BOSTON – Wayfair earnings for the fiscal second quarter surpassed Wall Street’s expectations, with the company posting a gain of $273.9 million, compared with a $181.9 million loss in the prior-year second quarter.
Gross profit for the quarter came in at $1.32 billion or 30.7% of total net revenue compared with $559.6 million in the second quarter of last year. Wayfair also reported diluted earnings per share of $2.54 for the second quarter compared to a net loss of $1.98 for last year’s second quarter. Earnings, adjusted for stock option expense and non-recurring costs, came to $3.13 per share.
Total net revenue increased $2 billion to $4.3 billion up 83.7% year-over-year. At the end of the second quarter, cash, cash equivalents and short- and long-term investments totaled $2.4 billion.
“The second quarter was a very strong period for Wayfair. Our strategic long-term investments positioned us well to serve our customers and to quickly adapt during a challenging time,” said Niraj Shah, CEO, co-founder and co-chairman of Wayfair. “We experienced unprecedented demand in Q2 and saw record numbers of new and repeat customers choose Wayfair.
“Our proprietary logistics network, strong supplier partnerships, and nimble and dedicated team of more than 16,000 employees enabled Wayfair to consistently serve our customers at a time they needed us most.”
Shah said the company’s financial performance in the quarter highlighted the long-term profitability model of the business.
Wayfair said the number of active customers in its direct retail business reached 26 million by the end of the second quarter, which is an increase of 46% over the previous year. On the earnings call with investors, Shah said, “We picked up a year’s worth of new customers in just one quarter. The secular shift to e-commerce has accelerated meaningfully.”
Although Wayfair did not offer guidance for the third quarter due to the market uncertainty caused by the pandemic, Michael Fleisher, Wayfair CFO, said the company expects more week-to-week volatility in the third quarter with potential revenue growth rate deceleration.
“Q3 should prove to be a second consecutive quarter of positive related EBITDA,” Fleisher said on the call. “This further speaks to the sustainability of a turning point with regards to profitable results in Q3.”
Shah said the company’s third annual Way Day will take place this year in September after it was delayed from its traditional date in the spring due to the pandemic.
“The current plan is to have it late September,” he said. “The timing of the September revenue gain will show up in the fourth quarter. We believe it will be separated enough from the holiday season to give us the opportunity to successfully have Way Day.”