Wayfair Inc. (W) Earnings & Analysis

Latest quarter

Wayfair’s Q2 FY2026 revenue beat the consensus, although both reported revenue and the estimate rounded to $3.5 billion. Adjusted earnings per share were $0.95, above the $0.94 consensus.

The company reported revenue of $3.5 billion, up from $3.3 billion a year earlier. Its filing attributed the increase primarily to higher order volume and a higher average order value. U.S. revenue grew 8.7%, while international revenue fell 1.3%, according to the filing. Wayfair had 22 million active customers at quarter-end, and repeat buyers placed 80.2% of orders during the quarter.

Wayfair reported gross margin of 30.0%, compared with 30.1% a year earlier, while operating margin rose to 2.96% from 0.52%. The filing said customer-experience investments increased cost of goods sold as a percentage of revenue, partly offset by growth in supplier services. Diluted earnings per share were −$0.01, compared with $0.11 a year earlier; the filing also reported a $65 million increase in loss on debt extinguishment. Wayfair’s free cash flow was $334.0 million, up from $260.0 million.

Adjusted EPS is the figure the consensus estimates, not the GAAP EPS above.

What management said on the call

CEO Niraj Shah said Q2 order growth supported revenue gains and that active customers also increased. By Wayfair’s measure, the U.S. home category had flat to slightly positive year-over-year growth, with higher-income segments growing faster. CFO Kate Gulliver said consumer sentiment and discretionary spending remained under pressure in Canada and the U.K.

Shah said Perigold grew by more than 35% in Q2 and generated a bit over $400 million a year in profitable sales. He said the luxury business uses Wayfair’s logistics, technology and marketing infrastructure, while investing in curation, brand and service. Shah also said Wayfair planned a Perigold loyalty program later in the year and intended to expand its store presence over time.

Asked about tariff refunds and pricing, Shah said, “we have not seen tariff refunds affect prices in the marketplace.” He added that some suppliers could use the capital to develop products and carry more inventory. Shah said he had not seen competitors change pricing in response to the refunds.

On the quarter ahead, Gulliver said customer-experience and loyalty investments would put gross margin toward the lower end of the company’s range, with advertising savings expected to offset the investment almost one-for-one. During questions, she said the outlook did not assume a change in the macroeconomic environment and instead relied on initiatives including loyalty, verified products, stores and the online storefront.

Asked about store economics, Gulliver said stores generally have similar gross margins to e-commerce, with lower advertising costs but store labor recorded in operating expenses. She said more than 50% of store customers were new to Wayfair’s customer file and that suppliers owned the inventory in stores. Gulliver said the company wanted a longer track record before providing a deeper explanation of store economics.

Shah said sales growth could spread fixed costs across more revenue and improve logistics economics. Gulliver said Wayfair expected to hold the fixed-cost component of operating expenses steady as revenue grew. She also said the company intended to be opportunistic about repurchasing shares to offset stock-based compensation.

Guidance

CFO Kate Gulliver outlined Wayfair’s third-quarter outlook on the earnings call, including expectations for revenue growth, gross margin and adjusted EBITDA margin. She said the outlook incorporates continued investment in customer experience and the loyalty program, alongside expected advertising savings.