Wayfair (W) Q4 Loss Wider Than Anticipated, Revenues Miss

Wayfair Inc. (NYSE:W) reported non-GAAP loss of $2.80 per share in fourth-quarter 2019, wider than the Zacks Consensus Estimate of a loss of $2.65.

Total fourth-quarter revenues came in at $2.53 billion, up 26% year over year. However, the figure missed the Zacks Consensus Estimate by 0.1%.

Following its fourth-quarter results, shares declined 10.2% due to greater-than-expected losses.

Quarter in Detail

Direct retail net revenues — including sales generated primarily through Wayfair’s sites — were $2.5 billion in the fourth quarter, which increased 26.5% year over year.

U.S. net revenues were $413.1 million in the fourth quarter, up 23.9% year over year. International net revenues also grew 37.1% year over year to $106.4 million.

Active customers increased 34% from the prior-year quarter to 20.3million. Also, LTM net revenues per active customer increased 1.1% year over year to $448 million.

Total number of orders delivered in the reported quarter was 11.2 million, up 27.1% year over year. In addition, orders per customer in the quarter were 1.86 million, reflecting an increase of 0.5% from the year-ago period. Further, repeat customers placed 7.7 million orders in the fourth quarter, up 31.3% year over year.

Wayfair Inc. Price, Consensus and EPS Surprise

Wayfair Inc. Price, Consensus and EPS Surprise

Wayfair Inc. price-consensus-eps-surprise-chart | Wayfair Inc. Quote

Operating Results

In the fourth quarter, Wayfair’s gross margin was 22.8%, down 130 basis points on a year-over-year basis.

Adjusted EBITDA margin was (7.1%) compared with (2.7%) in the year-ago quarter. This was led by increasing investments, mainly in international regions served.

The company’s operating expenses of $882.8 million increased 43.6% year over year. Operating loss was $305.4 million, wider than the prior-year loss of $129.6 million.

Balance Sheet & Cash Flow

At the end of the fourth quarter, cash, cash equivalents and short-term investments were $987 million, down from $1.3 billion in the comparable year-ago period. Accounts receivables were $99.7 million, up from $75.7 million in the third quarter.

Cash from operations was ($36.3) million and capital expenditure totaled $87.8 million. Free cash flow was ($158.5) million compared with ($180.9) million in the second quarter.

Zacks Rank and Stocks to Consider

Wayfair currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the broader technology sector include Stamps.com Inc. (NASDAQ:STMP) , eBay Inc. (NASDAQ:EBAY) and Atlassian Corp. (NASDAQ:TEAM) . While Stamps.com and eBay sport a Zacks Rank #1 (Strong Buy), Atlassian carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Long-term earnings growth for Stamps.com, Atlassian Corp. and eBay is currently projected at 15%, 22.3% and 11.25%, respectively.

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