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Wayfair Inc.

Wayfair Inc.WEarnings & Financial Report

NYSE · e-commerce

Wayfair Inc. is an American e-commerce company based in Boston, Massachusetts that sells furniture and home goods online. Formerly known as CSN Stores, it was founded in 2002, and currently offers 14 million items from more than 11,000 global suppliers. The company maintains international operations, including locations in North America and in Canada, Germany, Ireland, China and the United Kingdom.

What changed in Wayfair Inc.'s 10-K — 2024 vs 2025

Top changes in Wayfair Inc.'s 2025 10-K

402 paragraphs added · 348 removed · 300 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

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Membership provides cash back rewards, as well as other benefits, including free shipping, access to member only sales, and special offer and perks, designed to enhance the customer shopping experience and build long-term loyalty. Superior customer service is a core part of the experience we offer shoppers.
Membership provides cash back rewards, as well as other benefits, including free shipping, access to member-only sales, and special offers and perks, designed to enhance the customer shopping experience and build long-term loyalty. Superior customer service is a core part of the experience we offer shoppers.
Key Benefits for Our Suppliers We give suppliers cost-effective access to our large customer base. We sell products from over 20 thousand suppliers, many of which are small, family-run operations without well-known product brands and without easy retail access to a large customer base.
Key Benefits for Our Suppliers We give suppliers cost-effective access to our large customer base. We sell products from approximately 20 thousand suppliers, many of which are small, family-run operations without well-known product brands and without easy retail access to a large customer base.
We support our customers' shopping journey from start to finish through everything from financing solutions to customer support. Our private label and co-branded credit cards build loyalty and encourage repeat shopping with cash back rewards. Wayfair Rewards, our recently introduced membership program, also encourages repeat shopping.
We support our customers' shopping journey from start to finish through everything from financing solutions to customer support. Our private label and co-branded credit cards build loyalty and encourage repeat shopping with cash back rewards. Our membership rewards program, Wayfair Rewards, also encourages repeat shopping.
Our paid advertising efforts consist primarily of online channels, including search engine marketing, display advertising and paid social media, and to a lesser extent direct mail and television advertisements. Our non-paid advertising efforts include search engine optimization, non-paid social media, mobile “push” notifications and email.
Our paid advertising efforts consist primarily of online channels, including search engine marketing, display advertising and paid social media, text messages, and to a lesser extent direct mail and television advertisements. Our non-paid advertising efforts include search engine optimization, non-paid social media, mobile “push” notifications and email.
We give customers inspirational content and an engaging shopping journey . To inspire customers, we produce beautiful imagery and highly-tailored editorial content both in house and through third parties. We use personalization to create a more engaging consumer experience and we allow customers to create looks they love with tools such as our Room Ideas.
We give customers inspirational content and an engaging shopping journey . To inspire customers, we produce beautiful imagery and highly-tailored editorial content both in-house and through third parties. We use personalization, including AI-enabled tools, to create a more engaging consumer experience and we allow customers to create looks they love with tools such as our Room Ideas.
Our customer service organization has over 2,000 full-time employees w ho help consumers navigate our sites, answer questions and complete orders, and offers specialists focused on specific product classes. This team helps us build trust with consumers, build our brand awareness, enhance our reputation and drive sales.
Our customer service organization has over 2,000 full-time employees who help consumers navigate our sites, answer questions and complete orders, and offers specialists focused on specific product classes. This team helps us build trust with consumers, build our brand awareness, enhance our reputation and drive sales.
Our CGF services allow our suppliers to unlock efficiencies on inbound logistics, including through Asia-based product consolidation and port-to-door freight forwarding solutions, which ultimately result in faster deliveries to our customers. We believe these investments in logistics capabilities result in an enhanced experience for our customers and suppliers.
Our CGF services allow our suppliers to unlock efficiencies on inbound logistics, including through Asia-based product consolidation and port-to-door freight forwarding 7 Table of Contents solutions, which ultimately result in faster deliveries to our customers. We believe these investments in logistics capabilities result in an enhanced experience for our customers and suppliers.
We have built a portfolio of over one hundred house brands, which offer curated brand experience, making it easier for customers to discover styles, products and price points that appeal to them. Convenience and value are central to our offering.
In addition, we have built a portfolio of over one hundred house brands, which offer curated brand experiences, making it easier for customers to discover styles, products and price points that appeal to them. Convenience and value are central to our offering.
Our competition includes furniture stores, big box retailers, department stores, specialty retailers and online retailers and marketplaces in the U.S., Canada, the United Kingdom and Ireland, including: • Furniture Stores: American Freight, Ashley Furniture, Bob's Discount Furniture, Havertys, Raymour & Flanigan and Rooms To Go; • Big Box Retailers: Home Depot, IKEA, Lowe's, Target and Walmart; • Department Stores: JCPenney, Macy's and Neiman Marcus; • Specialty Retailers: Arhaus, At Home, Container Store, Crate and Barrel, Design Within Reach, Ethan Allen, Floor & Decor, LL Flooring, Restoration Hardware, Room & Board, Serena & Lily, TJX Companies and Williams Sonoma; 10 Table of Contents • Online Retailers and Marketplaces: Amazon, Build.com, Houzz, eBay, Etsy and Bed Bath & Beyond; • International: Argos, Canadian Tire, John Lewis, Leon's, and Next in addition to several of the companies listed above who also compete with us internationally.
Our competition includes furniture stores, big box retailers, department stores, specialty retailers and online retailers and marketplaces in the U.S., Canada, the United Kingdom and Ireland, including: • Furniture Stores: Ashley Furniture, Bob's Discount Furniture, Havertys, Nebraska Furniture Mart, Raymour & Flanigan and Rooms To Go; • Big Box Retailers: Home Depot, IKEA, Lowe's, Costco, Target and Walmart; • Department Stores: JCPenney, Macy's and Neiman Marcus; • Specialty Retailers: Arhaus, At Home, Container Store, Crate and Barrel, Design Within Reach, Ethan Allen, Floor & Decor, LL Flooring, Restoration Hardware, Ferguson, Room & Board, Serena & Lily, TJX Companies and Williams Sonoma; • Online Retailers and Marketplaces: Amazon, Houzz, eBay, Etsy and Bed Bath & Beyond; • International: Argos, Canadian Tire, John Lewis, Leon's, and Next in addition to several of the companies listed above who also compete with us internationally.
Corporate Responsibility As a multinational retailer with a global supply chain, Wayfair is committed to responsible practices across our business—from showcasing more sustainable products through our Shop Sustainably program, to implementing waste reduction initiatives, l owering emissions and adopting sustainable business practices.
Corporate Responsibility As a multinational retailer with a global supply chain, Wayfair is committed to responsible practices across our business—from showcasing more sustainable products through our Shop Sustainably program, to implementing waste reduction initiatives, 11 Table of Contents lowering emissions and adopting sustainable business practices.
We have established and publicly announced our goals to achieve zero waste (90%+ waste diversion from landfill and incineration) across Wayfair operations globally by 2030 and to reduce our Scope 1 and 2 greenhouse gas emissions by 63% by 2035 compared to a 2020 baseline.
We have established and publicly announced our goals to achieve zero waste (90%+ waste diversion from landfill and incineration) across Wayfair operations globally by 2030 and to reduce our Scope 1 and 2 greenhouse gas emissions by 63% by 2035 compared to a 2020 baseline. Wayfair also continues to evaluate and incorporate energy efficiency features across its global facilities.
To meet our customers where they are, we offer a family of sites, each with a unique brand identity that offers a tailored shopping experience and rich product selection to a different target audience. • Wayfair: Every style.
To meet our customers where they are, we offer a family of brands, both online and through physical retail stores, each with a unique identity that offers a tailored shopping experience and rich product selection to a different target audience: • Wayfair: Every style.
We provide our suppliers with access to our large customer base, with 21 million active customers over the last twelve months, enabling our suppliers to increase their sales and access the growing e-commerce market. Suppliers can leverage our technological expertise to enhance their success on our platform.
Access to our customers, including 21 million active customers over the last twelve months, enables our suppliers to increase their sales and access the growing e-commerce market. Suppliers can leverage our technological expertise to enhance their success on our platform.
Our global customer service locations are staffed with ove r 2,000 full -time highly-trained sales and service employees. 7 Table of Contents Our Growth Strategy Our goal is to further increase our leadership in the home goods market by pursuing the following key strategies: • continue to build our brands by delighting our customers; • increase repeat purchases from existing customers and acquire new customers; • invest in technology to further improve our customer and supplier experiences; • grow certain categories where we under-index the broader home goods market today; • engage with our customers through our loyalty program; • increase delivery speed and improve the delivery experience for our customers through the continued build-out of our proprietary logistics network; • continue to grow internationally; • continue to execute our omni-channel strategy with the launch of physical retail stores across our family of brands; and • opportunistically pursue strategic acquisitions.
Our Growth Strategy Our goal is to further increase our leadership in the home goods market by pursuing the following key strategies: • continue to build our brands by delighting our customers; • increase repeat purchases from existing customers and acquire new customers; • invest in technology, including AI, to further improve our customer and supplier experiences; • continue to execute our omni-channel strategy with the launch of additional physical retail stores across our family of brands; • grow certain categories where we under-index the broader home goods market today; • engage with our customers through our loyalty program; • increase delivery speed and improve the delivery experience for our customers through the continued build-out of our proprietary logistics network; • continue to grow within our existing international markets; and • opportunistically pursue strategic acquisitions.
We have transitioned most of our data storage and processing systems from our physical data centers to a cloud-based solution. Marketing We use a variety of marketing and advertising efforts to drive customer engagement across all of our channels, strengthen and reinforce brand and product awareness, as well as attract new customers and encourage repeat purchases from existing customers.
Marketing We use a variety of marketing and advertising efforts to drive customer engagement across all of our channels, strengthen and reinforce brand and product awareness, as well as attract new customers and encourage repeat purchases from existing customers.
Our logistics infrastructure allows us to ship directly to our customers from our suppliers or from our CastleGate warehouses. This fulfillment network is a key component of our custom-built and seamlessly integrated technology and operational platform. Technology We have custom-built large portions of our technology and operational platform to deliver the best experience for both our customers and suppliers.
This fulfillment network is a key component of our custom-built and seamlessly integrated technology and operational platform. 9 Table of Contents Technology We have custom-built large portions of our technology and operational platform to deliver the best experience for both our customers and suppliers.
Suppliers are also able to enhance their media and merchandising by using additional services provided by Wayfair, including through sponsored content. We believe many of our suppliers have increased their sales through our technology platform, which has strengthened their loyalty to us.
Suppliers can enhance their media and merchandising by using additional services provided by Wayfair, including through sponsored content. We believe many of our suppliers have increased their sales through our technology platform, which has strengthened their loyalty to us. Our logistics infrastructure allows us to ship directly to our customers from our suppliers or from our CastleGate warehouses.
Our Industry The home goods market is large and characterized by specific consumer trends, structural challenges and market dynamics that are shaping the future of our industry. Why Home is Different Home is shopped differently than other retail verticals .
Net revenue of the U.S. segment represented 88% of consolidated net revenue for the year ended December 31, 2025. Our Industry The home goods market is large and characterized by specific consumer trends, structural challenges and market dynamics that are shaping the future of our industry. Why Home is Different Home is shopped differently than other retail verticals .
Wayfair represents a significant majority of our net revenue and is currently the only one of our sites that also operates internationally, operating as Wayfair.ca in Canada, Wayfair.co.uk in the United Kingdom and Wayfair.ie in Ireland. Wayfair also operated Wayfair.de in Germany until we exited the German market on January 10, 2025 (the “Germany Restructuring”).
Our Wayfair brand represents a significant majority of our net revenue and is currently the only one of our sites that also operates internationally, operating as Wayfair.ca in Canada, Wayfair.co.uk in the United Kingdom and Wayfair.ie in Ireland.
This allows us to leverage our internal data and target customers efficiently across various channels. We also partner selectively with marketing partners where we find solutions that meet our marketing objectives and deliver a strong return on investment. Much of the underlying infrastructure for storefront, operations and advertising technology is common across all of our sites and countries.
This allows us to leverage our internal data and target customers efficiently across various channels. We also partner selectively with marketing partners where we find solutions that meet our marketing objectives and are expected to deliver a strong return on investment.
Compensation and Benefits Wayfair’s overall compensation program is structured to attract, motivate and retain highly qualified talent by paying competitively and equitably, including offering market-competitive salaries, equity and benefits.
None of our employees are represented by a labor union or covered by a collective bargaining agreement. Compensation and Benefits Wayfair’s overall compensation program is structured to attract, motivate and retain highly qualified talent by paying competitively and equitably, including offering market-competitive salaries, equity and benefits.
Key Benefits for Our Customers We offer a broad selection and choice. We have one of the largest online selections of furniture, décor, housewares and home improvement products, with over 30 million products from over 20 thousand suppliers.
We have one of the largest online selections of furniture, décor, housewares and home improvement products, with over 40 million products from approximately 20 thousand suppliers.
Logistics, fulfillment and customer service for home goods products are challenging given the variety of categories and price points and the mix of heavy and bulky items. Home goods often have a low dollar value to weight ratio compared to other categories of retail, therefore requiring a robust and reliable logistics network that is optimized for items with those characteristics.
Home goods often have a low dollar value to weight ratio compared to other categories of retail, therefore requiring a robust and reliable logistics network that is optimized for items with those characteristics. Consumers also seek first-rate customer service so they are not burdened with managing delivery, shipping and return logistics on their own.
The information on our website is not, and shall not be deemed to be, a part hereof or incorporated into this or any of our other filings with the SEC, and the reference to our website is intended to be an inactive textual reference only. 11 Table of Contents Government Regulation We are subject to domestic and foreign laws and regulations regarding general business, as well as laws and regulations governing the Internet and e-commerce, many of which are still evolving.
The information on our website is not, and shall not be deemed to be, a part hereof or incorporated into this or any of our other filings with the SEC, and the reference to our website is intended to be an inactive textual reference only.
Seasonality Our business is affected by seasonality, which historically has resulted in higher sales volume during our fourth quarter, which ends December 31 and includes the November and December holiday sales period.
Additional information regarding laws and regulations applicable to our business is set forth in Part I, Item 1A, Risk Factors , in this Annual Report on Form 10-K. Seasonality Our business is affected by seasonality, which historically has resulted in higher sales volume during our fourth quarter, which ends December 31 and includes the November and December holiday sales period.
Our success has been built on a culture of data-driven decision-making, operational discipline and an unwavering focus on the customer.
Our success has been built on a culture of data-driven decision-making, operational discipline and an unwavering focus on the customer. We believe that our internal control of our technology systems, which gives us the ability to update them often, is a competitive advantage.
Other e-commerce retailers that sell home goods typically focus their shopping experiences around keyword search, instead of a browse-oriented journey that encourages discovery. We believe the lack of an easy-to-browse, one-stop shopping experience with massive selection has led to consumer dissatisfaction with home goods shopping both online and off.
Other e-commerce retailers that sell home goods typically focus their shopping experiences around keyword search, instead of a browse-oriented journey that encourages discovery.
Our customers span a wide range of demographics, with annual household incomes ranging from $25,000 to over $250,000, and also include business professionals, from small startups to global enterprises. Our selections of furniture, décor, housewares and home improvement products appeal to our customers’ different tastes, styles, purchasing goals and budgets when shopping for their homes and businesses.
Our selections of furniture, décor, housewares and home improvement products appeal to our customers’ different tastes, styles, purchasing goals and budgets when shopping for their homes and businesses.
Through these house brands, which feature curated selections refined by style and price point, we help our customers navigate our vast product assortment to find items that uniquely match their needs. The delivery experience and overall customer service we offer our shoppers are central to our business.
Our specialty retail brands include AllModern, Joss & Main, and Perigold We also feature certain products under our house brands, such as Three Posts® and Mercury Row®. Through these house brands, which feature curated selections refined by style and price point, we help our customers navigate our vast product assortment to find items that uniquely match their needs.
