Wayfair stock surges on Q2 revenue beat, earnings meet estimates

Wayfair’s (NYSE: W) stock surged above 8% in the pre-market trading hours after the company posted better-than-expected revenue numbers and earnings came in line with the consensus. The stock price has jumped 45% in 2019 and it touched a new 52-week high of $173 mark in March.

Sales rose 42% to $2.3 billion backed by 40% plus top line growth from the US Direct Retail and International divisions. Analysts were anticipating revenue of $2.26 billion. On an adjusted basis, loss per share came in at $1.35, meeting street estimates.

The company’s CEO Niraj Shah said, “In addition to a successful second annual Way Day, we are seeing our investments across the business drive greater and greater value to our suppliers and customers.”

On a GAAP basis, net loss increased to $181.9 million compared to $100.7 million last year. The surge in losses are mainly due to continued investments made on improving the fulfilment network, building the sales and marketing team and improving user experience to bring in more customers while improving the orders placed by the existing users.

Wayfair doesn’t expect to be profitable in the next few years as it continues to expand its presence which requires continous spending.

Shah also added, “We look forward to building on this tremendous momentum as we continue to scale our operations and capture an out-sized share of the consumer spending moving online in our market segment.”

Key Metrics Performance

Active Customers surged 39.1% to 17.8 million and revenue per customer improved 1.6% to $447. Order per customer stood at 1.86 compared to 1.82 in the prior year period, while repeat customers placed 67.8% of total orders, up 1.8% from last year.

Orders placed by repeat customers increased 46.1% whereas orders delivered rose 42% over prior year period. Average order value remained flat at $255.

Q3 Expectations

For the third quarter, analysts are anticipating top line of $2.31 billion, an increase of 35.4% from last year. Adjusted loss per share is expected to increase 24 cents to $1.52.

Last quarter, Wayfair reported 38% jump in revenues while adjusted loss per share came in at $1.62. First quarter results came in ahead of estimates.

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