Executive Summary

Q3 delivered solid top-line growth and record non-pandemic profitability: revenue $3.12B (+8.1% y/y), Adjusted EBITDA $208M (6.7% margin, highest outside pandemic) and Adjusted EPS $0.70, underpinned by ad spend efficiencies and continued share gains .
Clear beats vs S&P Global consensus: revenue $3.12B vs $3.01B* and Primary EPS $0.70 vs $0.44*; GAAP EBITDA (SPGI definition) missed $116M vs $163M* due to a $99M loss on debt extinguishment (repurchases of 2025/2026/2028 notes) .
Guidance: Q4 revenue up mid-single digits y/y (≈100 bps drag from Germany exit), gross margin 30–31% (low end likely), ads 11–12% of revenue, SOTG&A $360–$370M (top end), Adjusted EBITDA margin 5.5–6.5% .
Catalysts: sustained contribution margin gains (Q3 15.8%), app-driven direct traffic growth, loyalty (Rewards), supply chain/retail initiatives (CastleGate, physical stores), and pragmatic GenAI execution highlighted on the call .

What Went Well and What Went Wrong

What Went Well
- Share capture and profitability: “more than 70% y/y growth in Adjusted EBITDA” with 6.7% Adjusted EBITDA margin, “highest…outside of the pandemic period” (CEO) .
- Advertising leverage and contribution margin: ads at 10.6% of revenue, contribution margin reached 15.8% (best since 2021), driven by mix shift to free/app traffic and holdout-testing rigor (CFO) .
- Strategic/tech execution: completion of multi-year replatforming enabling faster innovation; GenAI product discovery (Muse), improved search, catalog enrichment, service AI agents, and supplier/SEO optimizations (CTO) .
What Went Wrong
- GAAP noise from capital structure actions: $99M loss on debt extinguishment drove GAAP net loss (-$99M) despite strong non-GAAP performance .
- Active customers still down y/y (-2.3%), even as sequential improvement returned; category backdrop remains “flat to slightly down” with housing turnover depressed (CEO) .
- Q4 margin cadence: ad rate to tick up sequentially vs Q3 (11–12%) as holdout tests were one-time and holiday seasonality returns; gross margin guided to the low end of 30–31% (CFO) .

Financial Results

Table 1: Headline P&L and Margins (USD, except per-share and %). Periods ordered oldest→newest.

Metric	Q1 2025	Q2 2025	Q3 2025
Revenue ($B)	$2.73	$3.27	$3.12
GAAP Diluted EPS	$(0.89)	$0.11	$(0.76)
Adjusted Diluted EPS	$0.10	$0.87	$0.70
Gross Margin %	30.7%	30.1%	30.0%
Adjusted EBITDA ($M)	$106	$205	$208
Adjusted EBITDA Margin %	3.9%	6.3%	6.7%
Contribution Margin %	—	15.2% (CFO)	15.8% (CFO)

Table 2: Q3 2025 vs S&P Global Consensus (Wayfair’s “Primary EPS” aligns with company’s Adjusted Diluted EPS)

Metric	Consensus	Actual	Beat/Miss
Revenue ($)	$3,012,901,760*	$3,117,000,000	Beat*
Primary EPS ($)	$0.439*	$0.70	Beat*
EBITDA ($) [SPGI definition]	$163,305,820*	$116,000,000*	Miss*

Note: SPGI EBITDA is GAAP-style (approximately Operating Income + D&A). Wayfair’s reported Adjusted EBITDA ($208M) excludes items like SBC, debt extinguishment, etc. . Values with asterisk (*) retrieved from S&P Global.

