entered into capped calls that covered, initially, the number of shares of
Wayfair’s Class A common stock underlying the 2027 Notes, subject to anti-dilution adjustments substantially similar to those
applicable to the 2027 Notes (the “2027 Capped Calls”).
In May 2023, Wayfair issued $690.0 million in aggregate principal amount of 3.500% Convertible Senior Notes due 2028
(the “2028 Notes” and together with the 2025 Notes, 2026 Notes and 2027 Notes, the “Non-Accreting Notes”), which included
the exercise in full of a $90.0 million option granted to the initial purchasers. In connection with the issuance of the 2028 Notes,
Wayfair entered into capped calls that covered, initially, the number of shares of Wayfair’s Class A common stock underlying the
2028 Notes, subject to anti-dilution adjustments substantially similar to those applicable to the 2028 Notes (the “2028 Capped
Calls”).
Convertible Accreting Notes
In April 2020, Wayfair issued $535.0 million in aggregate original principal amount of 2.50% Accreting Convertible Senior
Notes due 2025 (the “2025 Accreting Notes”, and collectively with the Non-Accreting Notes, the “Convertible Notes”) to Great
Hill, CBEP Investments, LLC (“Charlesbank”) and The Spruce House Partnership LLC. The 2025 Accreting Notes are fully and
unconditionally guaranteed on a senior unsecured basis by Wayfair LLC, a wholly-owned subsidiary of Wayfair Inc., as
guarantor. On November 11, 2024, Wayfair repurchased in full the remaining $39 million in aggregate principal amount of the
2025 Accreting Notes.
Convertible Note Indentures
The Convertible Notes are governed by separate indentures between Wayfair, as issuer, and U.S. Bank National
Association, as trustee. The Non-Accreting Notes indenture also includes Wayfair LLC, as guarantor. Each indenture contains
customary terms and covenants, including that upon certain events of default occurring and continuing, either the trustee or the
holders of not less than 25% in aggregate principal amount of the respective Convertible Notes then outstanding may declare the
entire principal amount or accreted principal amount, as the case may be, of the respective Convertible Notes plus accrued
interest, if any, to be immediately due and payable.
Conversion and Redemption Terms of the Notes
Wayfair's Convertible Notes will mature at their maturity date unless earlier purchased, redeemed or converted. The Non-
Accreting Notes’ initial conversion terms are summarized below:
Convertible Notes
Maturity Date
Free Convertibility
Date
Initial Conversion
Rate per $1,000
Principal
Initial
Conversion
Price
Redemption Date
2025 Notes
October 1, 2025
July 1, 2025
2.3972
$417.15
October 4, 2022
2026 Notes
August 15, 2026
May 15, 2026
6.7349
$148.48
August 20, 2023
2027 Notes
September 15, 2027
June 15, 2027
15.7597
$63.45
September 20, 2025
2028 Notes
November 15, 2028
August 15, 2028
21.8341
$45.80
May 20, 2026
The conversion rate is subject to adjustment upon the occurrence of certain specified events, including certain distributions
and dividends to all or substantially all of the holders of Wayfair’s Class A common stock, but will not be adjusted for accrued
and unpaid interest.
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Wayfair will settle any conversions of the Non-Accreting Notes in cash, shares of Wayfair’s Class A common stock or a
combination thereof, with the form of consideration determined at Wayfair’s election. The holders of the Non-Accreting Notes
may convert all or a portion of such Notes prior to certain specified dates (each, a “Free Convertibility Date”) under the following
circumstances (in each case, as applicable to each series of Non-Accreting Notes):
•
during any calendar quarter (and only during such calendar quarter), if the last reported sale price of Wayfair’s Class A
common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days
ending on, and including, the last trading day of the immediately preceding calendar quarter is greater than or equal to
130% of the conversion price on each applicable trading day;
•
during the five-business day period after any ten consecutive trading day period (the “measurement period") in which the
trading price (as defined in the applicable indenture) per $1,000 principal amount of the notes for each trading day of the
measurement period was less than 98% of the product of the last reported sale price of Wayfair’s Class A common stock
and the conversion rate on each such trading day;
•
if Wayfair calls the notes for redemption, at any time prior to 5:00 p.m. (New York City time) (“the close of business”)
on the second scheduled trading day immediately preceding the redemption date; and
•
upon the occurrence of specified corporate events (as set forth in the applicable indenture).
On or after the applicable Free Convertibility Date until the close of business on the second scheduled trading day
immediately preceding the applicable maturity date, holders of the Non-Accreting Notes may convert their Non-Accreting Notes
at any time.
The conditional conversion features of the 2025 Notes, 2026 Notes, 2027 Notes and 2028 Notes were not triggered during
the calendar quarter ended December 31, 2024, therefore, the 2025 Notes, 2026 Notes, 2027 Notes and 2028 Notes are not
convertible during the calendar quarter ended March 31, 2025 pursuant to the applicable last reported sales price conditions.
Upon the occurrence of a fundamental change (as defined in the applicable indenture), holders of the applicable series of the
Non-Accreting Notes may require Wayfair to repurchase all or a portion of such Notes for cash at a price equal to 100% of the
principal amount of such Notes to be repurchased plus any accrued but unpaid interest to, but excluding, the fundamental change
repurchase date. Holders of the Non-Accreting Notes who convert their respective Notes in connection with a make-whole
fundamental change or a notice of redemption (each as defined in the applicable indenture) may be entitled to a premium in the
form of an increase in the conversion rate of the respective Notes.
Wayfair may not redeem the Non-Accreting Notes prior to certain dates (the “Redemption Date”). On or after the applicable
Redemption Date, Wayfair may redeem for cash all or part of the applicable series of the Non-Accreting Notes if the last reported
sale price of Wayfair’s Class A common stock equals or exceeds 130% of the conversion price then in effect for at least 20
trading days (whether or not consecutive), including at least one of the five trading days immediately preceding the date on which
Wayfair provides notice of redemption, during any 30 consecutive trading days ending on, and including the trading day
immediately preceding the date on which Wayfair provides notice of the redemption. The redemption price will be either 100% of
the principal amount of the notes to be redeemed, plus accrued and unpaid interest, if any, or the if-converted value if the holder
elects to convert their Non-Accreting Notes upon receiving notice of redemption.
Accounting for the Convertible Notes
The Convertible Notes are recorded as a single unit within liabilities in the consolidated balance sheets as the conversion
features within the Convertible Notes are not derivatives that require bifurcation and the Convertible Notes do not involve a
substantial premium. Transaction costs to issue the Convertible Notes were recorded as direct deductions from the related debt
liabilities and amortized to interest expense, net using the effective interest method over the terms of the corresponding
Convertible Notes.
Partial Extinguishment the Convertible Notes
On November 11, 2024, Wayfair repurchased $518 million in aggregate principal amount of the 2025 Notes, $215 million in
aggregate principal amount of the 2026 Notes and the remaining $39 million in aggregate principal amount of the 2025 Accreting
Notes, in privately negotiated transactions. In accounting for the repurchases, Wayfair recorded a $29 million gain on debt
extinguishment, representing the difference between the cash paid for principal, plus accrued and unpaid interest and transaction
fees of $741 million and the combined net carrying value of the 2025 Notes, 2026 Notes and 2025 Accreting Notes of
$770 million.
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Conversions of Convertible Notes
During the year ended December 31, 2024, there were no conversions of the Convertible Notes.
Interest Expense
The following table presents total interest expense recognized for the Notes for the years ended December 31:
Year ended December 31,
2024
2023
2022
The Notes
Contractual
Interest
Expense
Debt
Discount
Amortization
Total
Interest
Expense
Contractual
Interest
Expense
Debt
Discount
Amortization
Total
Interest
Expense
Contractual
Interest
Expense
Debt
Discount
Amortization
Total
Interest
Expense
(in millions)
2024 Notes
1
—
1
2
1
3
5
2
7
2025 Notes
4
2
6
6
2
8
9
3
12
2026 Notes
9
2
11
9
2
11
9
2
11
2027 Notes
22
2
24
22
2
24
7
1
8
2028 Notes
24
3
27
15
1
16
—
—
—
2029
Secured
Notes
13
—
13
—
—
—
—
—
—
2025
Accreting
Notes
1
—
1
1
—
1
1
—
1
Total
$
74 $
9 $
83 $
55 $
8 $
63 $
31 $
8 $
39
Fair Value of the Notes
As of December 31, 2024, the estimated fair value of the 2025 Notes, 2026 Notes, 2027 Notes, 2028 Notes and 2029
Secured Notes was $227 million, $682 million, $738 million, $859 million and $802 million, respectively. The estimated fair
values of the Notes was determined through consideration of quoted market prices. The fair values of the Notes are classified as
Level 2 as defined in Note 3, Cash, Cash Equivalents and Restricted Cash, Investments and Fair Value Measurements. As of
December 31, 2024, the if-converted value of the 2025 Notes, 2026 Notes, 2027 Notes and 2028 Notes did not exceed the
principal value.
