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Wayfair (W) Q2 Loss Lower Than Expected, Revenues Surpass

Wayfair Inc. W reported adjusted second-quarter 2017 loss of 45 cents per share, lower than the Zacks Consensus Estimate of 69 cents.

Following the second-quarter earnings release on Aug 8, the share price is down 3.6%. However, the company's shares have gained 107.8% year to date, outperforming the industry’s gain of 49.3%.

 

Revenues

Wayfair reported total net revenues of $1.12 billion in the second quarter, reflecting an increase of 16.9% sequentially and 42.7% year over year. Also, revenues slightly exceeded the Zacks Consensus Estimate of $1.19 billion.

The increase was driven by strength in both the U.S. and international segments.

Revenue Segments

Beginning fourth-quarter 2016, Wayfair reports revenues under two segments: U.S. and International.

U.S.: Revenues in this segment increased 36.1% year over year to $997.1 million. It accounted for 89% of the second quarter revenues.

International: Revenues in the International segment increased 131.8% year over year and contributed the remaining 11% of the total revenue.

Important Metrics

Direct Retail net revenue, which includes sales generated primarily through Wayfair’s sites, were $1.1 billion in the second quarter, increasing 45.9% year over year.

Active Customers increased 43.1% to 9.5 million. However, LTM net revenue per active customer decreased 0.5% to $0.4 million.

Orders delivered in the quarter were 4.3 million, up 46.0% from the year-ago quarter.

Operating Results

Gross margin was 24.0%, down 70 bps sequentially and flat year over year.

Wayfair’s operating expenses of $307.0 million increased 29.4% year over year. The operating margin was (3.3%) compared with (6.2%) in the year ago-quarter.

Wayfair’s net loss was $38.9 million or 45 cents per share, declining from the year-ago figure of $48.3 million or 57 cents.

Balance Sheet & Cash Flow

Wayfair exited the quarter with cash, cash equivalents and short-term investments of roughly $255.9 million, down from $276.7 million in the prior quarter. Accounts receivables were $23.9 million, up from $21.8 million in the last quarter.

Cash flow from operations was $18.1 million in the second quarter. The company spent $33.6 million on capex and $11.7 million on site and software development. Free cash flow was ($27.2) million compared with ($68.9) million in the previous quarter.

Wayfair Inc. Price, Consensus and EPS Surprise

 

Wayfair Inc. Price, Consensus and EPS Surprise | Wayfair Inc. Quote

Zacks Rank & Other Key Picks

Currently, Wayfair carries a Zacks Rank #3 (Hold). A few better-ranked stocks in the same space are Lam Research Corporation LRCX, carrying a Zacks Rank #1 (Strong Buy), and Applied Materials AMAT and Fortive Corporation FTV, carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Lam Research delivered a positive earnings surprise of 4.44%, on average, in the trailing four quarters.

Applied Materials delivered a positive earnings surprise of 3.35%, on average, in the trailing four quarters.

Fortive Corporation delivered a positive earnings surprise of 5.80%, on average, in the trailing four quarters.

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Wayfair Inc. (W): Free Stock Analysis Report
 
Lam Research Corporation (LRCX): Free Stock Analysis Report
 
Applied Materials, Inc. (AMAT): Free Stock Analysis Report
 
Fortive Corporation (FTV): Free Stock Analysis Report
 
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