See Note 13, Segment and Geographic Information, in the notes to the consolidated financial statements, included in Part II, Item 8, Financial Statements and Supplementary Data , in this Annual Report on Form 10-K. Net revenue of the U.S. segment represented 88% of consolidated net revenue for the year ended December 31, 2024.
Segments Our operating and reportable segments are the U.S. and International, which includes our businesses in Canada, the United Kingdom, Ireland and Germany (through January 10, 2025). See Note 13, Segment and Geographic Information, in the notes to consolidated financial statements included in Part II, Item 8, Financial Statements and Supplementary Data , in this Annual Report on Form 10-K.
We believe that our internal control of our technology systems, which gives us the ability to update them often, is a competitive advantage. 9 Table of Contents Our team of engineers and data scientists has built a full set of technology solutions specific to the home goods market.
Our team of engineers and data scientists has built a full set of technology solutions specific to the home goods market.
Competition The market for online home goods and furniture is highly competitive, fragmented and rapidly changing. While we are primarily focused on the mass market, we compete across all segments of the home goods market.
While we primarily focus on the mass market, we compete across all segments of the home goods market.
The majority of large parcel items are delivered to the customer through our WDN, which includes consolidation centers, cross docks and last mile delivery facilities. We believe that our proprietary logistics network has and will continue to help drive incremental sales by delighting our customers with faster delivery times, lower prices and a better home delivery experience.
The majority of large parcel items are delivered to the customer through our WDN, which includes consolidation centers, cross docks and last mile delivery facilities.
Item 1. Business Overview Wayfair is the destination for all things home. Through our e-commerce platform, we offer customers visually inspired browsing, compelling merchandising, easy product discovery and attractive prices. We are focused on bringing our customers an experience that is at the forefront of shopping for the home online.
Item 1. Business As used herein, “Wayfair,” “the company,” “we,” “us,” “our” and similar terms refer to Wayfair Inc. and its subsidiaries, unless the context indicates otherwise. Overview Wayfair is the destination for all things home. Through our e-commerce platform, we offer customers visually inspired browsing, compelling merchandising, easy product discovery and attractive prices.
Many consumers also seek first-rate customer service so they are not burdened with managing delivery, shipping 8 Table of Contents and return logistics on their own. However, we believe big box retailers that serve the mass market for home goods are often unable or unwilling to provide this level of service.
However, we believe many retailers that serve the mass market for home goods are often unable or unwilling to provide this level of service. Key Benefits for Our Customers We offer a broad selection and choice.
We believe we have a good relationship with our employees, which includes approximately 13,500 employees, of whom approximately 12,100 w ere full-time equivalents, as of December 31, 2024. Our reported headcount includes the approximately 730 employees impacted by the Germany Restructuring, although we expect approximately half of these positions to relocate to other corporate offices.
We believe we have a good relationship with our employees, which includes approximately 12,800 employees, of whom approximately 11,800 w ere full-time equivalents, as of December 31, 2025. Additionally, we rely on independent contractors and temporary personnel to supplement our workforce, primarily in our logistics network.
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For more information on the Germany Restructuring, see Note 14, Subsequent Events , in the notes to the consolidated financial statements, included in Part II, Item 8, Financial Statements and Supplementary Data, in this Annual Report on Form 10-K. On our sites, we also feature certain products under our house brands, such as Three Posts® and Mercury Row®.
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We are focused on bringing our customers an experience that is at the forefront of shopping for the home online. Our customers span a wide range of demographics, with annual household incomes typically ranging from $25,000 to over $250,000, and also include businesses, from small startups to global enterprises.
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As used herein, “Wayfair,” “the company,” “we,” “us,” “our” and similar terms refer to Wayfair Inc. and its subsidiaries, unless the context indicates otherwise. Segments Our operating and reportable segments are the United States (“U.S.”) and International, which includes our businesses in Canada, the United Kingdom, Ireland and Germany (through January 10, 2025).
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We complement our e-commerce experience with a growing physical retail presence. Our physical retail stores allow customers to experience our products in person, benefit from in-store services, and shop across product categories that reflect our online breadth. These physical retail stores are designed to strengthen our brands, deepen customer engagement, and enhance the end-to-end shopping experience.
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Additionally, we rely on independent contractors and temporary personnel to supplement our workforce, primarily in our logistics network. None of our employees are represented by a labor union or covered by a collective bargaining agreement.
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As of December 31, 2025, we operated 12 physical retail stores, excluding outlet locations, across 4 states in the United States (“U.S.”). The delivery experience and overall customer service we offer our shoppers are central to our business.
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This past year, Wayfair made progress towards our emission goal by joining a second aggregated virtual power purchase agreement. As part of this agreement, Wayfair is contracted to offtake 20 MW of power annually from the solar project. Wayfair also continues to evaluate and incorporate energy efficiency features across its global facilities.
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Our global customer service locations are staffed with over 2,000 full-time highly-trained sales and service employees, supplemented by artificial intelligence (“AI”)–enabled tools to support the efficient resolution of common customer inquiries.
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Adverse legal or regulatory developments could substantially harm our business. Additional information regarding laws and regulations applicable to our business is set forth in Part I, Item 1A, Risk Factors , in this Annual Report on Form 10-K.
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We believe the lack of an easy-to-browse, one-stop shopping experience with massive selection has led to consumer dissatisfaction with home goods shopping both online and off. 8 Table of Contents Logistics, fulfillment and customer service for home goods products are challenging given the variety of categories and price points and the mix of heavy and bulky items.
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Our omni-channel strategy helps our customers navigate our broad product offering and our family of specialty retail brands tailors customers’ shopping experiences by offering strategically selected products across different storefronts, each with a unique identity, style and price point.
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Much of the underlying infrastructure for storefront, operations and advertising technology is common across all of our sites and countries. We have transitioned most of our data storage and processing systems from our physical data centers to a cloud-based solution.
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We increasingly rely on AI and machine learning technologies to support elements of our customer experience, including search, recommendations, customer support and other personalization tools. For example, in 2025, we invested in the development and launch of Muse, an AI-powered tool, to inspire and personalize the home shopping experience by providing customers inspiration and ideas to build their aspirational home.
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We believe that our proprietary logistics network has and will continue to help drive incremental sales by delighting our customers with faster delivery times, lower prices and a better home delivery experience. 10 Table of Contents Competition The market for online home goods and furniture is highly competitive, fragmented and rapidly changing.
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Government Regulation We are subject to domestic and foreign laws and regulations regarding general business, as well as laws and regulations governing the Internet and e-commerce, many of which are still evolving. Adverse legal or regulatory developments could substantially harm our business.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Any reduction in force may yield unintended consequences and costs, such as attrition beyond the intended reduction in force, the distraction of employees, reduced employee morale and adverse effects to our reputation as both an employer and with respect to customers, which could make it more difficult for us to hire new employees in the future and to retain and motivate key employees, and there is a risk that we may not achieve the anticipated benefits from the reduction in force.
Any reduction in force may yield unintended consequences and costs, such as attrition beyond the intended reduction, the distraction of employees, reduced employee morale and adverse effects to our reputation as both an employer and with respect to customers, which could make it more difficult for us to hire new employees in the future and to retain and motivate key employees, and there is a risk that we may not achieve the anticipated benefits from the reduction.
Any or all of these factors and conditions could materially adversely affect our business, financial condition and results of operations. New store openings may negatively impact our financial results due to the costs of acquiring new store locations and opening new stores and lower sales during the initial period following opening.
Any or all of these factors and conditions could materially adversely affect our business, financial condition and results of operations. New store openings may negatively impact our financial results due to the costs of acquiring new store locations and opening new stores and lower sales during the initial period following openings.
Launching new brands, programs and services or expanding internationally is time-consuming, requires significant amounts of management time and resources, substantial upfront investments, including investments in marketing, information technology and additional personnel.
Launching new brands, programs and services or expanding internationally is time-consuming and requires significant amounts of management time and resources and substantial upfront investments, including investments in marketing, information technology and additional personnel.
We may reduce capital expenditures significantly or seek additional financing or issue additional securities, which may affect the timing and scope of growth strategy. We cannot be certain that we will be able to obtain new financing on favorable terms, or at all. Our international operations subject us to various additional legal, regulatory, financial and other risks.
We may reduce capital expenditures significantly or seek additional financing or issue additional securities, which may affect the timing and scope of our growth strategy. We cannot be certain that we will be able to obtain new financing on favorable terms, or at all. Our international operations subject us to various additional legal, regulatory, financial and other risks.
We use complex proprietary software in our technology infrastructure, which we seek to continually update and improve. We may not always be successful in executing these upgrades and improvements, and the operation of our systems may be subject to failure.
We use complex proprietary software in our technology infrastructure, which we continually seek to update and improve. We may not always be successful in executing these upgrades and improvements, and the operation of our systems may be subject to failure.
We regard our customer lists, trademarks, domain names, copyrights, patents, trade dress, trade secrets, proprietary technology and similar intellectual property as critical to our success, and we rely on a combination of trademark, copyright and patent law, trade dress, trade secret protection, agreements, and other methods together with the diligence our employees and others to protect our proprietary rights.
We regard our customer lists, trademarks, domain names, copyrights, patents, trade dress, trade secrets, proprietary technology and similar intellectual property as critical to our success, and we rely on a combination of trademark, copyright and patent law, trade dress, trade secret protection, agreements, and other methods together with the diligence of our employees and others to protect our proprietary rights.
If we are not able to comply with the requirements of Section 404 in a timely manner, or if we or our accounting firm identify deficiencies in our internal control over financial reporting that are deemed to be material weaknesses, the market price of our stock would likely decline and we could be subject to lawsuits, sanctions or investigations by regulatory authorities, including SEC enforcement actions, and we could be required to restate our financial results, any of which would require additional financial and management resources.
If we are not able to comply with the requirements of Section 404 in a timely manner, or if we or our accounting firm identify deficiencies in our internal control over financial reporting that are deemed to be material weaknesses, the market price of our stock would likely decline and we could be subject to lawsuits, sanctions or investigations by regulatory authorities, including SEC enforcement actions, and we could be required to restate our financial results, any of which would require additional financial and management resources and could be costly.
We also obtain a significant amount of traffic via social networking websites or other channels used by our current and prospective customers. As e-commerce and social networking continue to rapidly evolve, we must continue to establish relationships with these channels, and we may be unable to develop or maintain these relationships on acceptable terms.
We also obtain a significant amount of traffic via social networking websites or other channels used by our current and prospective customers. As e-commerce and social networking continue to rapidly evolve, we must continue to establish relationships and proficiency with these channels, and we may be unable to develop or maintain these relationships on acceptable terms.
Like many businesses, despite all of our efforts to defend against cyber threats and respond to incidents, we, and our third party service providers, have in the past and will in the future continue to be subject to cyber-attacks, cybersecurity threats and attempts to compromise and penetrate our data security systems and disrupt our operations.
Like many businesses, despite all of our efforts to defend against cyber threats and respond to incidents, we, and our third party service providers, have in the past experienced and will in the future continue to be subject to cyber-attacks, cybersecurity threats and attempts to compromise and penetrate our data security systems and disrupt our operations.
We and our service providers may not anticipate, detect, or prevent all types of attacks until after they have already been launched, particularly because the techniques used to obtain unauthorized access are increasingly sophisticated, constantly evolving and may not be known in the market.
We and our service providers may not anticipate, detect, or prevent all types of attacks until after they have been launched, particularly because the techniques used to obtain unauthorized access are increasingly sophisticated, constantly evolving and may not be known in the market.
For example, any movement by any other foreign currency against the U.S. dollar may result in higher costs to us for those goods. Declines in foreign currencies and currency exchange rates might negatively affect the profitability and business prospects of one or more of our foreign suppliers.
For example, any movement by any foreign currency against the U.S. dollar may result in higher costs to us for those goods. Declines in foreign currencies and currency exchange rates might negatively affect the profitability and business prospects of one or more of our foreign suppliers.
If we fail to execute the loyalty program, if our customers do not respond positively to the program or if the program costs more than anticipated in reward redemptions, our competitors may be able to attract some of our customers and our financial results could be adversely impacted.
If we fail to execute the loyalty program effectively, if our customers do not respond positively to the program or if the program costs more than anticipated in reward redemptions, our competitors may be able to attract some of our customers and our financial results could be adversely impacted.
In addition, with respect to our business with foreign suppliers, particularly for our international sites, we have in the past and may in the future be affected by changes in the value of the U.S. dollar relative to other foreign currencies.
In addition, with respect to our business with foreign suppliers, particularly for our international sites, we have in the past and may in the future be affected by changes in the value of the U.S. dollar relative to foreign currencies.
If one or more of these analysts cease coverage of our company or fail to regularly publish reports on us, we could lose visibility in the financial markets, which could cause our share price or trading volume to decline. 35 Table of Contents Anti-takeover provisions in our charter documents and under Delaware law could make an acquisition of our company more difficult, limit attempts by our stockholders to replace or remove our current management and limit the market price of our Class A common stock.
If one or more of these analysts cease coverage of our company or fail to regularly publish reports on us, we could lose visibility in the financial markets, which could cause our share price or trading volume to decline. 37 Table of Contents Anti-takeover provisions in our charter documents and under Delaware law could make an acquisition of our company more difficult, limit attempts by our stockholders to replace or remove our current management and limit the market price of our Class A common stock.
Specific factors that could impact consumers’ willingness to purchase home goods from us online, especially in markets where we do not have physical stores, include: • concerns about buying products, and in particular larger products, without a physical storefront, face-to-face interaction with sales personnel and the inability to physically handle, examine and compare products; • delivery time associated with online orders; 21 Table of Contents • actual or perceived lack of security of online transactions and concerns regarding the privacy or protection of personal information; • delayed shipments or shipments of incorrect or damaged products; • inconvenience associated with returning or exchanging items purchased online; • usability, functionality and features of our sites; and • our reputation and brand strength.
Specific factors that could impact consumers’ willingness to purchase home goods from us online, especially in markets where we do not have physical stores, include: • concerns about buying products, and in particular larger products, without a physical storefront, face-to-face interaction with sales personnel and the inability to physically handle, examine and compare products; • delivery time associated with online orders; • actual or perceived lack of security of online transactions and concerns regarding the privacy or protection of personal information; • delayed shipments or shipments of incorrect or damaged products; • inconvenience associated with returning or exchanging items purchased online; • usability, functionality and features of our sites; and • our reputation and brand strength.
If our new hires perform poorly, if we are unsuccessful in hiring, training, managing and integrating these new employees and staff, or if we are not successful in retaining our existing employees and staff, our business may be harmed.
If our new hires perform poorly, if we are unsuccessful in hiring, training, managing and integrating these new employees, or if we are not successful in retaining our existing employees, our business may be harmed.
If any of the events contemplated by the following discussion of risks should occur or other risks arise or develop, our business, which includes our prospects, financial condition and results of operations, the trading prices of our securities and our reputation, may be adversely affected. 12 Table of Contents Risks Related to Macroeconomic Conditions and Industry Trends Global economic conditions may have a material adverse effect on our business, results of operations and financial condition.
If any of the events contemplated by the following discussion of risks should occur or other risks arise or develop, our business, which includes our prospects, financial condition and results of operations, the trading prices of our securities and our reputation, may be adversely affected. 12 Table of Contents Risks Related to Macroeconomic Conditions Global economic conditions may have a material adverse effect on our business, results of operations and financial condition.
Our ability to open stores in a timely and successful manner depends on a number of factors, including: the availability of desirable store locations; the availability and costs of construction labor and materials; local permitting timelines; the ability to negotiate acceptable lease terms at reasonable rates, including the length of rental periods and renewal options and the ability to obtain termination rights; our ability to obtain all required approvals and comply with other regulatory requirements; our relationships with current and prospective landlords; the ability to secure and manage the inventory necessary for the launch and operation of new stores; the availability of capital funding for expansion; and general economic conditions.
Our ability to open stores in a timely and successful m anner depends on a number of factors, including: the availability of desirable store locations; the availability and costs of construction labor and materials; local permitting timelines; the ability to negotiate acceptable lease terms at reasonable rates, including the length of rental periods and renewal options and the ability to obtain termination rights; our ability to obtain all required approvals and comply with other regulatory requirements; our relationships with current and prospective landlords; the ability to secure and manage the inventory necessary for the launch and operation of new stores; the availability of capital funding for expansion; and general economic conditions.