Seniority of the Notes
The 2029 Secured Notes are senior secured debt obligations secured by first-priority liens, which assets also secure the
Revolver on a first-priority pari passu basis. The 2029 Secured Notes are guaranteed, jointly and severally, on a senior basis by
the Guarantors. The Convertible Notes are general senior unsecured obligations of Wayfair. The Convertible Notes rank senior in
right of payment to any of Wayfair’s future indebtedness that is expressly subordinated in right of payment to the Convertible
Notes, rank equal in right of payment to Wayfair’s existing and future unsecured indebtedness that is not so subordinated and are
effectively subordinated in right of payment to any of Wayfair’s secured indebtedness to the extent of the value of the assets
securing such indebtedness. The Convertible Notes are structurally subordinated to all existing and future indebtedness and
liabilities of Wayfair’s subsidiaries.
Capped Calls
The 2025 Capped Calls, 2026 Capped Calls, 2027 Capped Calls and 2028 Capped Calls (collectively, the “Capped Calls”)
are expected generally to reduce the potential dilution and/or offset the cash payments Wayfair is required to make in excess of
the principal amount of the Non-Accreting Notes upon conversion of the Non-Accreting Notes if the market price per share of
Wayfair’s Class A common stock is greater than the strike price of the applicable Capped Call (which corresponds to the initial
conversion price of the applicable Non-Accreting Notes and is subject to certain adjustments under the terms of the applicable
Capped Call), with such reduction and/or offset subject to a cap based on the cap price of the applicable Capped Calls (the “Initial
Cap Price”). The Capped Calls can, at Wayfair’s option, remain outstanding until their maturity date, even if all or a portion of the
Non-Accreting Notes are converted, repurchased or redeemed prior to such date.
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Each of the Capped Calls has an initial cap price per share of Wayfair’s Class A common stock, which represented a
premium over the last reported sale price (or, with respect to the 2025 Capped Calls, the volume-weighted average price) of
Wayfair’s Class A common stock on the date the corresponding Non-Accreting Notes were priced (the “Cap Price Premium”),
and is subject to certain adjustments under the terms of the corresponding agreements. Collectively, the Capped Calls cover,
initially, the number of shares of Wayfair’s Class A common stock underlying the Non-Accreting Notes, subject to anti-dilution
adjustments substantially similar to those applicable to the Non-Accreting Notes.
The initial terms for the Capped Calls are presented below:
Capped Calls
Maturity Date
Initial Cap Price
Cap Price Premium
2025 Capped Calls
October 1, 2025
$787.08
150%
2026 Capped Calls
August 15, 2026
$280.15
150%
2027 Capped Calls
September 15, 2027
$97.62
100%
2028 Capped Calls
November 15, 2028
$73.28
100%
The Capped Calls are separate transactions from the Non-Accreting Notes, are not subject to the terms of the Non-Accreting
Notes and will not affect any holder’s rights under the Non-Accreting Notes. Similarly, holders of the Non-Accreting Notes do
not have any rights with respect to the Capped Calls. The Capped Calls do not meet the criteria for separate accounting as a
derivative as they are indexed to Wayfair's stock and meet the requirements to be classified in equity. The premiums paid for the
Capped Calls were included as a net reduction to additional paid-in capital within stockholders’ deficit when they were entered.
2024 Capped Calls Unwind
During the year ended December 31, 2024, Wayfair completed an unwind of the 2024 Capped Calls. The proceeds received
from the unwind were included as an increase to additional paid-in-capital within stockholders’ deficit.
7. Commitments and Contingencies
Purchase Obligations
Wayfair has entered into purchase obligations that represent enforceable and legally binding software license and freight
commitments. Payments due under these purchase obligations are $249 million in 2025, $33 million in 2026, $24 million in 2027,
$5 million in 2028, none in 2029 or thereafter. These payments exclude payments for contracts that are able to be canceled, both
in full or in part, since they do not represent legally binding arrangements.
Collection of Sales or Other Similar Taxes
Wayfair has historically collected and remitted sales tax based on the locations of its physical operations. The U.S. Supreme
Court's decision in South Dakota v. Wayfair, Inc., removed a significant impediment to the enactment of laws imposing sales tax
collection obligations on out-of-state e-commerce companies. Several states and other taxing jurisdictions have presented, or
indicated that they may present, Wayfair with sales tax assessments. The aggregate assessments received as of December 31,
2024 are not material to Wayfair's business and Wayfair does not expect the Court's decision to have a significant impact on its
business.
Legal Matters
From time to time, Wayfair is involved in litigation matters and other legal claims that arise during the ordinary course of
business. The Company records a liability when it believes that it is both probable that a liability has been incurred and the
amount of loss can be reasonably estimated. Significant judgment is required to determine both the probability of having incurred
a liability and the estimated amount of the liability. The Company does not record a gain contingency until the period in which the
contingency is resolved and the gain is realizable or realized.
Litigation and legal claims are inherently unpredictable and claims cannot be predicted with certainty. An unfavorable
resolution of one or more of these matters could have a material adverse effect on the Company’s results of operations or financial
condition, and regardless of the outcome, these matters can be costly and time consuming, as it can divert management's attention
from important business matters and initiatives, negatively impacting Wayfair's overall operations. In addition, Wayfair may also
find itself at greater risk to outside party claims as it increases its operations in jurisdictions where the laws with respect to the
potential liability of online retailers are uncertain, unfavorable, or unclear. However, Wayfair does not currently believe that the
outcome of any legal matters will have a material adverse effect on Wayfair’s results of operations or financial condition.
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Canada Border Services Agency
The Canada Border Services Agency (“CBSA”) is examining Wayfair’s payment of duties under the Special Import
Measures Act (the “CBSA review”) for goods imported into Canada for the years ended December 31, 2023 and 2022 and part of
the year ended December 31, 2021. The estimated potential liability for the CBSA review, net of any amounts that may be
recouped through the appeals process, is approximately $41 million, inclusive of duties and interest.
Related to the CBSA review, during the year ended December 31, 2024, Wayfair incurred approximately $18 million to cost
of goods sold and approximately $4 million to selling, operations, technology, general and administrative within the consolidated
statement of operations. During the year ended December 31, 2024, Wayfair made payments of approximately $21 million of
duties and $5 million of interest charges based on assessments received related to the year ended December 31, 2022 and part of
the year ended December 31, 2021. Wayfair is required to pay all assessed amounts in order to exercise its appeal rights. Wayfair
believes there are substantial factual and legal grounds to appeal and partially recuperate these amounts and is exploring other
options to mitigate exposure. As of December 31, 2024, approximately $4 million was recorded within other current liabilities in
the consolidated balance sheets.
The CBSA is also examining Wayfair’s valuation of duties under the Customs Act for goods imported into Canada for the
years ended December 31, 2024, 2023, 2022, 2021 and 2020. The examination for the years ended December 31, 2021 and 2020
resulted in a gain of $16 million related to an overpayment of duties during those years. Wayfair considered this realizable during
December 2024 and was recorded as a reduction to cost of goods sold within the consolidated statement of operations and a
related receivable within Prepaid expenses and other current assets on the consolidated balance sheets. The refunds from this audit
will primarily be used to offset future normal course custom duties payments and payments due under the CBSA Review.
Because loss contingencies are inherently unpredictable, this assessment is subjective and requires judgments about future
events. As a result, it is at least reasonably possible that this estimate may change in the near term and the effect of the potential
change could be material.
8. Employee Benefit Plans
Wayfair has a defined-contribution, incentive savings plan pursuant to Section 401(k) of the Internal Revenue Code. The
plan covers all full-time employees who have reached the age of 21 years. Employees may elect to defer compensation up to a
dollar limit (as allowable by the Internal Revenue Code), of which up to 4% of an employee's salary will be matched by Wayfair.
