Online home goods retailer Wayfair (NYSE: NYSE:W) missed analysts' expectations in Q3 FY2023, with revenue up 3.66% year on year to $2.94 billion. Turning to EPS, Wayfair made a non-GAAP loss of $0.13 per share, improving from its loss of $2.67 per share in the same quarter last year.
Is now the time to buy Wayfair? Find out by reading the original article on StockStory.
Wayfair (W) Q3 FY2023 Highlights:
- Revenue: $2.94 billion vs analyst estimates of $2.98 billion (1.33% miss)
- EPS (non-GAAP): -$0.13 vs analyst estimates of -$0.46 ($0.33 beat)
- Free Cash Flow of $42 million, down 67.2% from the previous quarter
- Gross Margin (GAAP): 31.1%, up from 29% in the same quarter last year
- Trailing 12 Months Active Customers: 22.3 million, down 300 thousand year on year (slight beat)
Launched in 2002 by founder Niraj Shah, Wayfair (NYSE: W) is a leading online retailer for mass market home goods in the US, UK, Canada, and Germany.
Online RetailConsumers ever rising demand for convenience, selection, and speed are secular engines underpinning ecommerce adoption. For years prior to Covid, ecommerce penetration as a percentage of overall retail would grow 1-2% annually, but in 2020 adoption accelerated by 5%, reaching 25%, as increased emphasis on convenience drove consumers to structurally buy more online. The surge in buying caused many online retailers to rapidly grow their logistics infrastructures, preparing them for further growth in the years ahead as consumer shopping habits continue to shift online.
Sales GrowthWayfair's revenue growth over the last three years has been unimpressive, averaging 0.34% annually. This quarter, Wayfair reported rather lacklustre 3.66% year-on-year revenue growth, missing analysts' expectations.
Ahead of the earnings results, analysts covering the company were projecting sales to grow 6.13% over the next 12 months.
Usage Growth As an online retailer, Wayfair generates revenue growth by expanding its number of buyers and the average order size in dollars.
Wayfair has been struggling to grow its active buyers, a key performance metric for the company. Over the last two years, its buyers have declined 15.7% annually to 22.3 million. This is one of the lowest rates of growth in the consumer internet sector.
In Q3, Wayfair's active buyers decreased by 300 thousand, a 1.33% drop since last year.
Key Takeaways from Wayfair's Q3 Results With a market capitalization of $4.94 billion, Wayfair is among smaller companies, but its more than $1.28 billion in cash on hand and near break-even free cash flow margins puts it in a stable financial position.
Its revenue unfortunately missed analysts' expectations and its revenue growth was quite weak. While adjusted EBITDA was better, the growth is dragging the stock down. Wayfair did not give formal financial guidance in the earnings release and will talk about this topic on the earnings call. Overall, this was a mediocre quarter for Wayfair. The company is down 8.04% on the results and currently trades at $39.23 per share.
The author has no position in any of the stocks mentioned in this report.