Further, we may from time to time seek to retire, restructure, repurchase or redeem, or otherwise mitigate the equity dilution associated with, our outstanding convertible debt, through cash purchases, stock buybacks of some or all of the shares underlying the Non-Accreting Notes, and/or exchanges for equity or debt, in open-market purchases, privately negotiated transactions or otherwise.
Further, we may from time to time seek to retire, restructure, repurchase or redeem, or otherwise mitigate the equity dilution associated with, our outstanding convertible debt, through cash purchases, stock buybacks of some or all of the shares underlying the Convertible Notes, and/or exchanges for equity or debt, in open-market purchases, privately negotiated transactions or otherwise.
If we fail to comply with the rules or requirements of any provider of a payment method we accept, if the volume of fraud in our transactions limits or terminates our rights to use payment methods we currently accept, or if a data breach occurs relating to our payment systems, we may, among other things, be subject to fines or higher transaction fees and may lose, or face restrictions placed upon, our ability to accept credit card and debit card payments from consumers or to 26 Table of Contents facilitate other types of online payments.
If we fail to comply with the rules or requirements of any provider of a payment method we accept, if the volume of fraud in our transactions limits or terminates our rights to use payment methods we currently accept, or if a data breach occurs relating to our payment systems, we may, among other things, be subject to fines or higher transaction fees and may lose, or face restrictions placed upon, our ability to accept credit card and debit card payments from consumers or to facilitate other types of online payments.
Any such claim, proceeding or action, including a complaint by an activist to a regulatory authority or other public statement criticizing our practices could hurt our reputation, brand and business, force us to incur significant expenses in defense of such proceedings, distract our management, increase our costs of doing business, result in a loss of customers and suppliers and may result in the imposition of monetary penalties and otherwise adversely affect our financial condition and operating results.
Any such claim, proceeding or action, including a complaint by an activist to a regulatory authority or other public statement criticizing our practices, regardless of its merits, could hurt our reputation, brand and business, force us to incur significant expenses in defense of such proceedings, distract our management, increase our costs of doing business, result in a loss of customers and suppliers and may result in the imposition of monetary penalties and otherwise adversely affect our financial condition and operating results.
These factors may allow our competitors to derive greater net revenue and profits from their existing customer base, acquire customers at lower costs or respond more quickly than we can to new or emerging technologies and changes in consumer habits.
These factors may allow our competitors to generate greater net revenue and profits from their existing customer base, acquire customers at lower costs or respond more quickly than we can to new or emerging technologies and changes in consumer habits.
Further, in the event that it is more difficult or less compelling for our customers to buy products from us on their mobile or other devices, or if our customers choose not to buy products from us on such devices or to use mobile or other products that do not offer access to our sites or limit the effectiveness of our marketing or other offerings, our customer growth could be harmed and our business, financial condition and operating results may be materially adversely affected.
Further, in the event that it is more difficult or less compelling for our customers to buy products from us on their mobile or other devices, or if our customers choose not to buy 19 Table of Contents products from us on such devices or to use mobile or other products that do not offer access to our sites or limit the effectiveness of our marketing or other offerings, our customer growth could be harmed and our business, financial condition and operating results may be materially adversely affected.
Existing and future regulations and laws could impede the growth of the Internet, e-commerce or mobile commerce. These regulations and laws may involve taxes, tariffs, privacy and data security, anti-spam, content protection, artificial intelligence, electronic contracts and communications, consumer protection, Internet neutrality and gift cards.
Existing and future regulations and laws could impede the growth of the Internet, e-commerce or mobile commerce. These regulations and laws may involve taxes, tariffs, privacy and data security, anti-spam, content protection, artificial intelligence, electronic contracts and communications, consumer protection, Internet neutrality, automatic renewals and gift cards.
To do this, we must continue to provide our customers and potential customers with a unified, convenient, efficient and differentiated shopping experience by: • providing imagery, tools and technology that attract customers who historically would have bought elsewhere; 15 Table of Contents • maintaining a high-quality and diverse portfolio of products and services; • providing excellent customer service; • delivering products on time and without damage; and • maintaining and further developing our mobile platforms.
To do this, we must continue to provide our customers and potential customers with a unified, convenient, efficient and differentiated shopping experience by: • providing imagery, tools and technology that attract customers who historically would have bought elsewhere; • maintaining a high-quality and diverse portfolio of products and services; • providing excellent customer service; • delivering products on time and without damage; and • maintaining and further developing our mobile platforms.
Changes in trade policy, including trade restrictions, new or increased tariffs or quotas, embargoes, sanctions and countersanctions, safeguards or customs restrictions by the U.S. and/or other foreign governments could have a material adverse impact on our business.
Changes in trade policy, including trade restrictions, new or increased tariffs or quotas, embargoes, sanctions and countersanctions, safeguards or customs restrictions by the U.S. and/or other foreign governments could have a material adverse impact on our business and the business of our suppliers.
From time to time, we are subject to litigation or claims that could negatively affect our business operations and financial position. As we have grown, we have seen a rise in the number of litigation matters against us.
From time to time, we are subject to litigation or claims that could negatively affect our business operations and financial position or our brand and reputation. As we have grown, we have seen a rise in the number of litigation matters against us.
If one or more holders elect to convert their Non-Accreting Notes, unless we elect to satisfy our conversion obligation by delivering solely shares of our Class A common stock (other than paying cash in lieu of delivering any fractional share), we would be required to settle a portion or all of our conversion obligation through the payment of cash, which could adversely affect our liquidity.
If one or more holders elect to convert their Convertible Notes, unless we elect to satisfy our conversion obligation by delivering solely shares of our Class A common stock (other than paying cash in lieu of delivering any fractional share), we would be required to settle a portion or all of our conversion obligation through the payment of cash, which could adversely affect our liquidity.
Additionally, some providers of consumer devices and web browsers have implemented, or announced plans to implement, means to make it easier for Internet users to prevent the placement of cookies, to block other tracking technologies or to require new permissions from users for certain activities, which could if widely adopted significantly reduce the effectiveness of such practices and technologies.
Additionally, some providers of consumer devices and web browsers have implemented, or announced plans to implement, means to make it easier for Internet users to prevent the placement of cookies, to 34 Table of Contents block other tracking technologies or to require new permissions from users for certain activities, which could if widely adopted significantly reduce the effectiveness of such practices and technologies.
Failure to manage our growth and organizational change effectively could lead us to over-invest or under-invest in technology and operations; result in weaknesses in our infrastructure, systems or controls; give rise to operational mistakes, losses or loss of productivity or business opportunities; reduce customer satisfaction; limit our ability to respond to competitive pressures; and result in loss of employees and reduced productivity of remaining employees.
Failure to manage our growth and organizational change effectively could lead us to over-invest or under-invest in technology and operations; result in weaknesses in our infrastructure, systems or controls; give rise to operational mistakes, losses 14 Table of Contents or loss of productivity or business opportunities; reduce customer satisfaction; limit our ability to respond to competitive pressures; and result in loss of employees and reduced productivity of remaining employees.
We may be unable to source new suppliers or strengthen our relationships with current suppliers. We have relationships with over 20 thousand suppliers. Our agreements with suppliers are generally terminable at will by either party upon short notice.
We may be unable to source new suppliers or strengthen our relationships with current suppliers. We have relationships with approximately 20 thousand suppliers. Our agreements with suppliers are generally terminable at will by either party upon short notice.
In order to remain competitive, we must continue to enhance and improve the responsiveness, functionality and features of our sites, which is particularly challenging given the rapid rate at which new technologies, such as those related to artificial intelligence, customer preferences and expectations, and industry standards and practices are evolving in the e-commerce industry.
In order to remain competitive, we must continue to enhance and improve the responsiveness, functionality and features of our sites, which is particularly challenging given the rapid rate at which new technologies, such as those related to AI, customer preferences and expectations, and industry standards and practices are evolving in the e-commerce industry.
Any compromise or breach of our security measures, or those of our third-party service providers, could violate applicable privacy, data security and other laws and regulations, and cause significant legal and financial exposure, adverse publicity and a loss of confidence in our security measures, which could have a material adverse effect 20 Table of Contents on our business, financial condition and operating results.
Any compromise or breach of our security measures, or those of our third-party service providers, could violate applicable privacy, data security and other laws and regulations, and cause significant legal and financial exposure, adverse publicity and a loss of confidence in our security measures, which could have a material adverse effect on our business, financial condition and operating results.
If we are unable to manage the growth of our organization effectively, our business, financial condition and operating results may be materially adversely affected. 14 Table of Contents If we fail to acquire new customers, reactivate prior customers or retain existing customers, or fail to do so in a cost-effective manner, our business, financial condition and operating results could be harmed.
If we are unable to manage the growth of our organization effectively, our business, financial condition and operating results may be materially adversely affected. If we fail to acquire new customers, reactivate prior customers or retain existing customers, or fail to do so in a cost-effective manner, our business, financial condition and operating results could be harmed.
Additionally, global events as well as geopolitical developments, including military conflicts in Ukraine and the Middle East, fluctuating commodity prices, trade tariff developments and inflation have caused, and may in the future cause, global economic uncertainty and uncertainty about the interest rate environment, which has recently and could continue to amplify the volatility of currency fluctuations.
Additionally, global events as well as geopolitical developments, including military conflicts, fluctuating commodity prices, trade tariff developments and inflation have caused, and may in the future cause, global economic uncertainty and uncertainty about the interest rate environment, which has recently and could continue to amplify the volatility of currency fluctuations.
These adverse conditions include economic instability, changes in tax laws, regulations and new or increased tariffs, including retaliatory tariffs, export controls, the impacts of inflation, slower growth or recession, sustained higher interest rates, high unemployment, decreased consumer confidence in the economy, armed hostilities, such as the ongoing conflicts between Russia and Ukraine, and other events related thereto, such as economic sanctions and trade restrictions, geopolitical tensions in China and other regions, foreign currency exchange rate fluctuations, conditions affecting the retail environment for products we sell, and other unexpected events, including public health crises.
These adverse conditions include economic instability, changes in tax laws, regulations and new or increased tariffs, including retaliatory tariffs, export controls, the impacts of inflation, slower growth or recession, sustained higher interest rates, high unemployment, decreased consumer confidence in the economy, armed hostilities, and other events related thereto, such as economic sanctions and trade restrictions, geopolitical tensions in China and other regions, foreign currency exchange rate fluctuations, conditions affecting the retail environment for products we sell, and other unexpected events, including public health crises.
Political and economic instability, global or regional adverse conditions, such as military conflicts, pandemics or other disease outbreaks or natural disasters, the financial stability or insolvency of our suppliers, our suppliers’ ability to meet our code of conduct and other business standards, labor problems experienced by our suppliers, the availability or cost of raw materials, merchandise quality issues, currency exchange rates, trade tariff developments, imposition of anti-dumping and countervailing duties or other trade-related sanctions, transport availability and cost, including import-related taxes, transport security, labor inflation and other factors relating to our suppliers are beyond our control.
Political and economic instability, global or regional adverse conditions, such as military conflicts, public health emergencies, pandemics or other disease outbreaks or natural disasters, the financial instability or insolvency of our suppliers, our suppliers’ ability to meet our code of conduct and other business standards, labor problems experienced by our suppliers, the unavailability or cost of raw materials, merchandise quality issues, currency exchange rates, trade tariff developments, imposition of anti-dumping and countervailing duties or other trade-related sanctions, transport availability and cost, including import-related taxes, transport security, labor inflation and other factors relating to our suppliers are beyond our control.
During 2024, our international net revenue accounted for approximately 12% of our total net revenue. Expanding our international operations to grow our business will require significant management attention and resources and expose us to additional risks.
During 2025, our international net revenue accounted for approximately 12% of our total net revenue. Expanding our international operations to grow our business will require significant management attention and resources and expose us to additional risks.
Our failure to comply with any of these covenants or to meet any payment obligations under the Revolver could result in an event of default which, if not cured or waived, would result in any amounts outstanding, including any accrued interest and unpaid fees, becoming immediately due and payable.
Our failure to comply with any of these covenants or to meet any payment obligations under the Revolver or any future debt agreements could result in an event of default which, if not cured or waived, would result in any amounts outstanding, including any accrued interest and unpaid fees, becoming immediately due and payable.
Acquisitions involve numerous risks, any of which could harm our business, including: difficulties in integrating the technologies, operations, existing contracts and personnel of an acquired company; difficulties in supporting and transitioning customers and suppliers, if any, of an acquired company; diversion of financial and management resources from existing operations or alternative acquisition opportunities; failure to realize the anticipated benefits or synergies of a transaction; failure to identify all of the problems, liabilities or other shortcomings or challenges of an acquired company or technology, including issues related to intellectual property, regulatory compliance practices, liabilities related to data security and privacy of customer data, the acquired company's internal controls over financial reporting, including revenue recognition or other accounting practices; employee or customer issues; risks of entering new markets in which we have limited or no experience; potential loss of senior management or other key employees, customers and suppliers from either our current business or an acquired company's business; inability to generate sufficient net revenue to offset acquisition costs; additional costs or equity dilution associated with funding the acquisition; and possible write-offs or impairment charges relating to acquired businesses, and these liabilities may be greater than the warranty and indemnity limitations we negotiate. 27 Table of Contents In addition, our investments in properties may not be fully realized.
Acquisitions involve numerous risks, any of which could harm our business, including: difficulties in integrating the technologies, operations, existing contracts and personnel of an acquired company; difficulties in supporting and transitioning customers and suppliers, if any, of an acquired company; diversion of financial and management resources from existing operations or alternative acquisition opportunities; failure to realize the anticipated benefits or synergies of a transaction; failure to identify all of the problems, liabilities or other shortcomings or challenges of an acquired company or technology, including issues related to intellectual property, regulatory compliance practices, liabilities related to data security and privacy of customer data, the acquired company's internal controls over financial reporting, including revenue recognition or other accounting practices; employee or customer issues; risks of entering new markets in which we have limited or no experience; potential loss of senior management or other key employees, customers and suppliers from either our current business or an acquired company's business; inability to generate sufficient net revenue to offset acquisition costs; additional costs or equity dilution associated with funding the acquisition; and possible write-offs or impairment charges relating to acquired businesses, and these liabilities may be greater than the warranty and indemnity limitations we negotiate.
The loss of any of our senior management or other key employees could materially harm our business. Our future success also depends on our continuing ability to attract, develop, motivate and retain highly qualified and skilled employees, particularly mid-level managers, engineers and merchandising and technology personnel.
The loss of any of our senior management or other key employees could materially harm our business. 26 Table of Contents Our future success also depends on our continuing ability to attract, develop, motivate and retain highly qualified and skilled employees, particularly mid-level managers, engineers and merchandising and technology personnel.
The capped calls are expected generally to reduce the potential dilution upon conversion of the Non-Accreting Notes and/or offset any cash payments we are required to make in excess of the principal amount of converted Non-Accreting Notes, as the case may be, with such reduction and/or offset subject to a cap.
The capped calls are expected generally to reduce the potential dilution upon conversion of the Convertible Notes and/or offset any cash payments we are required to make in excess of the principal amount of converted Convertible Notes, as the case may be, with such reduction and/or offset subject to a cap.
Our marketing efforts to help grow our business may not be effective, and failure to effectively develop and expand our sales and marketing capabilities could harm our ability to increase our customer base and achieve broader market acceptance of our e-commerce and omnichannel approach to shopping for home goods.
Our marketing efforts to help grow our business may not be effective, and failure to effectively develop and expand our sales and marketing capabilities could harm our ability to increase our customer base and achieve broader market acceptance of our e-commerce and omni-channel approach to shopping for home goods.
For example, these stockholders are able to control elections of directors, 34 Table of Contents amendments of our Charter or Bylaws, increases to the number of shares available for issuance under our equity incentive plans or adoption of new equity incentive plans and approval of any merger or sale of assets for the foreseeable future.