Table 3: Segment Revenue ($M)

Segment	Q1 2025	Q2 2025	Q3 2025
U.S.	$2,429	$2,874	$2,728
International	$301	$399	$389
Total	$2,730	$3,273	$3,117

Table 4: KPIs and Customer Metrics

KPI	Q1 2025	Q2 2025	Q3 2025
Active Customers (M)	21.1	21.0	21.2
LTM Net Rev per Active ($)	$562	$572	$578
Orders Delivered (M)	9.1	10.0	9.8
Average Order Value ($)	$301	$328	$317
Repeat Orders as % of Total	80.5%	80.7%	80.1%
Mobile Order %	63.4%	62.9%	63.0%

Additional notes:

Q3 GAAP net loss (-$99M) includes a $99M loss on debt extinguishment from repurchases of 2025/2026/2028 notes; D&A was $75M; interest expense $31M .
Liquidity: $1.2B cash and equivalents; total liquidity $1.7B including undrawn revolver .

Guidance Changes

Table: Q4 2025 Guidance vs Prior (explicit prior quarter guidance shown where available)

Metric	Period	Previous Guidance	Current Guidance	Change
Net Revenue Growth (y/y)	Q4 2025	—	Mid-single digits y/y; ~100 bps drag from Germany exit	New detail
Gross Margin %	Q4 2025	30–31% “low end likely” (Q3 outlook was low end as well)	30–31%, likely low end	Maintained
Customer Service & Merchant Fees %	Q4 2025	“Just below 4%” (Q3 guide)	Just below 4%	Maintained
Advertising % of Revenue	Q4 2025	11–12% (Q3 guide)	11–12% (modestly higher than Q3; holdout tests in Q3 were one-time)	Maintained; seasonal uptick
SOTG&A ($M)	Q4 2025	$360–$370 (Q3 guide)	$360–$370, likely top end (seasonality/cloud)	Maintained
Adjusted EBITDA Margin %	Q4 2025	5–6% (Q3 guide)	5.5–6.5%	Raised midpoint
SBC & related taxes ($M)	Q4 2025	$75–$95 (Q3 guide)	$80–$100; includes ~$20M from CEO Performance Award	Modestly higher
D&A ($M)	Q4 2025	$73–$79 (Q3 guide)	$71–$77	Slightly lower range
Net Interest Expense ($M)	Q4 2025	~$30 (Q3 guide)	~$30	Unchanged
Wtd Avg Shares (M)	Q4 2025	~130 (Q3 guide)	~130	Unchanged
CapEx ($M)	Q4 2025	$55–$65 (Q3 guide)	$55–$65	Unchanged

Earnings Call Themes & Trends

Topic	Q1 2025 (prior)	Q2 2025 (prior)	Q3 2025 (current)	Trend
AI/Technology initiatives	Replatforming progress; early GenAI features referenced in product/content	Replatforming largely complete; loyalty, Verified, app gains; multichannel logistics economics clarified	Deep dive: Muse, Discover tab, AI search, catalog enrichment, autonomous agents; supplier SEO/ads; partner integrations (Google, OpenAI, Perplexity)	Expanding scope and deployment
Supply chain/logistics (CastleGate)	Continued investment; structural moat	CastleGate penetration ≈25%; multichannel 3PL launch; speed badging up; inbound commitments rising	Multichannel adoption building; suppliers excited; clarifications on CastleGate metric definition	Scaling penetration and monetization
Tariffs/macro	Category contraction; tariff uncertainty managed via marketplace model	Category flat-to-down; minimal tariff pull-forward observed	Category “flattish”; tariff pull-forward minimal (appliances/vanities, short-lived)	Macro steady/sluggish; minimal tariff impact
Product/brand mix & AOV	AOV up y/y; mix-driven	AOV +; higher-end brands/B2B strength	AOV +~2% y/y; higher-end brands & B2B outperformed	Mix supporting AOV
Regional trends	U.S. modest growth; International down y/y	U.S. +5%; International +3%	U.S. +8.6% y/y; International +4.6% reported; 3.5% cc	Both segments improving
Marketing efficiency	Tight payback discipline; building direct/app traffic	Ads 11.4%; direct/app momentum; holdout tests enabled pullback	Ads 10.6%; further leverage; one-time holdout effects; contribution margin +150 bps y/y	Improving efficiency, sustainable mix shift

