Wayfair Inc.

Good morning, my name is Dennis and I will be your conference operator today. At this time, I would like to welcome everyone to the Wayfair second quarter 2023 earnings release and conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star, then the number one on your telephone keypad. To withdraw your question, press star one again. I would now like to turn the conference over to James Lamb, Head of Investor Relations. Please go ahead.

Good morning, and thank you for joining us. Today, we will review our second quarter 2023 results. With me are Neeraj Shah, Co-Founder, Chief Executive Officer and Co-Chairman, Steve Conine, Co-Founder and Co-Chairman, and Kate Gulliver, Chief Financial Officer and Chief Administrative Officer. we will all be available for Q&A following today's prepared remarks. I would like to remind you that our call today will consist of forward-looking statements, including, but not limited to, those regarding our future prospects, business strategies, industry trends, and our financial performance, including guidance for the third quarter of 2023. All forward-looking statements made on today's call are based on information available to us as of today's date. We cannot guarantee that any forward-looking statements will be accurate, although we believe that we have been reasonable in our expectations and assumptions. Our 10-K for 2022, our 10-Q for this quarter, and our subsequent SEC filings identify certain factors that could cause the company's actual results to differ materially from those projected in any forward-looking statements made today. Except as required by law, we undertake no obligation to publicly update or revise any of these statements, whether as a result of any new information, future events, or otherwise. Also, please note that during this call we will discuss certain non-GAAP financial measures as we review the company's performance including adjusted EBITDA, adjusted EBITDA margin, and free cash flow. These non-GAAP financial measures should not be considered replacements for and should be read together with GAAP results. Please refer to the investor relations section of our website to obtain a copy of our earnings release and investor presentation, which contain descriptions of our non-GAAP financial measures and reconciliation of non-GAAP measures to the nearest comparable GAAP measures. This call is being recorded and a webcast will be available for replay on our IR website. I would now like to turn the call over to Neeraj.

Thanks, James, and good morning, everyone. We're excited to reconnect with you today to share the details of our second quarter results. Last year, we laid out a plan to strengthen our business that included a path to sustainable and growing profitability with several key milestones. For the past few quarters, you've seen us execute against that plan to lower our costs, focus on the basics, and earn more customer and supplier loyalty. And you've seen the tangible impact of this plan as our performance has continued to improve. I'm pleased to share today that we've passed one of our key milestones and are reporting positive adjusted EBITDA and positive free cash flow. This is in combination with a return to momentum in our top line with positive year-over-year order growth and sequentially higher active customer count, all while investing into initiatives for future growth. This is how we ran the business for our first decade and how we'll continue to do so going forward, profitable while investing for growth. We think we are now in a very exciting place, having scale while remaining ambitious and entrepreneurial. We plan to take full advantage of it. Our work over the past year to drive more than $1 billion of run rate savings in our cost structure is playing out across our entire P&L, enabling our accelerated return to positive adjusted EBITDA and comes in tandem with our efforts to see improvement in our top-level KPIs. Order growth is the leading indicator of our other major KPIs, and even as average order values normalized towards pre-COVID levels due to deflation, We expect to see net revenue return to positive year-over-year growth in the third quarter as our active customer count continues to climb sequentially. We're going to handle this earnings call in a slightly different format than usual because, as many of you know, next week we will be hosting our first Investor Day. We'd encourage all of our investors to tune into the live stream, which will begin at 1 p.m. Eastern Time on Thursday, August 10th. We'll be using this as an opportunity to introduce you to more members of our leadership team, dive deeper into the core pillars of our business, and take you through the major growth initiatives for the years ahead. Through that lens, today we're going to keep our prepared remarks concise to leave more time for questions about this quarter's results so that we can turn our full attention to our long-term strategy and key growth drivers next week. Now, let me give you a view of where our business stands as we move through the summer. Q2 proved to be a quarter of two continuing themes for Wayfair, share capture and cost efficiency. I'll start with the share capture piece, and the results really speak for themselves. Wayfair meaningfully outperformed the competition this spring, with net revenue down 3% year-over-year in Q2, compared to a category that continues to be down 10% to 20% for widely tracked estimates, like credit card and email receipt data. Our team spent significant time at various trade shows over the past few months, and we have heard resounding feedback from our suppliers that the platform they want to lean into is Wayfair. Benefits of our enormous marketing reach, considerable merchandising investments, and proprietary logistics capabilities make Wayfair an unparalleled partner to our suppliers. Since last fall, we have seen strong market share capture on the back of our core recipe. The combination of broad availability, fast delivery, and sharp pricing continues to be a powerful flywheel to drive both customer and supplier engagement. And across the board, we're setting new benchmarks on these metrics. Availability and speed badging continue to climb in Q2. And with further wholesale cost normalization, as well as our operational cost savings efforts, we now consistently see ourselves as a price leader across our most popular items. Our recipe is back intact. We've been extremely encouraged by the recent data we're seeing on customer behavior, with a noticeable upswing across all of our customer cohorts and sequential growth in our active customer count. It's crucial to know that this improvement in order momentum is not a function of isolated success in any particular class or with a specific group of shoppers, but has been broad-based across both our customer file and our catalog. We see this as an important point of validation for our customer acquisition strategy, which looks to build lifetime shoppers to make Wayfair a core part of their shopping habits. We approach earning customer loyalty through many vectors. Our work around promotions is a great example. In this environment, our promotional activity is a marketing lever that piques customer curiosity and draws them to visit. Once on the site, they purchase a variety of promoted and non-promoted products. In fact, during sale events in the second quarter, Non-featured items throw over two-thirds of our gross revenue. And it's worth noting that in our customer survey work, we've seen no change to the share of shoppers that indicated they would only shop Wayfair during a sale. As we do across every facet of the business, we're continuously testing these levers, measuring the results and iterating. For example, earlier this summer, we ran a series of promotions to encourage shoppers to use our app, and we saw remarkable engagement. Mobile app revenue hit its largest ever share, And we saw App Store rankings reach the highest they have been since the pandemic due to significant lifts and downloads. This is just one exciting way we're growing engagement with our app, key loyalty and free traffic driver. At the outset, I mentioned two themes for this quarter, share capture and cost efficiency. And we've talked at length about share capture and the major driving factors. I want to touch on cost efficiency briefly before passing it over to Kate, who will talk through this theme in more detail. The second quarter saw gross margins exceed 30%, a milestone we've only previously accomplished during the peak pandemic period of 2020. Unlike three years ago, the improvement in gross margin and its impact on our unit economics is durable, driven by the considerable work our team has done to execute across the set of more than 70 operational cost savings initiatives that we've talked about in recent quarters. Going back to where we started, this highlights a key point. from our shareholder letter. Wayfair is at the stage where we can both invest for growth while demonstrating considerable and improving profitability. Q2 was a quarter where we were able to achieve adjusted EBITDA margins of over 4% while also leaning into growth initiatives. I'm excited to talk more about our ongoing growth opportunities at our investor day next week. We continue to lean into physical retail, including opening two stores this summer to invest into our international business, and to pursue new technologies like generative AI, to name just a few areas. You will hear a focus on the opportunity ahead to growth, as well as a continued commitment to operational discipline and expanding profitability, directly from the senior leadership team that's driving us there every day. Thank you. And with that, let me turn it over to Kate for a review of our financials for the course.