For example, these stockholders are able to control elections of directors, amendments of our Charter or Bylaws, increases to the number of shares available for issuance under our equity incentive plans or adoption of new equity incentive plans and approval of any merger or sale of assets for the foreseeable future.
In addition, unfavorable publicity regarding, for example, our practices relating to privacy and data protection, employment matters, product quality or availability, poor customer service, delivery problems, competitive pressures, litigation or regulatory activity, could seriously harm our reputation.
In addition, unfavorable publicity regarding, for example, our practices relating to privacy and data protection, employment matters, product quality or availability, poor customer service, delivery problems, return or exchange policies, competitive pressures, litigation or regulatory activity, could seriously harm our reputation.
Under certain circumstances, the holders of the Notes may require us to repay all or a portion of the principal and interest outstanding under the Notes in cash prior to the maturity date, which could have an adverse effect on our liquidity and financial condition.
Under certain circumstances, the holders of the Notes may require us to repay all or a portion of the principal and interest outstanding under the Notes in cash prior to the maturity date, which could have a material effect on our liquidity and financial condition.
Declines in consumer spending have in the past resulted, and in the future may result, in decreased demand for our products and services which may have an adverse effect on our results of operations. We are subject to risks from changes to the trade policies, including tariff and import/export regulations by the U.S. and/or other foreign governments.
Declines in consumer spending have in the past resulted, and in the future may result, in decreased demand for our products and services which may have an adv erse effect on our results of operations. We are subject to risks from changes to the trade policies, including tariff and import/export regulations, of the U.S. and/or other foreign governments.
We will incur additional costs complying with these additional obligations and any failure or perceived failure to comply would adversely affect our business and reputation. 31 Table of Contents In addition, there is also uncertainty regarding potential laws, regulations and policies related to sustainability, climate change laws and regulations, and global environmental sustainability matters, including disclosure obligations and reporting on such matters.
We will incur additional costs complying with these additional obligations and any failure or perceived failure to comply would adversely affect our business and reputation. In addition, there is also uncertainty regarding potential laws, regulations and policies related to sustainability, climate change laws and regulations, and global environmental sustainability matters, including disclosure obligations and reporting on such matters.
Our business is rapidly evolving and intensely competitive, with numerous competitors including furniture stores, big box retailers, department stores, specialty retailers and online retailers and marketplaces in the U.S., Canada, the United Kingdom, and Ireland, including those listed in Part I, Item 1, Business . We expect competition in e-commerce generally to continue to increase.
Our business is rapidly evolving and intensely competitive, with numerous competitors including furniture stores, big box retailers, department stores, specialty retailers and online retailers and marketplaces in the U.S., Canada, the United Kingdom, and Ireland, including those listed in Part I, Item 1, Business . 22 Table of Contents We expect competition in e-commerce generally to continue to increase.
These exclusive forum provisions may increase costs to bring a claim, discourage claims or limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with the Company or Wayfair’s current or former directors, officers, other employees or stockholders, which may discourage such lawsuits against Wayfair or Wayfair’s current or former directors, officers, other employees and stockholders.
These exclusive forum provisions may increase costs to bring a claim, discourage claims or limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with the Company or Wayfair’s current 35 Table of Contents or former directors, officers, other employees or stockholders, which may discourage such lawsuits against Wayfair or Wayfair’s current or former directors, officers, other employees and stockholders.
Any slowdown, interruption or performance failure of our sites and the underlying technology and logistics infrastructure could harm our business, reputation and our ability to acquire, retain and serve our customers, which could materially adversely 19 Table of Contents affect our results of operations.
Any slowdown, interruption or performance failure of our sites and the underlying technology and logistics infrastructure could harm our business, reputation and our ability to acquire, retain and serve our customers, which could materially adversely affect our results of operations.
For example, as artificial intelligence continues to evolve, cyber-attackers could also use artificial intelligence to develop malicious code and sophisticated phishing attempts. Security incidents such as ransomware attacks are becoming increasingly prevalent and severe, as well as increasingly difficult to detect.
For example, as AI continues to evolve, cyber-attackers could also use AI to develop malicious code and sophisticated phishing attempts. Security incidents such as ransomware attacks are becoming increasingly prevalent and severe, as well as increasingly difficult to detect.
Given this, along with our inability to rapidly switch our Google Cloud operations to another cloud provider, any disruption of or interference with our use of Google Cloud or any widespread disruption in Google Cloud itself would impact our operations and our business would be adversely affected.
Given this, along with our inability to rapidly switch our Google Cloud 21 Table of Contents operations to another cloud provider, any disruption of or interference with our use of Google Cloud or any widespread disruption in Google Cloud itself would impact our operations and our business would be adversely affected.
The amount, timing, and purchases under our stock repurchase program, if any, are influenced by many factors and may fluctuate based on our operating results, cash flows, and priorities for the use of cash, the market price of our common stock, and our possession of potentially material nonpublic information.
The amount, timing, and purchases under our stock repurchase program, if any, are influenced by many factors and may fluctuate based on our operating results, cash flows, priorities for the use of cash, tax laws, the market price of our Class A common stock, and our possession of potentially material nonpublic information.
If the conditional conversion feature of any series of our Non-Accreting Notes is triggered, holders of such series of Non-Accreting Notes will be entitled to convert the applicable series of Non-Accreting Notes at any time during specified periods at their option.
If the conditional conversion feature of any series of our Convertible Notes is triggered, holders of such series of Convertible Notes will be entitled to convert the applicable series of Convertible Notes at any time during specified periods at their option.
Such repurchases, exchanges or liability management exercises, if any, will be upon such terms and at such prices and sizes as we may determine, and will depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors.
Such repurchases, exchanges or liability management exercises, if any, will be upon such terms and at such prices and sizes as we may determine, and will depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors. The amounts involved may be material.
Moreover, beginning in 2022 and continuing in 2023 and 2024, in an effort to reduce our operational costs and improve our organizational efficiency, we implemented a cost efficiency plan, part of which included internal restructurings and workforce reductions to right-size our cost structure.
Moreover, beginning in 2022 and continuing through 2025, in an effort to reduce our operational costs and improve our organizational efficiency, we implemented a cost efficiency plan, part of which included internal restructurings and workforce reductions to right-size our cost structure.
Our historical growth rates may not be sustainable or indicative of future growth. To manage our growth effectively, we must continue to implement our operational plans and strategies, improve and expand our infrastructure of people and information systems and appropriately manage our employee base.
Our historical growth rates may not be sustainable or indicative of future growth. To manage our growth effectively, we must continue to execute effective operational plans and strategies, improve our infrastructure of people and information systems and appropriately manage our employee base.
As a result, we may not be successful enough in these newer areas to recoup our investments in them. If this occurs, our business, financial condition and operating results may be materially adversely affected.
As a result, we 17 Table of Contents may not be successful enough in these newer areas to recoup our investments in them. If this occurs, our business, financial condition and operating results may be materially adversely affected.
Third parties may in the future determine they no longer wish to do business with us or may decide to take other actions that could harm our business. We may also determine that we no longer want to do business with them.
Third parties may in the future determine they no longer wish to do business with us or may decide to take other actions that could 25 Table of Contents harm our business. We may also determine that we no longer want to do business with them.
Our business is also affected by economic and business conditions globally, including inflation, slower growth or recession, new or increased tariffs and other changes to fiscal and monetary policy, tighter credit, higher interest rates, high unemployment, consumer confidence in the economy, consumer debt levels, energy prices, and currency fluctuations.
Our business is also affected by economic and business conditions in the U.S and globally, including inflation, slower growth or recession, new or increased tariffs and other changes to fiscal and monetary policy, tighter credit, higher interest rates, high unemployment, consumer confidence in the economy, consumer debt levels, energy prices, currency fluctuations, and conditions in the real estate and mortgage markets.
Federal, state and international governmental authorities continue to evaluate the privacy implications inherent in the use of proprietary or third-party "cookies" and other methods of online tracking for behavioral advertising, analytics and other purposes.
Federal, state and international governmental authorities continue to evaluate the privacy implications inherent in the use of proprietary or third-party "cookies" and similar tracking technologies for behavioral advertising, analytics and other purposes.
Among others, we are subject to several global and state laws, including, but not limited to, the General Data Protection Regulation (“GDPR”) in the European Union (“EU”) and the California Consumer Privacy Act, as amended by the California Privacy Rights Act (“CPRA”), all of which give new data privacy rights to their respective residents and impose significant obligations on controllers and processors of consumer data.
Among others, we are subject to several global and state laws, 33 Table of Contents including, but not limited to, the General Data Protection Regulation (“GDPR”) in the European Union (“EU”), UK General Data Protection Regulation (“UK GDPR”) and the California Consumer Privacy Act, as amended by the California Privacy Rights Act (“CPRA”), all of which give data privacy rights to their respective residents and impose significant obligations on controllers and processors of consumer data.
In addition, the impacts of climate change could result in changes in regulations, which could in turn affect our business, operating results, and financial condition. Risks Related to Our Business and Industry If we fail to manage our growth effectively, our business, financial condition and operating results could be harmed.
In addition, the impacts of climate change could result in changes in regulations, which could in turn affect our business, operating results, and financial condition. Risks Related to Our Business and Industry If we fail to manage our growth effectively, including regarding our employees, management and operations, our business, financial condition and operating results could be harmed.
The conditional conversion feature of any series of the Non-Accreting Notes, if triggered, may adversely affect our financial condition and operating results.
The conditional conversion feature of any series of the Convertible Notes, if triggered, may adversely affect our financial condition and operating results.
Our operations, or those of our suppliers, could be negatively impacted by various events beyond our control, including, without limitation, natural disasters, such as hurricanes, tornadoes, floods, earthquakes, extreme cold events and other adverse weather conditions; public health crises, such as pandemics and epidemics; political crises, such as terrorist attacks, war, labor unrest, and other political instability (including, without limitation, the ongoing conflicts between Russia and Ukraine), negative 13 Table of Contents global climate patterns, especially in water stressed regions; or other catastrophic events, such as fires or other disasters occurring at our distribution centers or our suppliers’ manufacturing facilities, whether occurring in the U.S. or internationally.
Our operations, or those of our suppliers, could be negatively impacted by various events beyond our control, including, without limitation, natural disasters, such as hurricanes, tornadoes, floods, earthquakes, extreme cold events and other adverse weather conditions; public health crises, such as pandemics and epidemics; political crises, such as terrorist attacks, war, labor unrest, and other political instability; negative global climate patterns, especially in water stressed regions; other catastrophic events, such as fires or other disasters occurring at our distribution centers or our suppliers’ manufacturing facilities, or acts of violence and other crimes, whether occurring in the U.S. or internationally.
As of December 31, 2024, we had $3.2 billion of principal indebtedness outstanding, $236 million of which is characterized as short-term debt and presented within other current liabilities in the consolidated balance sheets.
As of December 31, 2025, we had $3.3 billion of principal indebtedness outstanding, $39 million of which is characterized as short-term debt and presented within other current liabilities in the consolidated balance sheets.
We also are unable to predict whether any of the countries in which our suppliers’ products are currently manufactured or may be manufactured in the future will be subject to new, different, or additional trade restrictions imposed by the U.S. or foreign governments or the likelihood, type or effect of any such restrictions.
We are also subject to risks of fraud from our suppliers. 24 Table of Contents We are unable to predict whether any of the countries in which our suppliers’ products are currently manufactured or may be manufactured in the future will be subject to new, different, or additional trade restrictions imposed by the U.S. or foreign governments or the likelihood, type or effect of any such restrictions.
We may also be exposed to claims from third parties claiming infringement of their intellectual property rights, demanding the release or license of open source software or derivative works that we developed using such software (which could include our proprietary code) or otherwise seeking to enforce the terms of the applicable open source license.
We have in the past and may in the future also be exposed to claims from third parties claiming infringement of their intellectual property rights, demanding the release or license of open source software or derivative works that we developed using such software (which could include our proprietary 29 Table of Contents code) or otherwise seeking to enforce the terms of the applicable open source license.
The amounts involved may be material. 30 Table of Contents Current capital market conditions, including the impact of inflation, have increased borrowing rates and can be expected to significantly increase our cost of capital as compared to prior periods should we seek additional funding. Quantitative tightening by the U.S.
Current capital market conditions, including the impact of inflation, have increased borrowing rates and can be expected to significantly increase our cost of capital as compared to prior periods should we seek additional funding. Quantitative tightening by the U.S.
Our ability to grow our business depends on our ability to retain our existing customer base and generate increased net revenue and repeat purchases from this customer base and maintain high levels of customer engagement.
Our ability to grow our business depends on our ability to retain our existing customer base and generate increased net revenue and repeat purchases from this customer base and maintain high levels of customer engagement in a cost-effective manner.
We might not be able to obtain broad protection in the U.S. or internationally for all of our intellectual property, and we might not be able to obtain effective intellectual property protection in every country in which we sell products or perform services.
We might not be able to obtain broad protection in the U.S. or internationally for all of our intellectual property, and we might not be able to obtain effective intellectual property protection in every country in which we sell products or perform services, particularly as we continue to expand our business offerings.
These factors include, among others, financial market volatility, inflationary pressures, the impacts of tariffs, negative financial news, conditions in the real estate and mortgage markets, including home equity loans and consumer credit, changes in net worth based on market changes and uncertainty, energy shortages and cost increases, labor and healthcare costs, government actions and general uncertainty regarding the overall future economic environment.
These factors include, among others, financial market volatility, inflationary pressures, the impacts of tariffs, negative financial news, conditions in the real estate and mortgage markets, including home equity loans and consumer credit, changes in net worth and levels of disposable income as a result of market changes and uncertainty, energy shortages and cost increases, high levels of unemployment, labor and healthcare costs, government actions and general uncertainty regarding the overall future economic environment.
The programs could affect the trading price of our Class A common stock and increase volatility, and any announcement of a termination of either program may result in a decrease in the trading price of our Class A common stock.
The programs could affect the trading price of our Class A common stock and increase volatility, and any announcement of a termination of either program may result in a decrease in the trading price of our Class A common stock. Implementation of the Repurchase Programs could diminish our cash reserves.
We also utilize non-paid advertising. Our non-paid advertising efforts include search engine optimization, non-paid social media, mobile "push" notifications and email. We obtain a significant amount of traffic via search engines and, therefore, rely on search engines such as Google, Bing and Yahoo!.
We also utilize non-paid advertising. Our non-paid advertising efforts include search engine optimization, non-paid social media, text message, mobile "push" notifications and email. We obtain a significant amount of traffic via search engines and, therefore, rely on search engines such as Google, Bing and Yahoo! as well as AI-powered search and generative answer platforms.
We continually upgrade existing technologies and business applications to keep pace with these rapidly changing and continuously evolving technologies, and we may be required to implement new technologies, such as those related to artificial intelligence, or business applications in the future.
We continually upgrade existing technologies and business applications to keep pace with these rapidly changing and continuously evolving technologies, and we may be required to implement new technologies or business applications in the future.
In addition, continued growth in our transaction volume, as well as surges in online traffic and orders associated with promotional activities and seasonal trends in our business, place additional demands on our technology platform and could cause or exacerbate slowdowns or interruptions.
We may experience periodic system interruptions from time to time. In addition, continued growth in our transaction volume, as well as surges in online traffic and orders associated with promotional activities and seasonal trends in our business, place additional demands on our technology platform and could cause or exacerbate slowdowns or interruptions.
Any of these events could have a material adverse effect on our business, financial condition and operating results. 33 Table of Contents Our Bylaws and Charter generally provide that the Court of Chancery for the State of Delaware will be the exclusive forum for certain legal actions concerning the internal affairs of Wayfair, including but not limited to stockholder derivative litigation, and our Bylaws provide that the U.S. federal district courts will be the exclusive forum for legal actions arising under the Securities Act, which could increase costs to bring such claims, discourage such claims or limit the ability of Wayfair’s stockholders to bring such claims in a judicial forum viewed by the stockholders as more favorable.
Our Bylaws and Charter generally provide that the Court of Chancery for the State of Delaware will be the exclusive forum for certain legal actions concerning the internal affairs of Wayfair, including but not limited to stockholder derivative litigation, and our Bylaws provide that the U.S. federal district courts will be the exclusive forum for legal actions arising under the Securities Act, which could increase costs to bring such claims, discourage such claims or limit the ability of Wayfair’s stockholders to bring such claims in a judicial forum viewed by the stockholders as more favorable.