The amounts deferred by the employee and the matching amounts contributed by Wayfair both vest immediately. The amount
expensed under the plan totaled $22 million, $35 million and $43 million in the years ended December 31, 2024, 2023 and 2022,
respectively.
9. Stockholders’ Deficit
Preferred Stock
Wayfair authorized 10,000,000 shares of undesignated preferred stock, $0.001 par value per share, for future issuance. As of
December 31, 2024, Wayfair had no shares of undesignated preferred stock issued or outstanding.
Common Stock
Wayfair authorized 500,000,000 shares of Class A common stock, $0.001 par value per share, and 164,000,000 shares of
Class B common stock, $0.001 par value per share, of which 100,762,581 and 92,457,562 shares of Class A common stock and
24,658,295 and 25,691,295 shares of Class B common stock were outstanding as of December 31, 2024 and 2023, respectively.
The rights of the holders of Class A common stock and Class B common stock are identical, except with respect to voting and
conversion rights. Each share of Class A common stock is entitled to one vote per share and each share of Class B common stock
is entitled to ten votes per share. Each share of Class B common stock may be converted into one share of Class A common stock
at the option of its holder and will be automatically converted into one share of Class A common stock upon transfer thereof,
subject to certain exceptions. In addition, upon the date on which the outstanding shares of Class B common stock represent less
than 10% of the aggregate number of shares of the then outstanding Class A common stock and Class B common stock, or in the
event of the affirmative vote or written consent of holders of at least 66 2/3% of the outstanding shares of Class B common stock,
all outstanding shares of Class B common stock shall convert automatically into Class A common stock. Subject to preferences
that may apply to any shares of preferred stock outstanding at the time, the holders of common stock are entitled to receive
dividends out of funds legally available if Wayfair's Board of Directors (the “Board”), in its discretion, determines to issue
dividends and then only at the times and in the amounts that the Board may determine. Since Wayfair's initial public offering
through December 31, 2024, 57,380,119 shares of Class B common stock were converted to Class A common stock.
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82
Stock Repurchase Program
On August 21, 2020, the Board authorized the repurchase of up to $700 million of Wayfair’s Class A common stock in the
open market, through privately negotiated transactions, or otherwise, including pursuant to a Rule 10b5-1 plan (the “2020
Repurchase Program”). On August 10, 2021, the Board authorized a new $1.0 billion share repurchase program on the same terms
(the “2021 Repurchase Program,” together with the 2020 Repurchase Program, the “Repurchase Programs”). There is no stated
expiration date for the Repurchase Programs. Wayfair will begin repurchasing shares under the 2021 Repurchase Program upon
the completion of the 2020 Repurchase Program.
During the years ended December 31, 2024 and 2023, Wayfair did not repurchase any shares of Class A Common stock
under the Repurchase Programs. During the year ended December 31, 2022, Wayfair repurchased 548,173 shares of Class A
common stock for $75 million under the 2020 Repurchase Program.
10. Equity-Based Compensation
In April 2023, Wayfair’s stockholders approved the 2023 Incentive Award Plan (the “2023 Plan”) to replace Wayfair’s 2014
Incentive Award Plan, as amended (the “2014 Plan” and, together with the 2023 Plan, the “Incentive Plans”). The Incentive Plans
were adopted by the board of directors (the “Board”) to grant cash and equity incentive awards to eligible participants in order to
attract, motivate and retain talent. The Incentive Plans are administered by the Board for awards to non-employee directors and by
the compensation committee of the Board for other participants and provide for the issuance of equity-based awards including
stock options, stock appreciation rights, restricted stock, restricted stock units (“RSUs”), performance awards and stock payments.
Under the 2023 Plan, 20,525,663 shares of Class A common stock initially were available for future award grants. As of
December 31, 2024, 10,268,240 shares of Class A common stock remained available for future grant under the 2023 Plan.
The following table presents activity relating to RSUs for the year ended December 31, 2024:
Shares
Weighted-
Average
Grant Date
Fair Value
Unvested at December 31, 2023
5,186,886 $
93.68
RSUs granted
5,577,581 $
54.18
RSUs vested
(7,272,019) $
69.45
RSUs forfeited/canceled
(1,036,962) $
102.09
Unvested at December 31, 2024
2,455,486 $
72.11
As of December 31, 2024, unrecognized equity-based compensation expense related to RSUs expected to vest over time is
$88 million with a weighted-average remaining vesting term of 0.3 years.
The following table summarizes activity for the years ended December 31:
Year Ended December 31,
2024
2023
2022
Weighted average grant date fair value of RSUs
$
54.18 $
50.39 $
68.61
Total fair value of vested RSUs (in millions)
$
505 $
636 $
523
Intrinsic value of RSUs vested (in millions)
$
406 $
532 $
291
As of December 31, 2024, the aggregate intrinsic value of unvested RSUs was $109 million.
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83
Equity-based compensation was classified as follows in the consolidated statements of operations for the years ended
December 31:
Year Ended December 31,
2024
2023
2022
(in millions)
Cost of goods sold
$
9 $
10 $
11
Customer service and merchant fees
18
29
33
Selling, operations, technology, general and administrative
368
566
469
Total equity-based compensation expense
$
395 $
605 $
513
Equity-based compensation costs capitalized as software costs were $37 million, $61 million and $43 million for the years
ended December 31, 2024, 2023 and 2022, respectively.
11. Income Taxes
The components of the provision for income taxes, net for the years ended December 31, 2024, 2023 and 2022 are presented
below:
Year Ended December 31,
2024
2023
2022
(in millions)
Current:
Federal
$
— $
— $
—
State
4
3
9
Foreign
2
6
3
Deferred:
Federal
—
—
—
State
—
—
—
Foreign
4
—
—
Provision for income taxes, net
$
10 $
9 $
12
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The actual provision for income taxes, net differs from the expected provision for income taxes computed at the U.S.
Federal statutory tax rate of 21% due to the following:
Year Ended December 31,
2024
2023
2022
(in millions)
Provision for income taxes at the federal statutory rate
$
(101) $
(153) $
(277)
State income tax expense, net of federal impact
4
3
9
Foreign tax rate differential
13
17
28
Intercompany debt adjustment
(242)
—
—
Uncertain tax positions, net
191
—
—
Non-deductible equity-based compensation expense
4
10
16
Shortfall expense from equity-based compensation
15
17
41
Change in valuation allowance
105
103
214
Limitation on officer's compensation
3
5
4
Intangible property basis step-up
(7)
—
—
Intercompany interest
15
15
9
Other
10
(8)
(32)
Provision for income taxes, net
$
10 $
9 $
12
Certain prior period items in the table above were reclassified to conform to the current period presentation.
The components of loss before income taxes determined by tax jurisdiction, are as follows:
Year Ended December 31,
2024
2023
2022
(in millions)
U.S.
$
(245) $
(495) $
(997)
Foreign
(237)
(234)
(322)
Total
$
(482) $
(729) $
(1,319)
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The tax effects of temporary differences that give rise to significant portions of deferred tax assets and liabilities for the
periods presented are as follows:
December 31,
2024
2023
(in millions)
Deferred tax assets:
Net operating loss carryforwards
$
809 $
763
Equity-based compensation expense
7
18
Intangible property
60
47
Accrued expenses and reserves
21
26
Capitalized technology
96
70
Leases
283
266
Other
55
26
Gross deferred tax assets
1,331
1,216
Less: Valuation allowance
(1,042)
(933)
Net deferred tax assets
289
283
Deferred tax liabilities:
Prepaid expenses
$
(13) $
(17)
Property and equipment
(42)
(42)
Operating lease right-of-use asset
(234)
(217)
Other
(5)
(7)
Total deferred tax liabilities
(294)
(283)
Non-current net deferred tax liabilities
$
(5) $
—
The valuation allowance increased by $109 million during 2024. The increase in the valuation allowance is the result of
Wayfair establishing a valuation allowance related to the current year operating losses, and adjustments to our operating loss
carryforwards when we filed our returns.
In determining the need for a valuation allowance, Wayfair has given consideration to the cumulative book income and loss
positions of each of its entities as well as its worldwide cumulative income position. Wayfair has evaluated the positive and
negative evidence bearing upon the realizability of its deferred tax assets, which are primarily compromised of net operating
losses, on a jurisdictional basis. At December 31, 2024, Wayfair has determined that it is more likely than not that Wayfair will
not realize the benefits of its deferred tax assets, and as a result, has maintained a full valuation allowance against substantially all
of the worldwide net deferred tax assets.