Management Commentary

CEO Niraj Shah: “Our 6.7% Adjusted EBITDA margin marks the highest level achieved in Wayfair’s history outside of the pandemic period… profitability flow through is powered by a strong contribution margin and fixed cost discipline as our business has returned to growth.” .
CFO Kate Gulliver (on Q3 drivers): “Contribution margin of 15.8%, up 150 bps y/y… considerable leverage in advertising this quarter… revenue from our mobile app grew by double digits… installs grew by nearly 40%.” .
CTO Fiona Tan (on GenAI strategy): “We developed Muse… a proprietary AI-powered inspiration and discovery engine… evolved onsite search using an LLM… autonomous conversational AI agents and AI copilot for associates… building deep moats as AI-driven commerce scales.” .
Capital structure: “Repurchased ~$101M principal of 2028 notes using ~$200M cash… effectively offset ~2.2M shares of potential dilution and interest through 2028; dual mandate to reduce leverage and manage dilution.” .

Q&A Highlights

Tariffs/pull-forward: Management saw only minor, brief pull-forward in appliances and vanities; otherwise negligible impact on overall demand .
2026 outlook: Plan to drive top and bottom line with EBITDA growth outpacing revenue via recipe improvements, new programs (Rewards, Verified, retail), and tech compounding effects .
Ads efficiency: Leverage driven by growth in free/app traffic and holdout tests; some Q3 benefits were one-time; Q4 ad rate to normalize higher within 11–12% .
Agentic shopping: Wayfair optimizing for complex home category across AI platforms; focus on first-party truth, catalog integration, and eventual transactable experiences .
Industry backdrop: Category has “bottomed” at depressed levels; Wayfair’s share gains are structural, not macro-driven .

Estimates Context

Against S&P Global consensus, Wayfair beat on revenue ($3.12B vs $3.01B*) and Primary EPS ($0.70 vs $0.44*). SPGI EBITDA (GAAP-style) missed ($116M vs $163M*), reflecting the $99M loss on debt extinguishment and different treatment vs company Adjusted EBITDA ($208M) . Values with asterisk (*) retrieved from S&P Global.

Guidance Implications

Mix: Continued reinvestment of gross margin into price/experience to maximize multi-quarter contribution dollars, while ad expense normalizes seasonally (11–12%) .
Profitability: Implied Q4 Adjusted EBITDA margin 5.5–6.5% suggests durable y/y improvement; SOTG&A run-rate steady at $360–$370M (top end in holiday) .
Balance sheet: $1.2B cash; ongoing opportunistic debt repurchases to manage leverage and dilution .

Other Relevant Press Releases (Q3 context)

Affirm partnership expanded; Affirm integrated directly at checkout across Wayfair brands ahead of Way Day (Oct 26–29), broadening flexible pay options .

Key Takeaways for Investors

Sustained share capture with record non-pandemic Adjusted EBITDA margin and rising contribution margin signal a structurally improving model despite a flattish category .
Q3 beat on revenue and Primary EPS vs S&P Global; mind the EBITDA definition differences when benchmarking profitability .
Q4 guide reinforces margin discipline and revenue growth, with seasonal ad normalization and low-end gross margin bias; EBITDA margin still 5.5–6.5% .
Strategic flywheel—app/loyalty/Verified, GenAI enhancements, and CastleGate/multichannel logistics—supports better conversion, traffic mix, and supplier integration .
Capital allocation actively reducing leverage/dilution; GAAP noise (debt extinguishment) can mask underlying non-GAAP profitability in quarterlies .
Near term: watch holiday cadence (Way Day timing shift), ad efficiency retention post-holdouts, and contribution margin trajectory .
Medium term: evidence that EBITDA growth can outpace revenue as initiatives scale; monitor store rollouts, CastleGate penetration, and AI-driven commerce integrations .

Footnote: Values marked with an asterisk (*) retrieved from S&P Global.

Wayfair Inc. (W)·Q3 2025 Earnings Summary