Our potential inability to anticipate and address differences that we encounter as we expand internationally may divert financial, operational, and managerial resources from our existing operations, which could adversely impact our financial condition and results of operations. Fluctuations in currency exchange rates could adversely affect our financial performance and our reported results of operations.
Our potential inability to anticipate and address differences that we encounter as we expand internationally may divert financial, operational, and managerial resources from our existing operations, which could adversely impact our financial condition and results of operations.
Our net revenue primarily depends on the number of visitors who shop on our sites and the volume of orders we can handle. Unavailability of our sites or reduced order fulfillment performance would reduce the volume of goods sold and could also materially adversely affect consumer perception of our brand. We may experience periodic system interruptions from time to time.
Our net revenue primarily depends on the number of visitors who shop on our sites and the volume of orders we can handle. Unavailability of our sites or reduced order fulfillment performance would reduce the volume of goods sold and could materially adversely affect our ability to generate revenue and consumer perception of our brand.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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At the management level, our Head of Cybersecurity and the cybersecurity teams are primarily responsible for identifying, assessing, monitoring and managing our cybersecurity. Our current Head of Cybersecurity has 20 years of industry experience, including serving as an enterprise Chief Information Security Officer for many years and having extensive experience in developing and leading risk management programs.
At the management level, our Head of Cybersecurity and cybersecurity teams are primarily responsible for identifying, assessing, monitoring and managing our cybersecurity. Our current Head of Cybersecurity has over 20 years of industry experience, including serving as an enterprise Chief Information Security Officer for many years and having extensive experience in developing and leading risk management programs.
Recognizing the complexity and evolving nature of cybersecurity threats, Wayfair engages with a range of external experts, including cybersecurity assessors, consultants and auditors in evaluating and testing our risk management systems.
Recognizing the complexity and evolving nature of cybersecurity threats, Wayfair engages with a range of experts, including external cybersecurity assessors and consultants and internal auditors in evaluating and testing our risk management systems.
We use various security tools and processes to help prevent, 36 Table of Contents identify, escalate, investigate, resolve and recover from identified vulnerabilities and security incidents in a timely manner, including, but not limited to, internal reporting, monitoring and detection tools and a vulnerability identification program.
We use various security tools and processes to help prevent, 38 Table of Contents identify, escalate, investigate, resolve and recover from identified vulnerabilities and security incidents in a timely manner, including, but not limited to, internal reporting, monitoring and detection tools and a vulnerability identification program.
Our Global Incident Response Plan also includes immediate actions to mitigate the impact and long-term strategies for remediation and prevention of future incidents. 37 Table of Contents
Our Global Incident Response Plan also includes immediate actions to mitigate the impact and long-term strategies for remediation and prevention of future incidents. 39 Table of Contents
Working with these external experts enables us to leverage specialized knowledge and insights, with a goal of ensuring our cybersecurity strategies and processes remain at the forefront of industry best practices. Our collaboration with these third parties includes regular audits, threat assessments and consultation on security enhancements.
Working with these experts enables us to leverage specialized knowledge and insights, with a goal of ensuring our cybersecurity strategies and processes remain at the forefront of industry best practices. Our collaboration with these experts includes regular audits, threat assessments and consultation on security enhancements.
Governance Our Board is ultimately responsible for the risk oversight of the company, including, cybersecurity and privacy risks. Our Board has delegated responsibility for oversight of cybersecurity risks to the Audit Committee. The Audit Committee is composed of board members with diverse expertise including risk management, technology and finance, equipping them to oversee cybersecurity risks effectively.
Governance Our Board is ultimately responsible for the risk oversight of the company, including, cybersecurity and privacy risks. Our Board has delegated responsibility for oversight of cybersecurity risks to the Audit Committee. The Audit Committee is composed of board members with diverse expertise including risk management, technology and finance, which we believe equips them to oversee cybersecurity risks effectively.

Item 2. Properties

Properties — owned and leased real estate

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Properties As of December 31, 2024, we operated the following facilities: Leased Square Footage (1) Reportable Segment (square footage in thousands) Description of Use: Logistics 18,878 United States Logistics 3,510 International Customer service 125 United States Customer service 30 International Retail 420 United States Boston headquarters 1,341 United States Office space 132 United States Office space 311 International Total 24,747 (1) Represents the total leased space excluding subleases and leases that have not yet commenced.
Properties As of December 31, 2025, we operated the following facilities: Leased Square Footage (1) Reportable Segment (square footage in thousands) Description of Use: Logistics 18,002 United States Logistics 3,569 International Customer service 45 United States Customer service 20 International Retail 865 United States Retail 19 International Boston headquarters 1,341 United States Office space 132 United States Office space 334 International Total 24,327 (1) Represents the total leased space excluding subleases and leases that have not yet commenced.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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An unfavorable resolution of one or more of these matters could have a material adverse effect on our results of operations or financial condition, and regardless of the outcome, these matters can be costly and time consuming, as they can divert management's attention from important business matters and initiatives, negatively impacting our overall operations.
An unfavorable resolution of one or more legal matters could have a material adverse effect on our results of operations or financial condition, and regardless of the outcome, these matters can be costly and time consuming, as they can divert management's attention from important business matters and initiatives, negatively impacting our overall operations.
In addition, we may be at greater risk to outside party claims as we increase our operations in jurisdictions where the laws with respect to the potential liability of online retailers are uncertain, unfavorable or unclear.
In addition, we may be at greater risk from outside party claims as we increase our operations in jurisdictions where the laws with respect to the potential liability of online retailers are uncertain, unfavorable or unclear.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Dividends We have never declared or paid any cash dividends on our capital stock, and we do not currently anticipate paying any cash dividends in the foreseeable future. 38 Table of Contents Securities Authorized for Issuance Under Equity Compensation Plans Information regarding our equity compensation plans and securities authorized for issuance thereunder is set forth under Part III, Item 12, Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters , in this Annual Report on Form 10-K.
Dividends We have never declared or paid any cash dividends on our capital stock, and we do not currently anticipate paying any cash dividends in the foreseeable future. 40 Table of Contents Securities Authorized for Issuance Under Equity Compensation Plans Information regarding our equity compensation plans and securities authorized for issuance thereunder is set forth under Part III, Item 12, Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters , in this Annual Report on Form 10-K.
As of December 31, 2024, the approximate aggregate dollar value of shares that may yet be purchased under the authorized Repurchase Programs is $1.1 billion. There were no repurchases made during the three months ended December 31, 2024. Item 6. Reserved Not applicable.
As of December 31, 2025, the approximate aggregate dollar value of shares that may yet be purchased under the authorized Repurchase Programs is $1.1 billion. There were no repurchases made during the three months ended December 31, 2025. Item 6. Reserved Not applicable.
On August 10, 2021, the Board authorized a new $1.0 billion share repurchase program on the same terms (the “2021 Repurchase Program,” together with the 2020 Repurchase Program, the “Repurchase Programs”). There is no stated expiration for the Repurchase Programs. Wayfair will begin repurchasing shares under the 2021 Repurchase Program upon the completion of the 2020 Repurchase Program.
On August 10, 2021, the Board authorized a new $1.0 billion share repurchase program on the same terms (the “2021 Repurchase Program,” and, together with the 2020 Repurchase Program, the “Repurchase Programs”). Wayfair will begin repurchasing shares under the 2021 Repurchase Program upon the completion of the 2020 Repurchase Program.
Holders of Our Common Stock As of February 13, 2025, there were 205 holders of record of shares of our Class A common stock and 257 holders of record of shares of our Class B common stock.
Holders of Our Common Stock As of February 12, 2026, there were 137 holders of record of shares of our Class A common stock and 257 holders of record of shares of our Class B common stock.
Added
The Repurchase Programs do not obligate us to purchase any shares of our Class A common stock and have no expiration date, but may be suspended or terminated by the Board at any time.
Added
The actual timing, number and value of shares repurchased under the Repurchase Programs in the future will be determined by us in our discretion and will depend on a number of factors, including market conditions, applicable legal requirements, our capital needs and whether there is a better alternative use of capital.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Dollar and the Canadian Dollar. Included in other (expense) income, net are changes in foreign currency transaction gains and losses and long-term investment income or losses.
Dollar and the Canadian Dollar. Included in other income (expense), net are changes in foreign currency transaction gains and losses and long-term investment income or losses.
For information regarding the Notes, see Note 6, Debt and Other Financing , in the notes to the consolidated financial statements, included in Part II, Item 8, Financial Statements and Supplementary Data , in this Annual Report on Form 10-K. (2) Represents the future minimum lease payments under non-cancellable leases.
For information regarding the Notes, see Note 6, Debt and Other Financing , in the notes to consolidated financial statements, included in Part II, Item 8, Financial Statements and Supplementary Data , in this Annual Report on Form 10-K. (2) Represents the future minimum lease payments under non-cancellable leases.
For information regarding our lease obligations, see Note 5, Leases , in the notes to the consolidated financial statements, included in Part II, Item 8, Financial Statements and Supplementary Data , in this Annual Report on Form 10-K. (3) Represents the future payments for enforceable and legally binding software license and freight commitments.
For information regarding our lease obligations, see Note 5, Leases , in the notes to consolidated financial statements, included in Part II, Item 8, Financial Statements and Supplementary Data , in this Annual Report on Form 10-K. (3) Represents the future payments for enforceable and legally binding software license and freight commitments.
For information regarding our purchase obligations, see Note 7, Commitments and Contingencies, in the notes to the consolidated financial statements, included in Part II, Item 8, Financial Statements and Supplementary Data , in this Annual Report on Form 10-K.
For information regarding our purchase obligations, see Note 7, Commitments and Contingencies, in the notes to consolidated financial statements, included in Part II, Item 8, Financial Statements and Supplementary Data , in this Annual Report on Form 10-K.
(4) Represents the future minimum lease payments for additional, non-cancellable operating leases, primarily related to warehouse and retail leases that have not yet commenced. For more information see Note 5, Leases , in the notes to the consolidated financial statements, included in Part II, Item 8, Financial Statements and Supplementary Data , in this Annual Report on Form 10-K.
(4) Represents the future minimum lease payments for additional, non-cancellable operating leases, primarily related to warehouse and retail leases that have not yet commenced. For more information see Note 5, Leases , in the notes to consolidated financial statements, included in Part II, Item 8, Financial Statements and Supplementary Data , in this Annual Report on Form 10-K.
Further, we may from time to time seek to retire, restructure, repurchase or redeem, or otherwise mitigate the equity dilution associated with our outstanding convertible debt through cash purchases, stock buybacks of some or all of the shares underlying convertible notes and/or exchanges for equity or debt in open-market purchases, privately negotiated transactions or otherwise.
Further, we have and may from time to time seek to retire, restructure, repurchase or redeem, or otherwise mitigate the equity dilution associated with our outstanding convertible debt through cash purchases, stock buybacks of some or all of the shares underlying convertible notes and/or exchanges for equity or debt in open-market purchases, privately negotiated transactions or otherwise.
During the year ended December 31, 2024, we recorded net charges of $37 million, inclusive of $34 million associated with weakened macroeconomic conditions in connection with our German operations , $2 million related to changes in sublease market conditions and $1 million related to construction in progress assets at identified U.S. locations.
During the year ended December 31, 2024, we recorded net charges of $37 million, inclusive of $34 million associated with weakened macroeconomic conditions in connection with our German operations, $2 million related to changes in sublease market conditions and $1 million related to construction in progress assets at identified U.S. office locations.
If one or more holders elect to convert their Non-Accreting Notes at a time when any such Non-Accreting Notes are convertible, unless we elect to satisfy our conversion obligation by delivering solely shares of our Class A common stock (other than paying cash in lieu of delivering any fractional share), we would be required to settle a portion or all of our conversion obligation through the payment of cash, which could adversely affect our liquidity.
If one or more holders elect to convert their Convertible Notes at a time when any such Convertible Notes are convertible, unless we elect to satisfy our conversion obligation by delivering solely shares of our Class A common stock (other than paying cash in lieu of delivering any fractional share), we would be required to settle a portion or all of our conversion obligation through the payment of cash, which could adversely affect our liquidity.
These developments have and may continue to negatively impact global economic activity and consumer behavior, which have and may continue to adversely affect our business and our results of operations. As our customers react to these global economic conditions, we may take additional precautionary measures to limit or delay expenditures and preserve capital and liquidity.
These types of developments have and may continue to negatively impact global economic activity and consumer behavior, which have and may continue to adversely affect our business and our results of operations. As our customers react to these global economic conditions, we may take precautionary measures to limit or delay expenditures and preserve capital and liquidity.
However, our liquidity assumptions may prove to be incorrect, and we could exhaust our available financial resources sooner than we currently expect. In addition, we may elect to raise additional funds at any time through equity, equity-linked or debt financing arrangements.
However, our liquidity assumptions may prove to be incorrect, and we could exhaust our available financial resources sooner than we currently expect. We may elect to raise additional funds at any time through equity, equity-linked or debt financing arrangements.
During the year ended December 31, 2023, we recorded net charges of $14 million, inclusive of $5 million related to consolidation of certain customer service centers and $9 million related to construction in progress assets at identified U.S. locations.
During the year ended December 31, 2023, Wayfair recorded net charges of $14 million, inclusive of $5 million related to consolidation of certain customer service centers and $9 million related to construction in progress assets at identified U.S. locations.
See “Non-GAAP Financial Measures” below for more information regarding our use of Adjusted EBITDA, Free Cash Flow and Adjusted Diluted Earnings or Loss per Share and a reconciliation of these non-GAAP financial measures to the most directly comparable GAAP financial measure that is prepared in accordance with accounting principles generally accepted in the United States of America or “GAAP.” Our Free Cash Flow and Adjusted Diluted Earnings or Loss per Share are measured on a consolidated basis, while our Adjusted EBITDA is measured on a consolidated and reportable segment basis.
See “Non-GAAP Financial Measures” below for more information regarding our use of Adjusted Gross Profit, Adjusted Gross Margin, Contribution Profit, Contribution Margin, Adjusted EBITDA, Adjusted EBITDA Margin, Free Cash Flow and Adjusted Diluted Earnings or Loss per Share and a reconciliation of these non-GAAP financial measures to the most directly comparable financial measure that is prepared in accordance with accounting principles generally accepted in the United States of America or “GAAP.” Our Adjusted Gross Profit, Adjusted Gross Margin, Contribution Profit, Contribution Margin, Free Cash Flow and Adjusted Diluted Earnings or Loss per Share are measured on a consolidated basis, while our Adjusted EBITDA and Adjusted EBITDA Margin is measured on a consolidated and reportable segment basis.
All dollar and percentage comparisons made in our MD&A refer to the year ended December 31, 2024 financial results, compared with the year ended December 31, 2023 financial results, unless otherwise noted.
All dollar and percentage comparisons made in our MD&A refer to the year ended December 31, 2025 financial results, compared with the year ended December 31, 2024 financial results, unless otherwise noted.
Whether any of the Non-Accreting Notes will be convertible in future quarters will depend on the satisfaction of the applicable last reported sales price condition or another conversion condition in the future.
Whether any of the Convertible Notes will be convertible in future quarters will depend on the satisfaction of the applicable last reported sales price condition or another conversion condition in the future.
We will continue to monitor our liquidity during this time of historic disruption and volatility in the global capital markets. Credit Agreement and Debt Arrangements As of December 31, 2024, we had $3.2 billion principal amount of indebtedness outstanding.
We will continue to monitor our liquidity during this time of historic disruption and volatility in the global capital markets. Credit Agreement and Debt Arrangements As of December 31, 2025, we had $3.3 billion principal amount of indebtedness outstanding.
In addition, macroeconomic events have caused disruption in the capital markets, including increased inflation and interest rates, which could make obtaining financing more difficult and/or expensive. As a consequence, we may not be able to secure additional financing to meet our operating requirements on acceptable terms, or at all.