As of December 31, 2024, Wayfair had federal net operating loss carryforwards available to offset future federal taxable
income of $3.1 billion. In addition, Wayfair had state net operating loss carryforwards available in the amount of $2.9 billion
which are available to offset future state taxable income. Of the federal net operating loss carryforwards, $205 million begin to
expire in the year ending December 31, 2037 if unused. Federal net operating loss carryforwards of $2.9 billion do not expire. The
state net operating loss carryforwards begin to expire in the year ending December 31, 2025. The ability to utilize these federal
and state net operating loss carryforwards may be limited in the future if Wayfair experiences an ownership change pursuant to
Internal Revenue Code Section 382. An ownership change occurs when the ownership percentages of 5% or greater stockholders
change by more than 50% over a three-year period. Through December 31, 2024, Wayfair has determined that the ability to use
tax attributes is not impacted by such a restrictive limitation.
As of December 31, 2024, Wayfair also had foreign net operating loss carryforwards available to offset future foreign
income of $1.8 billion. Foreign net operating loss carryforwards of $107 million will begin to expire in the year ending December
31, 2038. Foreign net operating loss carryforwards of $1.7 billion do not expire.
As of December 31, 2024, Wayfair has not provided for deferred income taxes on outside basis differences in its foreign
subsidiaries of approximately $346 million since these basis differences are deemed to be indefinitely reinvested, or it is within
the control of Wayfair to recognize these basis differences on a tax-free basis. Upon realization of the outside basis differences in
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86
the form of dividends or otherwise, Wayfair could be subject to income taxes as well as withholding taxes. The amount of taxes
attributable to the outside basis differences, if realized, is expected to be immaterial.
Wayfair establishes reserves for uncertain tax positions based on management's assessment of exposures associated with tax
deductions, permanent tax differences and tax credits. A reconciliation of the beginning and ending amounts of gross
unrecognized tax benefits (excluding interest and penalties) is as follows:
Year Ended December 31,
2024
2023
2022
(in millions)
Beginning balance
$
— $
— $
—
Increases as a result of tax positions taken in the current period
306
—
—
Ending balance
$
306 $
— $
—
As of December 31, 2024, $1 million of the $306 million of unrecognized tax benefits would affect our effective tax rate, if
recognized, and the remaining $305 million would affect our deferred tax accounts and our valuation allowance. In the disclosure
of the components of the provision for income taxes above, in the year ended December 31, 2024, $1 million of the expense
related to uncertain tax positions impacts current tax expense, and $305 million impacts deferred tax expense. Wayfair's policy is
to recognize interest and penalties related to unrecognized tax benefits as a component of the provision for income taxes, net.
Related to the unrecognized tax benefits noted above, Wayfair did not accrue any penalties and interest during 2024, 2023 or 2022
because it is believed that such additional interest and penalties would be insignificant.
Wayfair's tax jurisdictions include the U.S., the United Kingdom, Germany, Ireland, Canada, Hong Kong and the British
Virgin Islands. The statute of limitations with respect to U.S. federal income taxes has expired for years prior to 2021. The
relevant U.S. state statutes vary and years prior to 2018 are generally closed. The statute of limitations for foreign income taxes
vary, but have expired for years prior to 2018. However, preceding years remain open to examination by U.S. federal and state
and foreign taxing authorities to the extent of future utilization of net operating losses generated in each preceding year.
The Organization for Economic Co-operation and Development (“OECD”) has proposed a global minimum tax of 15% of
reported profits (“Pillar 2”) that has been agreed upon in principle by over 140 countries. During 2024, many countries took steps
to incorporate Pillar 2 model rule concepts into their domestic laws. Although the model rules provide a framework for applying
the minimum tax, countries may enact Pillar 2 slightly differently than the model rules and on different timelines and may adjust
domestic tax incentives in response to Pillar 2. Wayfair has estimated the impact of Pillar 2 on our 2024 tax expense to be
immaterial. Our deferred tax assets and liabilities are calculated based on the statutory tax rates in the various jurisdictions in
which we operate. Our deferred tax assets and liabilities do not reflect the potential impact of Pillar 2 top-up taxes or any other
minimum tax regimes for future periods. These taxes will be in-period items if they are realized. As of December 31, 2024, the
impact of a top-up tax on our deferred tax assets and liabilities would be immaterial net, due to our full valuation allowance.
Wayfair is still evaluating the potential consequences of Pillar 2 on longer-term financial positions.
12. Loss per Share
The following table presents the calculation of basic and diluted loss per share:
Year Ended December 31,
2024
2023
2022
(in millions, except per share data)
Numerator:
Numerator for basic and diluted loss per share - net loss
$
(492) $
(738) $
(1,331)
Denominator:
Denominator for basic and diluted loss per share - weighted-average
number of shares of common stock outstanding
123
114
106
Loss per share
Basic
$
(4.01) $
(6.47) $
(12.54)
Diluted
$
(4.01) $
(6.47) $
(12.54)
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The potential common shares from anti-dilutive securities excluded from the weighted-average shares of common stock
used to calculate diluted loss per share were as follows:
Year Ended December 31,
2024
2023
2022
(in millions)
Unvested restricted stock units
2
5
10
Shares related to convertible debt instruments
31
36
25
Total
33
41
35
Wayfair may settle conversions of the Non-Accreting Notes in cash, shares of Wayfair’s Class A common stock or any
combination thereof at its election. The Capped Calls are generally expected to reduce the potential dilution of Wayfair's Class A
common stock upon any conversion of the Non-Accreting Notes and/or offset the cash payments Wayfair is required to make in
excess of the principal amount of the Notes upon conversion of the Non-Accreting Notes to the extent the market price per share
of Wayfair’s Class A common stock is greater than the strike price of the Capped Calls (which corresponds to the initial
conversion prices of the Non-Accreting Notes, subject to certain adjustments under the terms of the Capped Calls), with such
reduction and/or offset capped at the Initial Cap Price.
For more information on the structure of the Notes and the Capped Calls, see Note 6, Debt and Other Financing.
13. Segment and Geographic Information
Operating segments are defined as components of an enterprise for which separate financial information is available that is
evaluated on a regular basis by the Chief Operating Decision Maker (“CODM”) in deciding how to allocate resources to an
individual segment and in assessing performance. Wayfair’s CODM is its Chief Executive Officer.
Wayfair's operating and reportable segments are the U.S. and International. These segments reflect the way the CODM
allocates resources and evaluates financial performance, which is based upon each segment's Adjusted EBITDA. Adjusted
EBITDA is defined as net income or loss before depreciation and amortization, equity-based compensation and related taxes,
interest income or expense, net, other income or expense, net, provision or benefit for income taxes, net, non-recurring items and
other items not indicative of ongoing operating performance. These charges are excluded from the evaluation of segment
performance because it facilitates reportable segment performance comparisons on a period-to-period basis as these costs may
vary independent of business performance. The CODM uses Adjusted EBITDA to assess segment performance while deciding
how to allocate resources as a benchmark to evaluate operating performance, generate future operating plans and make strategic
decisions regarding the allocation of capital.
The accounting policies of the segments are the same as those described in Note 1, Summary of Significant Accounting
Policies. Wayfair allocates certain operating expenses to the operating and reportable segments, including customer service and
merchant fees and selling, operations, technology, general and administrative expenses based on the usage and relative
contribution provided to the segments. It excludes from the allocations certain operating expense lines, including depreciation and
amortization, equity-based compensation and related taxes, impairment and other related net charges and restructuring charges, as
well as interest income or expense, net, other income or expense, net, gain or loss on debt extinguishment and provision or benefit
for income taxes, net. There are no net revenue transactions between Wayfair's reportable segments.
U.S.
The U.S. segment primarily consists of amounts earned through product sales through Wayfair's family of sites in the U.S.
International
The International segment primarily consists of amounts earned through product sales through Wayfair's international sites.
Net revenue from external customers for each group of similar products and services are not reported to the CODM.
Separate identification of this information for purposes of segment disclosure is impractical, as it is not readily available and the
cost to develop it would be excessive. No individual country outside the U.S. provided greater than 10% of consolidated net
revenue.
