Wayfair Inc.

Q2 net revenue grew 7.5% year over year, with U.S. revenue up 8.7% and International revenue down 1.3%. Gross margin was 30.0% of net revenue, contribution margin was 15.3%, and adjusted EBITDA was $242 million, or 6.9% of net revenue. Cash from operations was $360 million, capital expenditures were $59 million, and free cash flow was $301 million, up more than 30% year over year. For Q3, Wayfair guided to high single-digit revenue growth, gross margin of 29.5% to 30.5%, customer service and merchant fees just below 4%, advertising of 10.5% to 11.5%, contribution margin in line with or slightly better than Q2, and adjusted EBITDA margin of 6% to 7%. They also guided to SOTG&A of $360 million to $370 million, SBC and related taxes of $65 million to $75 million, D&A of $64 million to $70 million, net interest expense of about $42 million, and CapEx of $60 million to $70 million.

Niraj Shah framed the quarter as evidence that Wayfair’s core recipe is working, citing accelerating share capture, improving order momentum, and broadening growth across the core business, specialty retail, and luxury. He emphasized that growth is being driven by Wayfair’s own actions — better price, selection, speed, availability, plus newer programs like loyalty, stores, delivery, and AI-enabled tools — rather than macro improvement. His tone was confident and long-term focused, repeatedly stressing that these initiatives are early and should compound over time.

Kate Gulliver highlighted the quarter’s financial leverage: gross margin at 30.0%, customer service and merchant fees at 3.6%, advertising at 11.1%, contribution margin at 15.3%, and EBITDA of $242 million at a 6.9% margin. She noted SOTG&A of $361 million and said Wayfair drove 100 basis points of SOTG&A leverage versus last year. On cash and capital allocation, she cited $1.1 billion of cash and equivalents, $1.6 billion of liquidity, $360 million of operating cash flow, and $301 million of free cash flow, then discussed the $400 million high-yield note issuance used to redeem the remaining 2028 convertibles. She said the company is nearing the end of its move away from convertible debt, with just $39 million of 2026 bonds and $229 million of 2027 bonds remaining, and expects to shift toward share repurchases to help offset stock-based compensation.

Analysts pressed on tariff refunds, pricing, advertising efficiency, the Q3 revenue guide, store economics, the path to double-digit EBITDA margins, and when GAAP earnings could stabilize. Management said tariff refunds have not changed marketplace pricing, and that suppliers appear more focused on new product and inventory than on cutting consumer prices. On stores, Kate said store and e-commerce gross margins are generally similar, while stores carry lower ACNR but higher labor in SOTG&A, and that the stores are still early with only 3 open, though they are seeing strong new-customer acquisition. On margins and GAAP earnings, management said the main GAAP headwind from convertible debt extinguishment is going away and that stock-based compensation, down about 40% over two years on a trailing 12-month basis, is becoming the main remaining difference versus adjusted earnings.