In addition, macroeconomic events have caused disruption in the capital markets, including increased inflation and interest rates, which could make obtaining financing more difficult and/or expensive. As a consequence, we may not be able to secure additional financing to meet our operating requirements or strategic goals on acceptable terms, in a timely manner, or at all.
Non-GAAP Financial Measures To provide investors with additional information regarding our financial results, we have disclosed in this Annual Report on Form 10-K the following non-GAAP financial measures: Adjusted EBITDA, Free Cash Flow, Adjusted Diluted Earnings or Loss per Share and Net Revenue Constant Currency Growth.
Non-GAAP Financial Measures To provide investors with additional information regarding our financial results, we have disclosed in this Annual Report on Form 10-K the following non-GAAP financial measures: Adjusted Gross Profit, Adjusted Gross Margin, Contribution Profit, Contribution Margin, Adjusted EBITDA, Adjusted EBITDA Margin, Free Cash Flow, Adjusted Diluted Earnings or Loss per Share and Net Revenue Constant Currency Growth.
Refer to Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations , in our Annual Report on Form 10-K for the year ended December 31, 2023 for a comparative discussion of our year ended December 31, 2023 financial results as compared to our year ended December 31, 2022 financial results filed with the SEC on February 22, 2024.
Refer to Part II, Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations , in our Annual Report on Form 10-K for the year ended December 31, 2024 for a comparative discussion of our year ended December 31, 2024 financial results as compared to our year ended December 31, 2023 financial results filed with the SEC on February 20, 2025.
We recognize net revenue when an order is delivered, and therefore orders delivered, together with average order value, is an indicator of the net revenue we expect to recognize in a given period. We view orders delivered as a key indicator of our growth.
We recognize net revenue when an order is delivered, and therefore orders delivered, together with average order value, is an indicator of the net revenue we expect to recognize for the period. We view orders delivered as a key indicator of our growth.
Refer to Note 6, Debt and Other Financing , in the notes to the consolidated financial statements, included in Part II, Item 8, Financial Statements and Supplementary Data , in this Annual Report on Form 10-K for additional information.
Refer to Note 6, Debt and Other Financing , included in Part II, Item 8, Financial Statements and Supplementary Data , in this Annual Report on Form 10-K for additional information.
Refer to Note 11, Income Taxes ,in the notes to the consolidated financial statements, included in Part II, Item 8, Financial Statements and Supplementary Data, in this Annual Report on Form 10-K for additional information.
Refer to Note 11, Income Taxes , included in Part II, Item 8, Financial Statements and Supplementary Data, in this Annual Report on Form 10-K for additional information.
For example, Adjusted Diluted Earnings or Loss per Share, by their nature, excludes equity-based compensation and related taxes, provision or benefit for income taxes, net, non-recurring items, other items not indicative of our ongoing operating performance, and, if dilutive, interest expense associated with convertible debt instruments under the if-converted method.
For example, Adjusted Diluted Earnings or Loss per Share, by their nature, excludes equity-based compensation and related taxes; provision or benefit for income taxes, net; non-recurring items; other items that we believe are not indicative of our core operating performance; and, if dilutive, interest expense associated with convertible debt instruments under the if-converted method.
Purchases of property and equipment and site and software development costs (collectively, “Capital Expenditures”) were 2.0% of net revenue for the year ended December 31, 2024 and related primarily to equipment purchases and improvements for leased warehouses within our expanding logistics network and ongoing investments, including our physical retail store expansion, proprietary technology and operational platform.
Purchases of property and equipment and site and software development costs (collectively, “Capital Expenditures”) were 1.6% of net revenue for the year ended December 31, 2025 and related primarily to equipment purchases and improvements for leased warehouses within our expanding logistics network and ongoing investments, including our physical retail store expansion, proprietary technology and operational platform.
Some of these limitations are: • Although depreciation and amortization are non-cash charges, the assets being depreciated and amortized may have to be replaced in the future, and Adjusted EBITDA does not reflect cash capital expenditure requirements for such replacements or for new capital expenditure requirements; • Adjusted EBITDA does not reflect equity-based compensation and related taxes; • Adjusted EBITDA does not reflect changes in our working capital; • Adjusted EBITDA does not reflect income tax payments that may represent a reduction in cash available to us; • Adjusted EBITDA does not reflect interest expenses associated with our borrowings; • Adjusted EBITDA does not include other items not indicative of our ongoing operating performance; and • Other companies, including companies in our industry, may calculate Adjusted EBITDA differently, which reduces its usefulness as a comparative measure.
Some of these limitations are: • Although depreciation and amortization are non-cash charges, the assets being depreciated and amortized may have to be replaced in the future, and Adjusted EBITDA does not reflect cash capital expenditure requirements for such replacements or for new capital expenditure requirements; • Adjusted EBITDA does not reflect equity-based compensation and related taxes; • Adjusted EBITDA does not reflect changes in our working capital; • Adjusted EBITDA does not reflect income tax payments that may represent a reduction in cash available to us; • Adjusted EBITDA does not reflect interest expenses associated with our borrowings; • Adjusted EBITDA excludes other items that we believe are not indicative of our core operating performance; • We may in the future modify how we calculate Adjusted EBITDA; and 53 Table of Contents • Other companies, including companies in our industry, may calculate Adjusted EBITDA differently, which reduces its usefulness as a comparative measure.
Factors Affecting our Performance We believe that our performance and future success depend on a number of factors that present significant opportunities for us but also pose risks and challenges, including those discussed in Part I, Item 1A, Risk Factors, in this Annual Report on Form 10-K for the year ended December 31, 2024.
Factors Affecting our Performance We believe that our performance and future success depend on a number of factors that present significant opportunities for us but also pose risks and challenges, including those discussed in Part I, Item 1A, Risk Factors, in this Annual Report on Form 10-K.
During the year ended December 31, 2024, we incurred $79 million of charges consisting primarily of one-time employee severance and benefit costs associated with the January 2024 workforce reductions. During the year ended December 31, 2023, we incurred $65 million of charges consisting primarily of one-time employee severance and benefit costs associated with the January 2023 workforce reductions.
During the year ended December 31, 2023, Wayfair incurred $65 million of charges consisting primarily of one-time employee severance and benefit costs associated with the January 2023 workforce reductions.
The indenture contains covenants that restrict the Issuer’s ability and the ability of its restricted subsidiaries to, among other things, incur additional indebtedness, declare or pay dividends, redeem stock or make other distributions or restricted payments, make certain investments, create certain liens, enter into certain transactions with affiliates, 46 Table of Contents agree to certain restrictions on the ability of the Issuer’s restricted subsidiaries to make certain payments, sell or transfer certain assets and consolidate, merge, sell or otherwise dispose of all or substantially all of the Issuer’s or its restricted subsidiaries’ assets.
Both indentures contain covenants that restrict the Issuer’s ability and the ability of its restricted subsidiaries to, among other things, incur additional indebtedness, declare or pay dividends, redeem stock or make other distributions or restricted payments, make certain investments, create certain liens, enter into certain transactions with affiliates, agree to certain restrictions on the ability of the Issuer’s restricted subsidiaries to make certain payments, sell or transfer certain assets and consolidate, merge, sell or otherwise dispose of all or substantially all of the Issuer’s or its restricted subsidiaries’ assets.
Key Financial Statement and Operating Metrics We measure our business using the key financial statement and operating metrics that are reflected in the below table.
Key Financial Statement and Operating Metrics We measure our business using the key financial statement, operating metrics and non-GAAP financial measures that are reflected in the below table.
While it is difficult to quantify and predict all of the impacts these global economic events, including fluctuating interest rates and inflationary pressures, will have on our business and to predict consumer spending in the near term, we believe the long-term opportunity that we see for shopping for the home online remains unchanged.
While it is difficult to quantify and predict the impacts on our business of these global and domestic economic events, including fluctuating interest rates, inflationary pressures and changes in global trade policy, and to predict consumer spending in the near term, we believe the long-term opportunity we see for shopping for the home online remains unchanged.
(3) Orders delivered represent the total orders delivered in any period, inclusive of orders that may eventually be returned. As we ship a large volume of packages through multiple carriers, actual delivery dates may not always be available, and as such we estimate delivery dates based on historical data.
(3) Orders delivered represent the total orders delivered in any period, inclusive of orders that may eventually be returned. As we ship a large volume of packages through multiple carriers, actual delivery dates may not always be available; in those cases, we estimate delivery dates using historical data.
Year Ended December 31, 2024 2023 % Change (in millions) Cost of goods sold $ 8,277 $ 8,336 (0.7) % As a percentage of net revenue 69.8 % 69.4 % 42 Table of Contents Operating expenses Operating expenses are comprised of customer service and merchant fees, advertising, selling, operations, technology, general and administrative expenses, impairment and other related net charges and restructuring charges.
Year Ended December 31, 2025 2024 % Change (in millions) Cost of goods sold $ 8,692 $ 8,277 5.0 % As a percentage of net revenue 69.8 % 69.8 % 44 Table of Contents Operating expenses Operating expenses are comprised of customer service and merchant fees, advertising, selling, operations, technology, general and administrative expenses, impairment and other related net charges and restructuring and other charges, net.
The following table summarizes operating expenses as a percentage of net revenue, excluding equity-based compensation and related taxes: Year Ended December 31, 2024 2023 Customer service and merchant fees 3.8 % 4.4 % Selling, operations, technology, general and administrative 13.5 % 15.5 % Customer Service and Merchant Fees During the year ended December 31, 2024, excluding the impact of equity-based compensation, our expenses for customer service and merchant fees decreased by $77 million, or 14.6%, compared to the same period in 2023.
The following table summarizes operating expenses as a percentage of net revenue, excluding equity-based compensation and related taxes: Year Ended December 31, 2025 2024 Customer service and merchant fees 3.7 % 3.8 % Selling, operations, technology, general and administrative 11.7 % 13.5 % Customer Service and Merchant Fees During the year ended December 31, 2025, excluding the impact of equity-based compensation and related taxes, our expenses for customer service and merchant fees increased by $6 million, or 1% compared to the same period in 2024.
As a percentage of net revenue, advertising expense s increased to 12.4% for the year ended December 31, 2024 compared to 11.6% in the same period in 2023 due to changes in our advertising channel mix as we seek to maximize returns on advertising spend within our efficiency parameters.
As a percentage of net revenue, advertising expenses decreased to 11.4% for the year ended December 31, 2025 compared to 12.4% in the same period in 2024 due to changes in our advertising channel mix as we seek to maximize returns on advertising spend within our efficiency parameters.
Year Ended December 31, 2024 2023 % Change (in millions) Provision for income taxes, net $ 10 $ 9 11.1 % 45 Table of Contents Liquidity and Capital Resources Sources of Liquidity As of December 31, 2024, our principal source of liquidity was cash and cash equivalents and short-term investments totaling $1.4 billion .
Year Ended December 31, 2025 2024 % Change (in millions) Provision for income taxes, net $ 9 $ 10 (10.0) % 47 Table of Contents Liquidity and Capital Resources Sources of Liquidity As of December 31, 2025, our principal source of liquidity was cash and cash equivalents and short-term investments totaling $1.5 billion.
The following discussion contains forward-looking statements that are subject to risks and uncertainties. Actual results may differ from those referred to herein due to a number of factors, including but not limited to risks described in Part I, Item 1A, Risk Factors in this Annual Report on Form 10-K. Overview Wayfair is the destination for all things home.
Actual results may differ from those referred to herein due to a number of factors, including but not limited to risks described in Part I, Item 1A, Risk Factors in this Annual Report on Form 10-K. Overview Wayfair is the destination for all things home.
Through our e-commerce business model, we offer visually inspired browsing, compelling merchandising, easy product discovery and attractive prices for over 30 million products from over 20 thousand suppliers. We believe an increasing portion of the dollars spent on home goods will be spent online and that there is an opportunity for acquiring more market share.
Through our omni-channel strategy, we offer visually inspired browsing, compelling merchandising, easy product discovery and attractive prices for over 40 million products from approximately 20 thousand suppliers. We believe an increasing portion of the dollars spent on home goods will be spent online and that there is an opportunity to acquire more market share.
Additionally, we have a $600 million senior secured revolving credit facility that matures on March 24, 2026 (the “Revolver”). As of December 31, 2024, there were no revolving loans outstanding under the Revolver.
Additionally, we have a $500 million senior secured revolving credit facility that matures on March 13, 2030 (the “Revolver”). As of December 31, 2025, there were no revolving loans outstanding under the Revolver.
Cash flows provided by operating activities decreased by $32 million during the year ended December 31, 2024, compared to the same period in 2023, primarily due to a decrease of $135 million for cash changes in operating assets and liabilities partially offset by an increase in net loss adjusted for non-cash items of $103 million.
Cash flows provided by operating activities increased by $217 million during the year ended December 31, 2025, compared to the same period in 2024, primarily due to an increase in net loss adjusted for non-cash items of $277 million, partially offset by an decrease of $60 million for cash changes in operating assets and liabilities.
Year Ended December 31, 2024 2023 % Change (in millions) Gain on debt extinguishment $ 29 $ 100 (71.0) % Provision for income taxes, net During the year ended December 31, 2024, our provision for income taxes, net increased by $1 million, or 11.1%, compared to the same period in 2023, primarily related to the level and mix of income earned in the U.S. and certain foreign jurisdictions and U.S. state income taxes.
Year Ended December 31, 2025 2024 % Change (in millions) (Loss) Gain on debt extinguishment, net $ (233) $ 29 NM NM - Not Meaningful Provision for income taxes, net During the year ended December 31, 2025, our provision for income taxes, net decreased by $1 million, or 10.0% compared to the same period in 2024, primarily related to the level and mix of income earned in the U.S. and certain foreign jurisdictions and U.S. state income taxes.
Excluding liquidity available through our Revolver, the following table shows sources of liquidity for the periods presented: December 31, 2024 2023 (in millions) Cash and cash equivalents $ 1,316 $ 1,322 Short-term investments 56 29 Total liquidity $ 1,372 $ 1,351 We believe that our existing cash and cash equivalents and investments, cash generated from operations and the borrowing availability under our Revolver will be sufficient to meet our anticipated cash needs for at least the foreseeable future including planned capital expenditures, contractual obligations and other such requirements.
Excluding liquidity available through our Revolver, the following table shows sources of liquidity for the periods presented: December 31, December 31, 2025 2024 (in millions) Cash and cash equivalents $ 1,476 $ 1,316 Short-term investments 66 56 Total liquidity $ 1,542 $ 1,372 We believe that our existing cash and cash equivalents and investments, cash generated from operations and the borrowing availability under our Revolver will be sufficient to meet our anticipated cash needs for at least the next twelve months from the date of the filing of this report including planned capital expenditures, contractual obligations and other requirements.
The conditional conversion features of the 2025 Notes, 2026 Notes, 2027 Notes and 2028 Notes were not triggered during the calendar quarter ended December 31, 2024, therefore, the 2025 Notes, 2026 Notes, 2027 Notes and 2028 Notes are not convertible during the calendar quarter ended March 31, 2025 pursuant to the applicable last reported sales price conditions.
The conditional conversion features of the 2026 Notes were not triggered during the calendar quarter ended December 31, 2025, therefore, the 2026 Notes are not convertible during the calendar quarter ended March 31, 2026 pursuant to the applicable last reported sales price conditions. During the twelve months ended December 31, 2025, there were no conversions of the Convertible Notes.
All other key financial statement and operating metrics are derived and reported from our consolidated net revenue. 40 Table of Contents We use the following metrics to assess the near and longer-term performance of our overall business: Year Ended December 31, 2024 2023 2022 (in millions, except LTM net revenue per active customer, average order value and per share data) Key Financial Statement Metrics: Net revenue $ 11,851 $ 12,003 $ 12,218 Gross profit $ 3,574 $ 3,667 $ 3,416 Loss from operations $ (461) $ (813) $ (1,384) Net loss $ (492) $ (738) $ (1,331) Loss per share: Basic $ (4.01) $ (6.47) $ (12.54) Diluted $ (4.01) $ (6.47) $ (12.54) Net cash provided by (used in) operating activities $ 317 $ 349 $ (674) Key Operating Metrics: Active customers (1) 21 22 22 LTM net revenue per active customer (2) $ 555 $ 537 $ 553 Orders delivered (3) 40 41 40 Average order value (4) $ 300 $ 292 $ 305 Non-GAAP Financial Measures: Adjusted EBITDA $ 453 $ 306 $ (416) Free Cash Flow $ 83 $ (2) $ (1,132) Adjusted Diluted Earnings (Loss) per Share $ 0.13 $ (1.13) $ (7.71) (1) The number of active customers represents the total number of individual customers who have purchased at least once directly from our sites during the preceding twelve-month period.