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The following tables present net revenue, significant segment expenses and Adjusted EBITDA attributable to Wayfair’s
reportable segments for the periods presented:
Year Ended December 31,
2024
2023
2022
(in millions)
U.S.
International
Total
U.S.
International
Total
U.S.
International
Total
Net revenue
$ 10,373 $
1,478 $ 11,851 $ 10,482 $
1,521 $ 12,003 $ 10,464 $
1,754 $ 12,218
Less:
Cost of goods
sold (1)
7,122
1,095
8,217
7,146
1,129
8,275
7,385
1,348
8,733
Advertising
1,292
180
1,472
1,234
163
1,397
1,277
196
1,473
Other segment
items (2)
1,388
321
1,709
1,658
367
2,025
1,900
528
2,428
Adjusted
EBITDA
$
571 $
(118) $
453 $
444 $
(138) $
306 $
(98) $
(318) $
(416)
Less:
reconciling
items (3)
945
1,044
$
915
Net loss
$
(492)
$
(738)
$ (1,331)
(1) Cost of goods sold excludes costs that are excluded from Wayfair's evaluation of segment performance. Excluded from
Wayfair's evaluation of segment performance and from cost of goods sold are depreciation and amortization and equity-based
compensation and related taxes.
(2) Other segment items include customer service and merchant fees and selling, operations, technology, general and
administrative, and exclude any costs that are excluded from Wayfair's evaluation of segment performance. Excluded from
Wayfair's evaluation of segment performance and from other segment items are depreciation and amortization, equity-based
compensation and related taxes, interest income or expense, net, other income or expense, net, provision or benefit for
income taxes, net, non-recurring items and other items not indicative of ongoing operating performance.
(3) The following adjustments are made to reconcile total reportable segments Adjusted EBITDA to consolidated net loss:
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89
Year Ended December 31,
2024
2023
2022
(in millions)
Depreciation and amortization
$
387 $
417 $
371
Equity-based compensation and related taxes
411
623
527
Interest expense, net
29
17
27
Other (income) expense, net
21
(1)
4
Provision for income taxes, net
10
9
12
Other:
Impairment and other related net charges (a)
37
14
39
Restructuring charges (b)
79
65
31
Gain on debt extinguishment (c)
(29)
(100)
(96)
Total reconciling items
$
945 $
1,044 $
915
(a) During the year ended December 31, 2024, Wayfair recorded net charges of $37 million, inclusive of $34 million
associated with weakened macroeconomic conditions in connection with our German operations, $2 million related to
changes in sublease market conditions and $1 million related to construction in progress assets at identified U.S.
locations. During the year ended December 31, 2023, Wayfair recorded net charges of $14 million, inclusive of $5
million related to consolidation of certain customer service centers and $9 million related to construction in progress
assets at identified U.S. locations. During the year ended December 31, 2022, we recorded net charges of $39 million,
inclusive of $31 million of lease impairment and other net charges related to changes in market conditions around
future sublease income for one office location in the U.S. and charges of $8 million related to construction in progress
assets at an International warehouse.
(b) During the year ended December 31, 2024, Wayfair incurred $79 million of charges consisting primarily of one-time
employee severance and benefit costs associated with the January 2024 workforce reductions. During the year ended
December 31, 2023, Wayfair incurred $65 million of charges consisting primarily of one-time employee severance and
benefit costs associated with the January 2023 workforce reductions. During the year ended December 31, 2022,
Wayfair incurred $31 million of charges consisting primarily of one-time employee severance and benefit costs
associated with the August 2022 workforce reductions.
(c) During the year ended December 31, 2024, Wayfair recorded a $29 million gain on debt extinguishment upon
repurchase of $518 million in aggregate principal amount of the 2025 Notes, $215 million in aggregate principal
amount of the 2026 Notes and the remaining $39 million in aggregate principal amount of the 2025 Accreting Notes.
During the year ended December 31, 2023, Wayfair recorded a $100 million gain on debt extinguishment upon
repurchase of $83 million in aggregate principal amount of the 2024 Notes and $535 million in aggregate principal
amount of the 2025 Notes. During the year ended December 31, 2022, Wayfair recorded a $96 million gain on debt
extinguishment upon repurchase of $375 million in aggregate principal amount of the 2024 Notes and $229 million in
aggregate principal amount of the 2025 Notes.
See “Non-GAAP Financial Measures” in Part II, Item 7, Management's Discussion and Analysis of Financial Condition and
Results of Operations in this Annual Report on Form 10-K for more information regarding the use of Adjusted EBITDA.
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90
The following table presents long-lived assets attributable to Wayfair's reportable segments reconciled to the consolidated
amounts:
Year Ended December 31,
2024
2023
(in millions)
Geographic long-lived assets:
U.S.
$
789 $
783
International
279
267
Total reportable segment long-lived assets
1,068
1,050
Plus: reconciling corporate long-lived assets
460
518
Total long-lived assets
$
1,528 $
1,568
U.S. and International long-lived assets consist of property and equipment, net and operating lease ROU assets. Corporate
long-lived assets consist of property and equipment, net, including capitalized internal-use software and website development
costs, and operating lease ROU assets at corporate facilities.
The following table presents total assets attributable to Wayfair's reportable segments reconciled to consolidated amounts:
Year Ended December 31,
2024
2023
(in millions)
Assets by segment:
U.S.
$
1,245 $
1,243
International
328
312
Total reportable segment assets
1,573
1,555
Plus: reconciling corporate assets
1,886
1,919
Total assets
$
3,459 $
3,474
U.S. and International segment assets consist primarily of accounts receivable, net, inventories, prepaid expenses and other
current assets, property and equipment, net and operating lease ROU assets. Corporate assets include cash and cash equivalents,
short-term investments, long-lived assets at corporate facilities, capitalized internal-use software and website development costs
and other non-current assets.
14. Subsequent Events
On January 10, 2025, Wayfair announced its decision to exit the German market, herein referred to as the Germany
Restructuring, including a workforce reduction impacting approximately 730 employees, although Wayfair expects approximately
half of these positions to relocate to other corporate offices.
As a result of the Germany Restructuring, Wayfair expects to incur aggregate charges of approximately $102 million to
$111 million, consisting of (i) approximately $40 million to $44 million in employee-related costs, including severance, benefits,
relocation and transition costs and (ii) approximately $62 million to $67 million of other primarily non-cash charges, including
gross impairment charges related to facility closures and other wind-down activities and excluding any recoveries that may be
recognized related to our leases. Wayfair recorded partial non-cash charges during the year ended December 31, 2024 and expects
to incur the remainder of the aggregate charges during the first quarter of 2025.
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91
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None.
Item 9A. Controls and Procedures
Disclosure Controls and Procedures
Our management, with the participation of our chief executive officer (“CEO”) and chief financial officer (“CFO”),
evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the
Exchange Act) as of December 31, 2024. Based on such evaluation, our CEO and CFO have concluded that, as of December 31,
2024, our disclosure controls and procedures are effective in ensuring that (a) the information required to be disclosed by us in the
reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods
specified in the SEC's rules and forms, and (b) such information is accumulated and communicated to our management, including
our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required
disclosure.
Management's Annual Report on Internal Control Over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as
defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act). Internal control over financial reporting is a process designed
to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for
external purposes in accordance with generally accepted accounting principles, and includes those policies and procedures that: (i)
pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of
our assets; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial
statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made
only in accordance with authorizations of our management and directors; and (iii) provide reasonable assurance regarding
prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on our
financial statements. Our management conducted an evaluation of the effectiveness of our internal control over financial reporting
based on the framework in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the
Treadway Commission (2013 framework). Based on this evaluation, management concluded that our internal control over
financial reporting was effective as of December 31, 2024. The effectiveness of our internal control over financial reporting as of
December 31, 2024 has been audited by Ernst & Young LLP, an independent registered public accounting firm, as stated in its
attestation report which is included immediately following Item 9A. Controls and Procedures, in this Annual Report on Form 10-
K.
Limitations on Disclosure Controls and Procedures and Internal Control over Financial Reporting
Our disclosure controls and procedures and internal control over financial reporting are designed to provide reasonable
assurance of achieving their objectives as specified above. Management does not expect, however, that our disclosure controls
and procedures or our internal control over financial reporting will prevent or detect all error and fraud. Any control system, no
matter how well designed and operated, is based upon certain assumptions and can provide only reasonable, not absolute,
assurance that its objectives will be met. Further, no evaluation of controls can provide absolute assurance that misstatements due
to error or fraud will not occur or that all control issues and instances of fraud, if any, within Wayfair have been detected.
