Wayfair posts 2nd consecutive profitable quarter
BOSTON – Wayfair posted a profit for its second consecutive quarter after the company reported a net income of $173.2 million for the quarter ended Sept. 30, compared with a $272.9 million loss in the prior-year third quarter.
Gross profit for the third quarter came in at $1.1 billion or 29.9{6e11cad7ac0545e2324fbf6d445e3b83c9482a898fa074d95dae34b306dc1610} of total net revenue, compared with $540 million in the third quarter of last year. Wayfair also reported diluted earnings per share of $1.67 for the third quarter compared with a net loss of $2.94 for last year’s third quarter.
Total net revenue increased $1.5 billion to $3.8 billion up 66.5{6e11cad7ac0545e2324fbf6d445e3b83c9482a898fa074d95dae34b306dc1610} year-over-year. At the end of the third quarter, cash, cash equivalents and short- and long-term investments totaled $2.6 billion.
“Wayfair delivered another quarter of strong operating and financial results in Q3. Category momentum is vibrant, demand is moving online at an accelerated pace, and we expect the home to be even more important than usual when it comes to celebrating the holidays this year,” said Niraj Shah, CEO, co-founder and co-chairman, Wayfair.
“Our long-term mindset and strategic investments are translating to sustained profitability. While today’s unique environment has accentuated these trends, we are confident that there is a long runway for continued strong profitable growth ahead for Wayfair.”
The company said the number of active customers in its direct retail business reached 28.8 million by the end of the third quarter, which is an increase of 50.9{6e11cad7ac0545e2324fbf6d445e3b83c9482a898fa074d95dae34b306dc1610} over the previous year. And, repeat customers placed 11.3 million orders in the third quarter of 2020, an increase of 84.4{6e11cad7ac0545e2324fbf6d445e3b83c9482a898fa074d95dae34b306dc1610} year-over-year.
Wayfair also noted that in the third quarter of 2020, 60{6e11cad7ac0545e2324fbf6d445e3b83c9482a898fa074d95dae34b306dc1610} of total orders delivered for its direct retail business were placed via a mobile device, compared with 53.8{6e11cad7ac0545e2324fbf6d445e3b83c9482a898fa074d95dae34b306dc1610} in the third quarter of 2019.
On the quarterly earnings call with investors, Shah said, “The home category is a vast $800 billion market in the U.S. and Europe, and the category remains under penetrated. With our presence across verticals, that means the runway for growth is very, very long. Therefore, we have a much larger profitable scale in mind.”
Shah said this year’s Way Day event in September resulted in the two biggest days in Wayfair history, with the top five best-selling categories being the same as those in 2019 despite the effect of the pandemic. For the upcoming holiday season, the company introduced Black Friday deals earlier wi,th messaging for the whole season being drawn out and plans for an expanded holiday season in place.
With regards to the fourth quarter, Wayfair CFO Michael Fleisher said on the earnings call that the quarter-to-date gross revenue growth is trending at 50{6e11cad7ac0545e2324fbf6d445e3b83c9482a898fa074d95dae34b306dc1610} but the company has seen a moderation in the growth rate since the latter half of Q3 and it is staying prudent as it plans for 2021.