All other key financial statement and operating metrics are derived and reported from our consolidated net revenue. 42 Table of Contents We use the following metrics to assess the performance of our overall business: Year Ended December 31, 2025 2024 2023 (in millions, except LTM net revenue per active customer, average order value and per share data) Key Financial Statement Metrics: Net revenue $ 12,457 $ 11,851 $ 12,003 Gross profit $ 3,765 $ 3,574 $ 3,667 Income (loss) from operations $ 17 $ (461) $ (813) Net loss $ (313) $ (492) $ (738) Loss per share Basic $ (2.44) $ (4.01) $ (6.47) Diluted $ (2.44) $ (4.01) $ (6.47) Net cash provided by operating activities $ 534 $ 317 $ 349 Key Operating Metrics: Active customers (1) 21 21 22 LTM net revenue per active customer (2) $ 586 $ 555 $ 537 Orders delivered (3) 40 40 41 Average order value (4) $ 312 $ 300 $ 292 Non-GAAP Financial Measures: Adjusted Gross Profit $ 3,774 $ 3,584 $ 3,677 Contribution Profit $ 1,892 $ 1,661 $ 1,752 Adjusted EBITDA $ 743 $ 453 $ 306 Free Cash Flow $ 329 $ 83 $ (2) Adjusted Diluted Earnings (Loss) per Share $ 2.60 $ 0.13 $ (1.13) (1) The number of active customers represents the total number of individual customers who have purchased at least once directly from our sites during the preceding twelve-month period.
(3) During the year ended December 31, 2024, we recorded a $29 million gain on debt extinguishment upon repurchase of $518 million in aggregate principal amount of the 2025 Notes, $215 million in aggregate principal amount of the 2026 Notes and the remaining $39 million in aggregate principal amount of the 2025 Accreting Notes.
During the year ended December 31, 2024, Wayfair recorded a $29 million gain on debt extinguishment upon repurchase of $518 million in aggregate principal amount of the 2025 Notes, $215 million in aggregate principal amount of the 2026 Notes and the remaining $39 million in aggregate principal amount of the 2.5% Accreting Convertible Senior Notes due 2025 Accreting Notes (the “2025 Accreting Notes”).
Year Ended December 31, 2024 2023 % Change (in millions) U.S. net revenue $ 10,373 $ 10,482 (1.0) % International net revenue 1,478 1,521 (2.8) % Net revenue $ 11,851 $ 12,003 (1.3) % For more information on our segments, see Note 13, Segment and Geographic Information , in the notes to the consolidated financial statements, included in Part II, Item 8, Financial Statements and Supplementary Data , in this Annual Report on Form 10-K.
Year Ended December 31, 2025 2024 % Change (in millions) U.S. net revenue $ 10,973 $ 10,373 5.8 % International net revenue 1,484 1,478 0.4 % Net revenue $ 12,457 $ 11,851 5.1 % For more information on our segments, see Note 13, Segment and Geographic Information , included in Part II, Item 8, Financial Statements and Supplementary Data , in this Annual Report on Form 10-K.
We had outstanding letters of credit, primarily as security for certain lease agreements, fo r $71 million a s of December 31, 2024, which reduced the availability of credit under the Revolver.
We had outstanding letters of credit, primarily as security for certain lease agreements, for $94 million as of December 31, 2025, which reduced the availability of credit under the Revolver.
We view average order value as a key indicator of the mix of products on our sites, the mix of offers and promotions and the purchasing behavior of our customers. 41 Table of Contents Results of Consolidated Operations Net revenue During the year ended December 31, 2024, net revenue decreased by $152 million , or 1.3%, compared to the same period in 2023, which reflects continued macroeconomic pressures felt by consumers.
We view average order value as a key indicator of the mix of products on our sites, the mix of offers and promotions and the purchasing behavior of our customers. 43 Table of Contents Results of Consolidated Operations Net revenue During the year ended December 31, 2025, net revenue increased by $606 million, or 5.1%, compared to the same period in 2024, which reflects our ongoing execution of business initiatives amid persistent macroeconomic pressures on consumers.
Investing Activities Cash flows used in investing activities increased by $110 million during the year ended December 31, 2024, compared to the same period in 2023, primarily due to decreases in sales and maturities of short- and long-term investments of $194 million, increases in purchases of short- and long-term investments of $31 million and decreases of other investing activities of $2 million, partially offset by decreases in purchases of property and equipment and site and software development costs of $117 million.
Investing Activities Cash flows used in investing activities decreased by $43 million during the year ended December 31, 2025, compared to the same period in 2024, due to increases in sales and maturities of short- and long-term investments of $62 million and decreases in purchases of property and equipment and site and software development costs of $29 million, partially offset by an increase in purchases of short- and long-term investments of $48 million.
We have provided a reconciliation below of Adjusted EBITDA to net income or loss, the most directly comparable GAAP financial measure. We disclose Adjusted EBITDA because it is a key measure used by our management and the Board to evaluate our operating performance, generate future operating plans and make strategic decisions regarding the allocation of capital.
We disclose Adjusted EBITDA because it is a key measure used by our management and the Board to evaluate our operating performance, generate future operating plans and make strategic decisions regarding the allocation of capital.
Recent Accounting Pronouncements For information about recent accounting pronouncements, see Note 1, Summary of Significant Accounting Policies , in the notes to the consolidated financial statements included in Part II, Item 8, Financial Statements and Supplementary Data , in this Annual Report on Form 10-K.
The IBR is determined at lease commencement and is subsequently reassessed upon a modification to the lease arrangement. Recent Accounting Pronouncements For information about recent accounting pronouncements, see Note 1, Summary of Significant Accounting Policies , included in Part II, Item 8, Financial Statements and Supplementary Data , in this Annual Report on Form 10-K.
Impairment and other related net charges During the year ended December 31, 2024, impairment and other related charge s increased by $23 million, or 164.3% compared to the same period in 2023. As a percentage of net revenue, impairment and other related net charge s increased to 0.3% from 0.1% in the same period in 2023.
Impairment and other related net charges During the year ended December 31, 2025, impairment and other related charges decreased by $14 million compared to the same period in 2024. As a percentage of net revenue, impairment and other related net charges decreased to 0.2% from 0.3% in the same period in 2024.
Accordingly, you should not consider Free Cash Flow in isolation or as a substitute for analysis of our results as reported under GAAP. Because of these limitations, you should consider Free Cash Flow 51 Table of Contents alongside other financial performance measures, including net cash provided by or used in operating activities, Capital Expenditures, and our other GAAP results.
Because of these limitations, you should consider Free Cash Flow alongside other financial performance measures, including net cash provided by or used in operating activities, capital expenditures, and our other GAAP results.
The Repurchase Programs do not obligate us to purchase any shares of our Class A common stock and have no expiration but may be suspended or terminated by the Board at any time.
We will begin repurchasing shares under the 2021 Repurchase Program upon the completion of the 2020 Repurchase Program. 49 Table of Contents The Repurchase Programs do not obligate us to purchase any shares of our Class A common stock and have no expiration date, but may be suspended or terminated by the Board at any time.
Year Ended December 31, 2024 2023 % Change (in millions) Customer service and merchant fees (1) $ 470 $ 557 (15.6) % Advertising 1,472 1,397 5.4 % Selling, operations, technology, general and administrative (1) 1,977 2,447 (19.2) % Impairment and other related net charges 37 14 164.3 % Restructuring charges 79 65 21.5 % Total operating expenses $ 4,035 $ 4,480 (9.9) % As a percentage of net revenue: Customer service and merchant fees (1) 4.0 % 4.6 % Advertising 12.4 % 11.6 % Selling, operations, technology, general and administrative (1) 16.7 % 20.4 % Impairment and other related net charges 0.3 % 0.1 % Restructuring charges 0.7 % 0.5 % 34.1 % 37.2 % (1) Includes equity-based compensation and related taxes as follows: Year Ended December 31, 2024 2023 (in millions) Customer service and merchant fees $ 19 $ 29 Selling, operations, technology, general and administrative $ 382 $ 584 During the year ended December 31, 2024, our equity-based compensation and related taxes included in customer service and merchant fees and selling, operations, technology, general and administrative decreased by $212 million, or 34.6%, compared to the same period in 2023, driven by a decrease in vested restricted stock units during the year ended December 31, 2024, compared to the same period in 2023.
Year Ended December 31, 2025 2024 % Change (in millions, except percentages) Customer service and merchant fees (1) $ 471 $ 470 0.2 % Advertising 1,425 1,472 (3.2) % Selling, operations, technology, general and administrative (1) 1,776 1,977 (10.2) % Impairment and other related net charges 23 37 (37.8) % Restructuring and other charges, net 53 79 (32.9) % Total operating expenses $ 3,748 $ 4,035 (7.1) % As a percentage of net revenue: Customer service and merchant fees (1) 3.8 % 4.0 % Advertising 11.4 % 12.4 % Selling, operations, technology, general and administrative (1) 14.3 % 16.7 % Impairment and other related net charges 0.2 % 0.3 % Restructuring and other charges, net 0.4 % 0.7 % 30.1 % 34.1 % (1) Includes equity-based compensation and related taxes as follows: Year Ended December 31, 2025 2024 (in millions) Customer service and merchant fees $ 14 $ 19 Selling, operations, technology, general and administrative $ 322 $ 382 During the year ended December 31, 2025, our equity-based compensation and related taxes included in customer service and merchant fees and selling, operations, technology, general and administrative decreased by $65 million, or 16.2%, compared to the same period in 2024, driven by workforce restructuring.
See Note 6, Debt and Other Financing , in the notes to the consolidated financial statements, included in Part II, Item 8, Financial Statements and Supplementary Data , in this Annual Report on Form 10-K for additional information on debt and other financing transactions.
On November 12, 2025, we repurchased $210 million in aggregate principal amount of the 2027 Notes. See Note 6, Debt and Other Financing , included in Part II, Item 8, Financial Statements and Supplementary Data , in this Annual Report on Form 10-K for additional information on debt and other financing transactions.
Accordingly, we believe that these adjustments to our adjusted diluted net income or loss before calculating per share amounts for all periods presented provide a more meaningful comparison between our operating results from period to period.
Accordingly, we believe that these adjustments to our diluted earnings or loss per share provide a more meaningful comparison between our operating results from period to period.
If we determine that actual or expected returns or 53 Table of Contents allowances are significantly higher or lower than the reserves established, we record a reduction or increase, as appropriate to net revenue in the period in which we make such a determination.
If we determine that actual or expected returns or allowances are significantly higher or lower than the reserves established, we record a reduction or increase, as appropriate to net revenue in the period in which we make such a determination. The sales return allowance decreased by $4 million, resulting in a balance of $45 million as of December 31, 2025.
Year Ended December 31, 2024 2023 % Change (in millions) Other (expense) income, net $ (21) $ 1 (2,200.0) % Gain on debt extinguishment During the year ended December 31, 2024, gain on debt extinguishment decreased by $71 million, or 71.0%, compared to the same period in 2023.
Year Ended December 31, 2025 2024 % Change (in millions) Other income (expense), net $ 31 $ (21) NM NM - Not Meaningful (Loss) gain on debt extinguishment, net During the year ended December 31, 2025, (loss) gain on debt extinguishment, net decreased by $262 million compared to the same period in 2024.
Net Revenue Constant Currency Growth has limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of our results as reported under GAAP. For example, Net Revenue Constant Currency Growth rates, by their nature, exclude the impact of foreign exchange, which may have a material impact on net revenue.
Net Revenue Constant Currency Growth has limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of our results as reported under GAAP.
For information regarding our credit agreement and other notes, see Note 6, Debt and Other Financing , in the notes to the consolidated financial statements, included in Part II, Item 8, Financial Statements and Supplementary Data , in this Annual Report on Form 10-K.
For information regarding our credit agreement and debt agreements, see Note 6, Debt and Other Financing , included in Part II, Item 8, Financial Statements and Supplementary Data , in this Annual Report on Form 10-K. As of December 31, 2025, we were in compliance with all the terms and conditions of our debt agreements.
We do not have any off-balance sheet interest in variable interest entities, which include special purpose entities and other structured finance entities. 48 Table of Contents Contractual Obligations The following table summarizes our contractual obligations as of December 31, 2024: Payment Due by Period Total Less than 1 year 1 - 3 Years 3 - 5 Years More than 5 Years (in millions) Short-term and long-term debt (1) $ 3,622 $ 349 $ 1,640 $ 1,633 $ — Operating leases (2) $ 1,437 $ 224 $ 466 $ 291 $ 456 Purchase obligations (3) $ 311 $ 249 $ 57 $ 5 $ — Other commitments (4) $ 16 $ — $ 3 $ 4 $ 9 (1) Represents future interest and principal payments on the Notes.
We do not have any off-balance sheet interest in variable interest entities, which include special purpose entities and other structured finance entities. 50 Table of Contents Contractual Obligations The following table summarizes our contractual obligations as of December 31, 2025: Payment Due by Period Total Less than 1 year 1 - 3 Years 3 - 5 Years More than 5 Years (in millions) Short-term and long-term debt (1) $ 4,239 $ 236 $ 1,445 $ 1,763 $ 795 Operating leases (2) $ 1,391 $ 226 $ 431 $ 257 $ 477 Purchase obligations (3) $ 649 $ 243 $ 406 $ — $ — Other commitments (4) $ 45 $ — $ 4 $ 5 $ 36 (1) Represents future interest and principal payments on the Notes.
We aim to turn these customers into recurring shoppers by creating a seamless shopping experience across their entire journey — offering best-in-class product discovery, purchasing, fulfillment and customer service. During the year ended December 31, 2024, net revenue decreased by 1.3% compared to the same period in 2023.
We aim to turn these customers into recurring shoppers by creating a seamless shopping experience across their entire journey — offering best-in-class product discovery, purchasing, fulfillment and customer service.
Selling, operations, technology, general and administrative During the year ended December 31, 2024, excluding the impact of equity-based compensation and related taxes, our expenses for selling, operations, technology, general and administrative activiti es decreased by $268 million, or 14.4% co mpared to the same period in 2023. The decrease is primarily due to decreased compensation costs.
Selling, operations, technology, general and administrative During the year ended December 31, 2025, excluding the impact of equity-based compensation and related taxes, our expenses for selling, operations, technology, general and administrative activities decreased by $141 million, or 8.8% c o mpared to the same period in 2024.
As of December 31, 2024, we have repurchased 2,354,491 shares of Class A common stock for approximately $612 million under the Repurchase Programs. 47 Table of Contents Trends and Historical Cash Flows Year Ended December 31, 2024 2023 2022 (in millions) Net loss $ (492) $ (738) $ (1,331) Net cash provided by (used in) operating activities $ 317 $ 349 $ (674) Net cash (used in) provided by investing activities $ (262) $ (152) $ 1 Net cash (used in) provided by financing activities $ (69) $ 77 $ 16 Operating Activities Cash flows in connection with operating activities consisted of net loss adjusted for certain non-cash items including depreciation and amortization, equity-based compensation and certain other non-cash expenses, as well as the effect of changes in working capital and other activities.
Trends and Historical Cash Flows Year Ended December 31, 2025 2024 2023 (in millions) Net loss $ (313) $ (492) $ (738) Net cash provided by operating activities $ 534 $ 317 $ 349 Net cash used in investing activities $ (219) $ (262) $ (152) Net cash (used in) provided by financing activities $ (129) $ (69) $ 77 Operating Activities Cash flows in connection with operating activities consisted of net loss adjusted for certain non-cash items including depreciation and amortization, equity-based compensation and certain other non-cash expenses, as well as the effect of changes in working capital and other activities.