Changes in Internal Control Over Financial Reporting
There were no changes in our internal control over financial reporting identified in connection with the evaluation required
by Rules 13a-15(d) or 15d-15(d) of the Exchange Act during the three months ended December 31, 2024 covered by this Annual
Report on Form 10-K, that materially affected, or are reasonably likely to materially affect, our internal control over financial
reporting.
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92
Report of Independent Registered Public Accounting Firm
To the Stockholders and the Board of Directors of Wayfair Inc.
Opinion on Internal Control Over Financial Reporting
We have audited Wayfair Inc.’s internal control over financial reporting as of December 31, 2024, based on criteria established in
Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission
(2013 framework) (the COSO criteria). In our opinion, Wayfair Inc. (the Company) maintained, in all material respects, effective
internal control over financial reporting as of December 31, 2024, based on the COSO criteria.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)
(PCAOB), the consolidated balance sheets of the Company as of December 31, 2024 and 2023, the related consolidated
statements of operations, comprehensive loss, stockholders’ deficit and cash flows for each of the three years in the period ended
December 31, 2024, and the related notes and our report dated February 20, 2025 expressed an unqualified opinion thereon.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its
assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Annual
Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal
control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required
to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and
regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all
material respects.
Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material
weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and
performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a
reasonable basis for our opinion.
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally
accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that
(1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of
the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of
financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the
company are being made only in accordance with authorizations of management and directors of the company; and (3) provide
reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s
assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ Ernst & Young LLP
Boston, Massachusetts
February 20, 2025
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93
Item 9B. Other Information
(c)
Rule 10b5-1 Trading Plans
During the three months ended December 31, 2024, no director or officer of the Company adopted or terminated a “Rule
10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408(a) of Regulation S-
K.
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
Not applicable.
PART III
Item 10. Directors, Executive Officers and Corporate Governance
We have adopted an insider trading compliance policy regarding securities transactions (the “Insider Trading Compliance
Policy”) that applies to our directors, officers, employees, consultants, and contractors and those of our subsidiaries. We believe
that the Insider Trading Compliance Policy is reasonably designed to promote compliance with insider trading laws, rules and
regulations with respect to the purchase, sale and/or other dispositions of our securities, as well as the applicable rules and
regulations of the New York Stock Exchange. A copy of the Insider Trading Compliance Policy is filed as Exhibit 19 to this
Annual Report on Form 10-K.
The remainder of the information required by this Item 10 is incorporated by reference from our proxy statement for our
2025 annual meeting of stockholders, which we will file with the Securities and Exchange Commission within 120 days of
December 31, 2024.
Item 11. Executive Compensation
The information required by this item is incorporated by reference from our proxy statement for our 2025 annual meeting of
stockholders, which we will file with the Securities and Exchange Commission within 120 days of December 31, 2024.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
The information required by this item is incorporated by reference from our proxy statement for our 2025 annual meeting of
stockholders, which we will file with the Securities and Exchange Commission within 120 days of December 31, 2024.
Item 13. Certain Relationships and Related Transactions, and Director Independence
The information required by this item is incorporated by reference from our proxy statement for our 2025 annual meeting of
stockholders, which we will file with the Securities and Exchange Commission within 120 days of December 31, 2024.
Item 14. Principal Accountant Fees and Services
The information required by this item is incorporated by reference from our proxy statement for our 2025 annual meeting of
stockholders, which we will file with the Securities and Exchange Commission within 120 days of December 31, 2024.
PART IV
Item 15. Exhibit and Financial Statement Schedules
(a) The following documents are filed as part of this Annual Report on Form 10-K:
(1) Financial Statements:
The financial statements are filed as part of this Annual Report on Form 10-K under Item 8, Financial Statements and
Supplementary Data.
(2) Financial Statement Schedules:
The financial statement schedules are omitted because they are either not applicable or the information required is presented
in the financial statements and notes thereto under Item 8, Financial Statements and Supplementary Data.
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94
(3) Exhibits:
See the Exhibit Index immediately prior to the signature page in this Annual Report on Form 10-K, which is incorporated
herein by reference.
Item 16. Form 10–K Summary
Not applicable.
EXHIBIT INDEX
Incorporated by Reference
Exhibit
Number
Exhibit Description
Filed or
Furnished
Herewith
Form
File No.
Filing Date
Exhibit
Number
3.1
Restated Certificate of Incorporation of the Company
8-K
001-36666
10/8/2014
3.1
3.2
Amended and Restated Bylaws of Wayfair Inc.
8-K
001-36666
2/14/2025
3.1
4.1
Specimen stock certificate evidencing the shares of
Class A common stock of the Company
S-1
333-198171
9/19/2014
4.1
4.2
Indenture, dated as of August 19, 2019, by and
between Wayfair Inc. and U.S. Bank National
Association, as trustee
8-K
001-36666
8/19/2019
4.1
4.3
Form of 1.00% Convertible Senior Notes due 2026
(included in Exhibit 4.2)
4.4
Form of Indenture by and between Wayfair Inc.,
Wayfair LLC, as Guarantor, and U.S. Bank National
Association, as trustee
8-K
001-36666
4/8/2020
4.1
4.5
Form of 2.50% Accreting Convertible Senior Notes
due 2025 (included in Exhibit 4.4)
4.6
Indenture, dated as of August 14, 2020, by and
between Wayfair Inc. and U.S. Bank National
Association, as trustee
8-K
001-36666
8/17/2020
4.1
4.7
Form of 0.625% Convertible Senior Notes due 2025
(included in Exhibit 4.6)
4.8
Indenture, dated as of September 13, 2022, by and
between Wayfair Inc. and U.S. Bank National
Association, as trustee
8-K
001-36666
9/14/2022
4.1
4.9
Form of 3.25% Convertible Senior Notes due 2027
(included in Exhibit 4.8)
4.10
Indenture, dated as of May 12, 2023, by and between
Wayfair Inc. and U.S. Bank Trust Company,
National Association, as trustee.
8-K
001-36666
5/12/2023
4.1
4.11
Form of 3.50% Convertible Senior Notes due 2028
(included in Exhibit 4.10).
8-K
001-36666
5/12/2023
4.12
Indenture, dated October 8, 2024, among Wayfair
LLC, the guarantors party thereto and U.S. Bank
Trust Company, National Association, as trustee and
notes collateral agent
8-K
001-36666
10/8/2024
4.1
4.13
Form of 7.25% Senior Secured Notes (included in
Exhibit 4.12)
8-K
001-36666
10/8/2024
4.14
Description of Wayfair Securities
10-K
001-36666
2/25/2021
4.12
10.1+
2014 Incentive Award Plan
S-1
333-198171
9/19/2014
10.3
10.2+
Amendment No. 1 to 2014 Incentive Award Plan
(included in Annex B)
DEF1
4A
001-36666
8/29/2022
10.3+
Form of Option Agreement under the 2014 Incentive
Award Plan (adopted fiscal 2014)
S-1
333-198171
9/19/2014
10.4
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95
10.4+
Form of Restricted Stock Unit Agreement under the
2014 Incentive Award Plan (adopted fiscal 2014)
S-1
333-198171
9/19/2014
10.5
10.5+
Form of Restricted Stock Unit Agreement under the
2014 Incentive Award Plan (adopted fiscal 2018)
10-K
001-3666
2/25/2019
10.6
10.6+
Form of Restricted Stock Agreement under the 2014
Incentive Award Plan (adopted fiscal 2014)
S-1
333-198171
9/19/2014
10.6
10.7+
Form of Indemnification and Advancement
Agreement for Directors and Executive Officers
8-K
001-36666
1/8/2018
10.1
10.8+
Form of Amended and Restated Letter Agreement,
dated May 6, 2014 between the Company and each
of Niraj Shah and Steven Conine
S-1
333-198171
8/15/2014
10.11
10.9
Credit Agreement, dated March 24, 2021 among
Wayfair Inc., Wayfair LLC, the lending institutions
from time to time parties thereto and Citibank, N.A.,
in its capacity as administrative agent, collateral
agent, swingline lender and a letter of credit issuer
8-K
001-36666
3/26/2021
10.1
10.10
Amendment No. 1 to the Credit Agreement, dated
October 11, 2021, among Wayfair Inc., Wayfair LLC
and Citibank, N.A. as the Administrative Agent
10-K
001-36666
2/24/2022
10.12
10.11
2020 Incremental Commitment Joinder Agreement
and Consent to Waiver, dated October 30, 2020,
among Silicon Valley Bank, as an Incremental
Lender, the other Lenders party thereto, Wayfair
LLC, Wayfair Inc. and Citibank, N.A., as
Administrative Agent.
