Wayfair(US:W) ZACKS·2026-02-20 16:01Core Insights - Wayfair reported fourth-quarter 2025 non-GAAP earnings of 85 cents per share, exceeding the Zacks Consensus Estimate by 32.8% and showing a significant improvement from a non-GAAP adjusted diluted loss of 25 cents per share in the same quarter last year [1] - Net revenues for the fourth quarter rose 6.9% year over year to $3.3 billion, with revenue growth at approximately 7.8% when excluding the impact of the company's exit from Germany, surpassing the Zacks Consensus Estimate by 1.48% [1] Financial Performance - Last Twelve Months (LTM) net revenues per active customer increased by 5.6% year over year to $586, although the active customer base saw a slight decline of 0.5% year over year to 21.3 million as of December 31, 2025 [2] - U.S. net revenues, which accounted for 87.9% of total net revenues, increased by 7.4% year over year to $2.9 billion, while international net revenues (12% of total) rose by 3.7% year over year to $395 million [3] - The total number of delivered orders in the fourth quarter was 11.1 million, reflecting a 3.7% year-over-year increase, with repeat customers placing 8.8 million orders, which is 79.1% of total orders delivered [4] Profitability Metrics - Gross profit for the fourth quarter was $1 billion, resulting in a gross margin of 30.3%, which expanded by approximately 10 basis points year over year [5] - Non-GAAP Contribution Profit was $511 million, or 15.3% of net revenues, showing a contribution margin improvement of 250 basis points year over year [5] - Adjusted EBITDA reached $224 million, up approximately 133% year over year, with an adjusted EBITDA margin of 6.7%, expanding by 360 basis points year over year [5] Cost Management - Customer service and merchant fees accounted for 3.7% of net revenues, approximately $122 million, consistent with the previous year [6] - Advertising expenses represented 11.4% of net revenues, approximately $376 million, down from 13.7% in the year-ago quarter due to improved efficiency [6] - Selling, operations, technology, and general and administrative (SOT G&A) expenses were $358 million for the quarter, with a GAAP net loss of $116 million, an improvement from a loss of $128 million in the previous year [7] Balance Sheet & Cash Flow - As of December 31, 2025, cash, cash equivalents, and short-term investments totaled $1.5 billion, with total liquidity reaching $1.9 billion [8] - Net cash provided by operations for the fourth quarter was $202 million, and non-GAAP free cash flow was $145 million, representing over 40% year-over-year growth [9] - For the full year 2025, net cash provided by operating activities was $534 million, and non-GAAP free cash flow was $329 million, with net leverage dropping below 2.5x [10] Guidance - For Q1 2026, Wayfair expects revenues to grow in the mid-single digits year over year, with gross margin anticipated in the 30-31% range [11] - Contribution margin is expected to be around 15%, and SOT G&A expenses are projected to be between $360 million and $370 million [11] - Adjusted EBITDA margin is anticipated to be in the 4.5-5.5% range for the first quarter, with the company noting that this period is typically a cash outflow due to working capital dynamics [12]