As a percentage of net revenue, cost of goods sold increased to 69.8% for the year ended December 31, 2024, compared to 69.4% in the same period in 2023 due to mix shifts and lower net revenue.
As a percentage of net revenue, cost of goods sold remained relatively constant at 69.8% for the year ended December 31, 2025, compared to the same period in 2024.
During the year ended December 31, 2024, our U.S. net revenue decreased by 1.0% and International net revenue decreased by 2.8% compared to the same period in 2023. During the year ended December 31, 2024, International Net Revenue Constant Currency Growth was (2.7)% (see “Non-GAAP Financial Measures” below for more information regarding our use of Net Revenue Constant Currency Growth).
During the year ended December 31, 2025, International Net Revenue Constant Currency Growth was 0.2% (see “Non-GAAP Financial Measures” below for more information regarding our use of Net Revenue Constant Currency Growth).
Because of these limitations, you should consider Adjusted Diluted Earnings or Loss per Share alongside other financial performance measures. 52 Table of Contents A reconciliation of the numerator and denominator for diluted earnings or loss per share, the most directly comparable GAAP financial measure, to the numerator and denominator for Adjusted Diluted Earnings or Loss per Share in order to calculate Adjusted Diluted Earnings or Loss per Share, is as follows: Year Ended December 31, 2024 2023 2022 (in millions, except per share data) Numerator: Numerator for basic and diluted loss per share - net loss $ (492) $ (738) $ (1,331) Adjustments to net loss Equity-based compensation and related taxes 411 623 527 Provision for income taxes, net 10 9 12 Other: Impairment and other related net charges 37 14 39 Restructuring charges 79 65 31 Gain on debt extinguishment (29) (100) (96) Numerator for Adjusted Diluted Earnings (Loss) per Share - Adjusted net income (loss) $ 16 $ (127) $ (818) Denominator: Denominator for basic and diluted loss per share - weighted-average number of shares of common stock outstanding 123 114 106 Adjustments to effect of dilutive securities: Restricted stock units 1 — — Denominator for Adjusted Diluted Earnings (Loss) per Share - Adjusted weighted-average number of shares of common stock outstanding after the effect of dilutive securities 124 114 106 Diluted Loss per Share $ (4.01) $ (6.47) $ (12.54) Adjusted Diluted Earnings (Loss) per Share $ 0.13 $ (1.13) $ (7.71) Critical Accounting Policies and Estimates Our financial statements are prepared in accordance with accounting principles generally accepted in the U.S.
Because of these limitations, you should consider Adjusted Diluted Earnings or Loss per Share alongside other financial performance measures, including diluted earnings or loss per share and our other GAAP results. 55 Table of Contents A reconciliation of the numerator and denominator for diluted earnings or loss per share, the most directly comparable GAAP financial measure, to the numerator and denominator for Adjusted Diluted Earnings or Loss per Share in order to calculate Adjusted Diluted Earnings or Loss per Share, is as follows: Year Ended December 31, 2025 2024 2023 (in millions, except per share data) Numerator: Numerator for basic and diluted loss per share - net loss $ (313) $ (492) $ (738) Adjustments to net loss Interest expense associated with convertible debt instruments 50 — — Equity-based compensation and related taxes 345 411 623 Provision for income taxes, net 9 10 9 Other: Impairment and other related net charges 23 37 14 Restructuring and other charges, net 53 79 65 Loss (gain) on debt extinguishment 233 (29) (100) Numerator for Adjusted Diluted Earnings (Loss) per Share - Adjusted net income (loss) $ 400 $ 16 $ (127) Denominator: Denominator for basic and diluted loss per share - weighted-average number of shares of common stock outstanding 128 123 114 Adjustments to effect of dilutive securities: Restricted stock units — 1 — Convertible debt instruments 26 — — Denominator for Adjusted Diluted Earnings (Loss) per Share - Adjusted weighted-average number of shares of common stock outstanding after the effect of dilutive securities 154 124 114 Diluted Loss per Share $ (2.44) $ (4.01) $ (6.47) Adjusted Diluted Earnings (Loss) per Share $ 2.60 $ 0.13 $ (1.13) Net Revenue Constant Currency Growth We calculate Net Revenue Constant Currency Growth by translating the current period local currency net revenue by the currency exchange rates used to translate our financial statements in the comparable prior-year period.
As a percentage of net revenue, total selling, operations, technology, general and administrative expens es decreased to 16.7% f or the year ended December 31, 2024, compared to 20.4% in the same period in 2023, primarily due to decreased compensation costs.
As a percentage of net revenue, total selling, operations, technology, general and administrative expenses decreased to 14.3% for the year ended December 31, 2025, compared to 16.7% in the same period in 2024, primarily due to decreased compensation costs and amortization expense driven by workforce reductions.
Investors should, however, understand that equity-based compensation and related taxes will be a significant recurring expense in our business and an important part of the compensation provided to our employees.
Investors should, however, understand that equity-based compensation and related taxes will be a significant recurring expense in our business and an important part of the compensation provided to our employees. Accordingly, we believe that Adjusted EBITDA provides useful information to investors and others in understanding and evaluating our operating results in the same manner as our management and the Board.
As a percentage of net revenue, total customer service and merchant fees decreased to 4.0% for the year ended December 31, 2024, compared to 4.6% in the same period in 2023 due to decreased compensation costs. 43 Table of Contents Advertising During the year ended December 31, 2024, our advertising expenses increased by $75 million, or 5.4%, c ompared to the same period in 2023.
The increase in customer service and merchant fees is primarily due to increased net revenue, partially offset by decreased compensation costs. 45 Table of Contents As a percentage of net revenue, total customer service and merchant fees decreased to 3.8% for the year ended December 31, 2025, compared to 4.0% in the same period in 2024 primarily due to increased net revenue, partially offset by decreased compensation costs.
Free Cash Flow We calculate Free Cash Flow as net cash provided by or used in operating activities less Capital Expenditures. We have provided a reconciliation below of Free Cash Flow to net cash provided by or used in operating activities, the most directly comparable GAAP financial measure.
We have provided a reconciliation below of Free Cash Flow to net cash provided by or used in operating activities, the most directly comparable GAAP financial measure. We disclose Free Cash Flow because it is an important indicator of our business performance as it measures the amount of cash we generate.
Year Ended December 31, 2024 2023 % Change (in millions) Interest expense, net $ (29) $ (17) 70.6 % 44 Table of Contents Other (expense) income, net During the year ended December 31, 2024, other (expense) income, net increased by $22 million, or 2,200.0%, compared to the same period in 2023 , primarily driven by foreign currency rate fluctuations between the U.S.
Year Ended December 31, 2025 2024 % Change (in millions) Interest expense, net $ (119) $ (29) 310.3 % Other income (expense), net During the year ended December 31, 2025, other income (expense), net increased by $52 million com pared to the same period in 2024 , primarily driven by foreign currency rate fluctuations between the U.S.
During the year ended December 31, 2023, we recorded a $100 million gain on debt extinguishment upon repurchase of $83 million in aggregate principal amount of the 2024 Notes and $535 million in aggregate principal amount of the 2025 Notes.
(3) During the year ended December 31, 2025, we recorded a $233 million loss on debt extinguishment upon repurchase of $210 million in aggregate principal amount of the 2027 notes, $101 million in aggregate principal amount of the 2028 Notes, $80 million in aggregate principal amount of the 2025 Notes and $696 million in aggregate principal amount of the 2026 Notes.
Because of these limitations, you should consider Adjusted EBITDA alongside other financial performance measures, including various cash flow metrics, net income or loss and our other GAAP results. 50 Table of Contents The following table reflects the reconciliation of net income or loss to Adjusted EBITDA for each of the periods indicated: Year Ended December 31, 2024 2023 2022 (in millions) Reconciliation of Adjusted EBITDA: Net loss $ (492) $ (738) $ (1,331) Depreciation and amortization 387 417 371 Equity-based compensation and related taxes 411 623 527 Interest expense, net 29 17 27 Other expense (income), net 21 (1) 4 Provision for income taxes, net 10 9 12 Other: Impairment and other related net charges (1) 37 14 39 Restructuring charges (2) 79 65 31 Gain on debt extinguishment (3) (29) (100) (96) Adjusted EBITDA $ 453 $ 306 $ (416) (1) During the year ended December 31, 2024, we recorded net charges of $37 million, inclusive of $34 million associated with weakened macroeconomic conditions in connection with our German operations , $2 million related to changes in sublease market conditions and $1 million related to construction in progress assets at identified U.S. locations.
The following table reflects the reconciliation of net loss to Adjusted EBITDA for each of the periods indicated: Year Ended December 31, 2025 2024 2023 (in millions, except percentages) Reconciliation of Adjusted EBITDA: Net loss $ (313) $ (492) $ (738) Depreciation and amortization 305 387 417 Equity-based compensation and related taxes 345 411 623 Interest expense, net 119 29 17 Other (income) expense, net (31) 21 (1) Provision for income taxes, net 9 10 9 Other: Impairment and other related net charges (1) 23 37 14 Restructuring and other charges, net (2) 53 79 65 Loss (gain) on debt extinguishment (3) 233 (29) (100) Adjusted EBITDA $ 743 $ 453 $ 306 Net revenue $ 12,457 $ 11,851 $ 12,003 Net loss margin (2.5) % (4.2) % (6.1) % Adjusted EBITDA Margin 6.0 % 3.8 % 2.5 % (1) During the year ended December 31, 2025, we recorded net charges of $23 million, inclusive of $20 million associated with the Germany Restructuring and weakened macroeconomic conditions in connection with our German operations and $3 million associated with changes in sublease market conditions for a technology center in the U.S.
(2) During the year ended December 31, 2024, we incurred $79 million of charges consisting primarily of one-time employee severance and benefit costs associated with the January 2024 workforce reductions. During the year ended December 31, 2023, we incurred $65 million of charges consisting primarily of one-time employee severance and benefit costs associated with the January 2023 workforce reductions.
This is inclusive of $48 million related to the Germany Restructuring and $20 million related to the March 2025 workforce reduction. During the year ended December 31, 2024, Wayfair incurred $79 million of charges consisting primarily of one-time employee severance and benefit costs associated with the January 2024 workforce reduction.
On August 10, 2021, the Board authorized a new $1.0 billion share repurchase program on the same terms (the “2021 Repurchase Program” together with the 2020 Repurchase Program, the “Repurchase Programs”). There is no stated expiration date for the Share Repurchase Programs. We will begin repurchasing shares under the 2021 Repurchase Program upon the completion of the 2020 Repurchase Program.
On August 10, 2021, the Board authorized a new $1.0 billion share repurchase program on the same terms (the “2021 Repurchase Program” and, together with the 2020 Repurchase Program, the “Repurchase Programs”).
Accordingly, we believe that Adjusted EBITDA provides useful information to investors and others in understanding and evaluating our operating results in the same manner as our management and the Board. 49 Table of Contents Adjusted EBITDA has limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of our results as reported under GAAP.
Adjusted EBITDA has limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of our results as reported under GAAP.
Adjusted Diluted Earnings or Loss per Share We calculate Adjusted Diluted Earnings or Loss per Share as net income or loss plus equity-based compensation and related taxes, provision or benefit for income taxes, net, non-recurring items, other items not indicative of our ongoing operating performance, and, if dilutive, interest expense associated with convertible debt instruments under the if-converted method divided by the weighted-average number of shares of common stock used in the computation of diluted earnings or loss per share.
The following table presents a reconciliation of net cash provided by or used in operating activities to Free Cash Flow for each of the periods indicated: Year Ended December 31, 2025 2024 2023 (in millions) Net cash provided by operating activities $ 534 $ 317 $ 349 Purchase of property and equipment (70) (73) (148) Site and software development costs (135) (161) (203) Free Cash Flow $ 329 $ 83 $ (2) Adjusted Diluted Earnings or Loss per Share We calculate Adjusted Diluted Earnings or Loss per Share as net income or loss plus equity-based compensation and related taxes; provision or benefit for income taxes, net; non-recurring items; other items that we believe are not indicative of our core operating performance; and, if dilutive, interest expense associated with convertible debt instruments under the if-converted method; divided by the weighted-average number of shares of common stock used in the computation of diluted earnings or loss per share.
As of December 31, 2024, we had 21 million active customers and during the year ended December 31, 2024, 80.1% of orders came from repeat buyers.
As of December 31, 2025, we had 21 million active customers and during the year ended December 31, 2025, 80.3% of orders came from repeat buyers. The increased sales represents our ongoing execution of business initiatives amid persistent macroeconomic pressures on consumers.
We disclose Free Cash Flow because it is an important indicator of our business performance as it measures the amount of cash we generate. Accordingly, we believe that Free Cash Flow provides useful information to investors and others in understanding and evaluating our operating results in the same manner as our management.
Accordingly, we believe that Free Cash Flow provides useful information to investors and others in understanding and evaluating our operating results in the same manner as our management. Free Cash Flow has limitations as an analytical tool because it omits certain components of the cash flow statement and does not represent the residual cash flow available for discretionary expenditures.
During the year ended December 31, 2022, we recorded a $96 million gain on debt extinguishment upon repurchase of $375 million in aggregate principal amount of the 2024 Notes and $229 million in aggregate principal amount of the 2025 Notes.
During the year ended December 31, 2025, Wayfair recorded a $233 million loss on debt extinguishment, net upon repurchase of $80 million, $696 million, $210 million, and $101 million,in aggregate principal amount of the 2025 Notes, 2026 Notes, 2027 Notes, and 2028 Notes, respectively.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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If our costs were to be subject to more significant inflationary pressures, we may not be able to fully offset such higher costs through price increases or other cost efficiency measures. Our inability or failure to do so could harm our business, financial condition and results of operations. 54 Table of Contents
If our costs were to be subject to more significant inflationary pressures, we may not be able to fully offset such higher costs through price increases or other cost efficiency measures. Our inability or failure to do so could harm our business, financial condition and results of operations. 58 Table of Contents
Since the Notes bear interest at a fixed rate, we have no direct financial statement risk associated with changes in interest rates.
Since the Notes bear interest at fixed rates, we have no direct financial statement risk associated with changes in interest rates.
Inflation In fiscal 2024, we continued to see normalization of inflationary pressures in the supply chain. We continue to monitor the impact of inflation in order to minimize its effects through pricing strategies, productivity improvements and cost reductions.
Inflation During fiscal 2025, while inflationary pressures continued to exist across the supply chain, we effectively managed these dynamics and did not experience any material inflationary impacts. We continue to monitor the impact of inflation in order to minimize its effects through pricing strategies, productivity improvements and cost reductions.
Our 2025 Notes, which were issued in August 2020, carry a fixed interest rate of 0.625% per year, our 2026 Notes, which were issued in August 2019, carry a fixed interest rate of 1.00% per year, our 2027 Notes, which were issued in September 2022, carry a fixed interest rate of 3.250%, our 2028 Notes, which were issued in May 2023, carry a fixed interest rate of 3.500% and our 2029 Secured Notes, which were issued in November 2024, carry a fixed interest rate of 7.250% per year.
The fair value of our cash, cash equivalents and short-term investments will fluctuate with movements of interest rates, increasing in periods of declining rates of interest and declining in periods of increasing rates of interest. 57 Table of Contents Our 2025 Notes, which were issued in August 2020, carried a fixed interest rate of 0.625% per year, our 2026 Notes, which were issued in August 2019, carry a fixed interest rate of 1.00% per year, our 2027 Notes, which were issued in September 2022, carry a fixed interest rate of 3.250%, our 2028 Notes, which were issued in May 2023, carry a fixed interest rate of 3.500%, our 2029 Secured Notes, which were issued in October 2024, carry a fixed interest rate of 7.250% per year, our 2030 Secured Notes, which were issued in March 2025, carry a fixed interest rate of 7.750% per year and our 2032 Secured Notes, which were issued in November 2025, carry a fixed interest rate of 6.750% per year.
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The fair value of our cash, cash equivalents and short-term investments will fluctuate with movements of interest rates, increasing in periods of declining rates of interest and declining in periods of increasing rates of interest.

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