10-Q
001-36666
11/3/2020
10.15
10.12
Letter Agreement, dated November 14, 2018,
between Morgan Stanley & Co. LLC and Wayfair
Inc. regarding the 2018 Base Capped Call
Transaction
8-K
001-36666
11/19/2018
10.2
10.13
Letter Agreement, dated November 14, 2018,
between Goldman Sachs & Co. LLC and Wayfair
Inc. regarding the 2018 Base Capped Call
Transaction
8-K
001-36666
11/19/2018
10.3
10.14
Letter Agreement, dated November 14, 2018,
between Bank of America, N.A. and Wayfair Inc.
regarding the 2018 Base Capped Call Transaction
8-K
001-36666
11/19/2018
10.4
10.15
Amended and Restated Letter Agreement, dated
November 15, 2018, between Citibank, N.A. and
Wayfair Inc. regarding the 2017 Base Capped Call
Transaction
8-K
001-36666
11/19/2018
10.5
10.16
Amended and Restated Letter Agreement, dated
November 15, 2018, between Goldman Sachs & Co.
LLC and Wayfair Inc. regarding the 2017 Base
Capped Call Transaction
8-K
001-36666
11/19/2018
10.6
10.17
Amended and Restated Letter Agreement, dated
November 15, 2018, between Bank of America, N.A.
and Wayfair Inc. regarding the 2017 Base Capped
Call Transaction
8-K
001-36666
11/19/2018
10.7
10.18
Amended and Restated Letter Agreement, dated
November 15, 2018, between Citibank, N.A. and
Wayfair Inc. regarding the 2017 Additional Capped
Call Transaction
8-K
001-36666
11/19/2018
10.8
10.19
Amended and Restated Letter Agreement, dated
November 15, 2018, between Goldman Sachs & Co.
LLC and Wayfair Inc. regarding the 2017 Additional
Capped Call Transaction
8-K
001-36666
11/19/2018
10.9
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96
10.20
Amended and Restated Letter Agreement, dated
November 15, 2018, between Bank of America, N.A.
and Wayfair Inc. regarding the 2017 Additional
Capped Call Transaction
8-K
001-36666
11/19/2018
10.10
10.21
Letter Agreement, dated November 27, 2018,
between Morgan Stanley & Co. LLC and Wayfair
Inc. regarding the 2018 Additional Capped Call
Transaction
8-K
001-36666
11/29/2018
10.1
10.22
Letter Agreement, dated November 27, 2018,
between Goldman Sachs & Co. LLC and Wayfair
Inc. regarding the 2018 Additional Capped Call
Transaction
8-K
001-36666
11/29/2018
10.2
10.23
Letter Agreement, dated November 27, 2018,
between Bank of America, N.A. and Wayfair Inc.
regarding the 2018 Additional Capped Call
Transactions
8-K
001-36666
11/29/2018
10.3
10.24
Letter Agreement, dated August 14, 2019, between
Goldman Sachs & Co. LLC and Wayfair Inc.
regarding the 2019 Base Capped Call Transactions
8-K
001-36666
8/19/2019
10.2
10.25
Letter Agreement, dated August 14, 2019, between
Citibank, N.A. and Wayfair Inc. regarding the 2019
Base Capped Call Transactions
8-K
001-36666
8/19/2019
10.3
10.26
Letter Agreement, dated August 14, 2019, between
JPMorgan Chase Bank, N.A. and Wayfair Inc.
regarding the 2019 Base Capped Call Transactions
8-K
001-36666
8/19/2019
10.4
10.27
Letter Agreement, dated August 16, 2019, between
Goldman Sachs & Co. LLC and Wayfair Inc.
regarding the 2019 Base Capped Call Transactions
8-K
001-36666
8/19/2019
10.5
10.28
Letter Agreement, dated August 16, 2019, between
Citibank, N.A. and Wayfair Inc. regarding the 2019
Base Capped Call Transactions
8-K
001-36666
8/19/2019
10.6
10.29
Letter Agreement, dated August 16, 2019, between
JPMorgan Chase Bank, N.A. and Wayfair Inc.
regarding the 2019 Base Capped Call Transactions
8-K
001-36666
8/19/2019
10.7
10.30
Form of Registration Rights Agreement by and
between Wayfair Inc. and GHEP VII Aggregator,
L.P., CBEP Investments, LLC and The Spruce House
Partnership LLC
8-K
001-36666
4/8/2020
10.2
10.31
Letter Agreement, dated August 11, 2020, between
Barclays PLC and Wayfair Inc. regarding the Base
Capped Call Transaction
8-K
001-36666
8/17/2020
10.2
10.32
Letter Agreement, dated August 11, 2020, between
Citibank, N.A. and Wayfair Inc. regarding the Base
Capped Call Transaction
8-K
001-36666
8/17/2020
10.3
10.33
Letter Agreement, dated August 11, 2020, between
Morgan Stanley & Co. LLC and Wayfair Inc.
regarding the Base Capped Call Transaction
8-K
001-36666
8/17/2020
10.4
10.34
Letter Agreement, dated August 11, 2020, between
Goldman Sachs & Co. LLC and Wayfair Inc.
regarding the Base Capped Call Transaction
8-K
001-36666
8/17/2020
10.5
10.35
Letter Agreement, dated August 11, 2020, between
Nomura Global Financial Products Inc. and Wayfair
Inc. regarding the Base Capped Call Transaction
8-K
001-36666
8/17/2020
10.6
10.36
Letter Agreement, dated August 11, 2020, between
Bank of Montreal and Wayfair Inc. regarding the
Base Capped Call Transaction
8-K
001-36666
8/17/2020
10.7
Table of Contents
97
10.37
Letter Agreement, dated August 12, 2020, between
Barclays Bank PLC and Wayfair Inc. regarding the
Additional Capped Call Transaction
8-K
001-36666
8/17/2020
10.8
10.38
Letter Agreement, dated August 12, 2020, between
Citibank, N.A. and Wayfair Inc. regarding the
Additional Capped Call Transaction
8-K
001-36666
8/17/2020
10.9
10.39
Letter Agreement, dated August 12, 2020, between
Morgan Stanley & Co. LLC and Wayfair Inc.
regarding the Additional Capped Call Transaction
8-K
001-36666
8/17/2020
10.10
10.40
Letter Agreement, dated August 12, 2020, between
Goldman Sachs & Co. LLC and Wayfair Inc.
regarding the Additional Capped Call Transaction
8-K
001-36666
8/17/2020
10.11
10.41
Letter Agreement, dated August 12, 2020, between
Nomura Global Financial Products Inc. and Wayfair
Inc. regarding the Additional Capped Call
Transaction
8-K
001-36666
8/17/2020
10.12
10.42
Letter Agreement, dated August 12, 2020, between
Bank of Montreal and Wayfair Inc. regarding the
Additional Capped Call Transaction
8-K
001-36666
8/17/2020
10.13
10.43
Letter Agreement, dated September 8, 2022, between
Citibank, N.A. and Wayfair Inc. regarding the Base
Capped Call Transaction.
8-K
001-36666
9/14/2022
10.2
10.44
Letter Agreement, dated September 8, 2022, between
Goldman Sachs & Co. LLC and Wayfair Inc.
regarding the Base Capped Call Transaction.
8-K
001-36666
9/14/2022
10.3
10.45
Letter Agreement, dated September 8, 2022, between
Barclays Bank PLC and Wayfair Inc. regarding the
Base Capped Call Transaction.
8-K
001-36666
9/14/2022
10.4
10.46
Letter Agreement, dated September 8, 2022, between
BNP Paribas and Wayfair Inc. regarding the Base
Capped Call Transaction.
8-K
001-36666
9/14/2022
10.5
10.47
Letter Agreement, dated September 8, 2022, between
Bank of Montreal and Wayfair Inc. regarding the
Base Capped Call Transaction.
8-K
001-36666
9/14/2022
10.6
10.48
Letter Agreement, dated September 9, 2022, between
Citibank, N.A. and Wayfair Inc. regarding the
Additional Capped Call Transaction.
8-K
001-36666
9/14/2022
10.7
10.49
Letter Agreement, dated September 9, 2022, between
Goldman Sachs & Co. LLC and Wayfair Inc.
regarding the Additional Capped Call Transaction.
8-K
001-36666
9/14/2022
10.8
10.50
Letter Agreement, dated September 9, 2022, between
Barclays Bank PLC and Wayfair Inc. regarding the
Additional Capped Call Transaction.
8-K
001-36666
9/14/2022
10.9
10.51
Letter Agreement, dated September 9, 2022, between
BNP Paribas and Wayfair Inc. regarding the
Additional Capped Call Transaction.
8-K
001-36666
9/14/2022
10.10
10.52
Letter Agreement, dated September 9, 2022, between
Bank of Montreal and Wayfair Inc. regarding the
Additional Capped Call Transaction.
8-K
001-36666
9/14/2022
10.11
10.53+
Wayfair Inc. 2023 Incentive Award Plan
10-Q
001-36666
5/4/2023
10.1+
10.54+
Form of Restricted Stock Unit Agreement under the
2023 Incentive Award Plan (adopted fiscal 2023)
10-Q
001-36666
5/4/2023
10.2+
10.55
Letter Agreement, dated May 9, 2023, between
Goldman Sachs & Co. LLC and Wayfair Inc.
regarding the Base Capped Call Transaction.
8-K
001-36666
5/12/2023
10.2
Table of Contents
98
10.56
Letter Agreement, dated May 9, 2023, between
Citibank, N.A. and Wayfair Inc. regarding the Base
Capped Call Transaction.
8-K
001-36666
5/12/2023
10.3
10.57
Letter Agreement, dated May 9, 2023, between
Barclays Bank PLC and Wayfair Inc. regarding the
Base Capped Call Transaction.
8-K
001-36666
5/12/2023
10.4
10.58
Letter Agreement, dated May 9, 2023, between Bank
of Montreal and Wayfair Inc. regarding the Base
Capped Call Transaction.
8-K
001-36666
5/12/2023
10.5
10.59
Letter Agreement, dated May 9, 2023, between BNP
Paribas and Wayfair Inc. regarding the Base Capped
Call Transaction.
8-K
001-36666
5/12/2023
10.6
10.60
Letter Agreement, dated May 9, 2023, between
Morgan Stanley & Co. LLC and Wayfair Inc.
regarding the Base Capped Call Transaction.
8-K
001-36666
5/12/2023
10.7
10.61
Letter Agreement, dated May 10, 2023, between
Goldman Sachs & Co. LLC and Wayfair Inc.
regarding the Additional Capped Call Transaction.
8-K
001-36666
5/12/2023
10.8
10.62
Letter Agreement, dated May 10, 2023, between
Citibank, N.A. and Wayfair Inc. regarding the
Additional Capped Call Transaction.
8-K
001-36666
5/12/2023
10.9
10.63
Letter Agreement, dated May 10, 2023, between
Barclays Bank PLC and Wayfair Inc. regarding the
Additional Capped Call Transaction.
8-K
001-36666
5/12/2023
10.10
10.64
Letter Agreement, dated May 10, 2023, between
Bank of Montreal and Wayfair Inc. regarding the
Additional Capped Call Transaction.
8-K
001-36666
5/12/2023
10.11
10.65
Letter Agreement, dated May 10, 2023, between
BNP Paribas and Wayfair Inc. regarding the
Additional Capped Call Transaction.
8-K
001-36666
5/12/2023
10.12
10.66
Letter Agreement, dated May 10, 2023, between
Morgan Stanley & Co. LLC and Wayfair Inc.
regarding the Additional Capped Call Transaction.
8-K
001-36666
5/12/2023
10.13
10.67
Amendment No. 2 to the Credit Agreement, dated
June 13, 2023, among Wayfair Inc., Wayfair LLC
and Citibank, N.A. as the Administrative Agent
10-Q
001-36666
8/3/2023
10.16
19.1
Wayfair Inc. Insider Trading Compliance Policy
X
21.1
Subsidiaries of the Company
X
23.1
Consent of Ernst & Young LLP
X
31.1
Certification of Chief Executive Officer pursuant to
Rule 13a-14(a) of the Securities Exchange Act of
1934, as amended, as adopted pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002
X
31.2
Certification of Chief Financial Officer pursuant to
Rule 13a-14(a) of the Securities Exchange Act of
1934, as amended, as adopted pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002
X
32.1#
Certification of Chief Executive Officer pursuant to
18 U.S.C. §1350, as adopted pursuant to Section 906
of the Sarbanes-Oxley Act of 2002
X
32.2#
Certification of Chief Financial Officer pursuant to
18 U.S.C. §1350, as adopted pursuant to Section 906
of the Sarbanes-Oxley Act of 2002
X
97.1
Compensation Recovery Policy
10-K
001-36666
2/22/2024
97.1
Table of Contents
99
101.INS
Inline XBRL Instance Document - the instance
document does not appear in the Interactive Data File
because its XBRL tags are embedded within the
Inline XBRL document
X
101.SCH
XBRL Taxonomy Extension Schema Document
X
101.CAL
XBRL Taxonomy Calculation Linkbase Document
X
101.DEF
XBRL Taxonomy Definition Linkbase Document
X
101.LAB
XBRL Taxonomy Labels Linkbase Document
X
101.PRE
XBRL Taxonomy Presentation Linkbase Document
X
104
Cover Page Interactive Data File (formatted as inline
XBRL with applicable taxonomy extension
information contained in Exhibits 101.*)
X
+ Indicates a management contract or compensatory plan
# This certification is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (Exchange
Act), or otherwise subject to the liability of that section, nor shall it be deemed incorporated by reference into any filing under the
Securities Act of 1933, as amended or the Exchange Act.
Table of Contents
100
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused
this report to be signed on its behalf by the undersigned, thereunto duly authorized.
WAYFAIR INC.
By:
/s/ NIRAJ SHAH
Niraj Shah
Chief Executive Officer and President
Date: February 20, 2025
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following
persons on behalf of the registrant and in the capacities and on the dates indicated.
Signature
Title
Date
/s/ NIRAJ SHAH
Chief Executive Officer and President, Co-Founder
and Director (Principal Executive Officer)
February 20, 2025
Niraj Shah
/s/ KATE GULLIVER
Chief Financial Officer and Chief Administrative
Officer (Principal Financial and Accounting Officer)
February 20, 2025
Kate Gulliver
/s/ STEVEN CONINE
Co-Founder and Director
February 20, 2025
Steven Conine
/s/ JEFFREY NAYLOR
Director
February 20, 2025
Jeffrey Naylor
/s/ DIANA FROST
Director
February 20, 2025
Diana Frost
/s/ ANDREA JUNG
Director
February 20, 2025
Andrea Jung
/s/ MICHAEL KUMIN
Director
February 20, 2025
Michael Kumin
/s/ JEREMY KING
Director
February 20, 2025
Jeremy King
/s/ ANKE SCHÄFERKORDT
Director
February 20, 2025
Anke Schäferkordt
/s/ MICHAEL E. SNEED
Director
February 20, 2025
Michael E. Sneed
Table of Contents
101
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Stock Price Performance Graph
The graph set forth below compares the five-year cumulative total stockholder return on our Class A common
stock with the five-year cumulative total return of the S&P Retail Select Industry Index and the NYSE Composite,
resulting from an initial investment of $100 in each on December 31, 2019 and, assuming the reinvestment of any
dividends, based on closing prices. Measurement points are the last trading day of each fiscal quarter during 2020,
2021, 2022, 2023 and 2024.
Period Ending
Index Value
Comparison of Cumulative Total Return
Wayfair Inc.
NYSE COMPOSITE
S&P Retail Select Industry Index
12/31/19
03/31/20
06/30/20
09/30/20
12/31/20
03/31/21
06/30/21
09/30/21
12/31/21
03/31/22
06/30/22
09/30/22
12/30/22
03/31/23
06/30/23
09/29/23
12/29/23
03/28/24
06/28/24
09/30/24
12/31/24
0
100
200
300
400
Note: Stock price performance shown in the Stock Price Performance Graph for our Class A common stock is
historical and not necessarily indicative of future price performance.