Wayfair Inc.

Hello and thank you for standing by. My name is Tiffany and I will be your conference operator today. At this time, I would like to welcome everyone to the Wayfair third quarter 2025 earnings release 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 that time, simply press star then the number one on your telephone keypad. I would now like to turn the call over to Ryan Barney, Head of Investor Relations. Ryan, please go ahead.

Good morning, and thank you for joining us. Today, we will review our third quarter 2025 results. With me are Neeraj Shah, Co-Founder, Chief Executive Officer and Co-Chairman, Steve Conine, Co-Founder and Co-Chairman, Kate Gulliver, Chief Financial Officer and Chief Administrative Officer, and Fiona Tan, Chief Technology 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 fourth quarter of 2025. 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 2024, 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 reconciliations 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, Ryan, and good morning, everyone. We're pleased to be here today to discuss our third quarter results with you. Q3 was a great success. Share gain further accelerated with revenue growing 9% year over year, excluding Germany. This came in tandem with more than 70% year over year growth in adjusted EBITDA. Our 6.7% adjusted EBITDA margin marks the highest level achieved in Wayfair's history outside of the pandemic period. As we've promised, Substantial profitability flow-through is powered by a strong contribution margin and fixed cost discipline as our business has returned to growth. As we shared in Q2, we see the groundwork we've laid over multiple years directly driving share capture and profitability, despite a category that remains stubbornly sluggish. Existing home sales continue to bounce along the same multi-decade lows we've seen since late 2022. Decreasing short-term interest rates certainly loosen financial conditions, but mortgages are a longer-duration product and will require more relief in long-term rates before we start to see a broader unlock in mobility. In that context, it is important to note that our plan to grow is driven by Wayfair-specific factors and is not reliant upon a recovery in the housing market. In spite of the depressed housing environment, We've been encouraged to see that the category has moved past its multi-year trend of double-digit declines. Based on the data we have, the category started down low single digits and has been inching closer and closer to flat over the course of 2025, though it remains structurally underspent against the pre-pandemic baseline. This directional improvement is all the more encouraging given the uncertainty our industry has faced around the evolving tariff landscape this year. These changes have only served to reinforce the relative strength of our model, consistently delivering the best value and experience to our customers while simultaneously enabling our suppliers to win share and grow their businesses. That strength should be very clear in the KPIs themselves. Revenue growth was driven by order momentum. We saw orders grow by over 5% year-over-year in the quarter, including new orders growing mid-single digits for two quarters in a row. Active customers saw sequential growth for the first time since 2023. AOV was up roughly 2% in Q3, driven almost entirely by mix shift as our higher end brands and B2B outperformed the growth of the Wayfair business. Competition remains intense amongst our suppliers and provides a structural incentive to keep prices as low as possible to win share on our platform. To measure our momentum, we anchor on quarter over quarter trends as a barometer of success. Q3 this year was the best sequential growth we've seen in a third quarter since 2019, following strong trends from the second quarter. I'm sure many of you are wondering how much of this is intrinsic growth improvement versus something more transitory, like pull forward due to tariffs. The only instances of pull forward we've identified came from a very short-lived increase in large appliances demand back in the early spring, and a similarly short-lived increase in vanities late in the third quarter. Neither of these moves the aggregate in a meaningful fashion. We see our outperformance as structural share capture driven by our strong day-to-day execution against the core recipe, the early success of the new programs we've been able to launch, and from the broad gains we have brought to bear from our technology team. Since the start of the year, we've highlighted these strong returns we're seeing from initiatives like Wayfair Rewards, Wayfair Verified, and our growing fleet of retail stores. These successes all reflect the deeper engineering resources we've been able to dedicate now that our multi-year replatforming is largely complete. At the turn of the decade, we made the decision to modernize our technology stack, including migration from data centers to the cloud. The simplest way to think about this is that by replatforming our code base, we can now be much more agile, and as a result, meaningfully ramp up the pace of innovation in what we can offer our customers and suppliers. We completed the bulk of our replatforming earlier this year, and the timing couldn't have been better, as we're in the early innings of a new phase in how customers shop online. While AI has certainly become the buzzword of late, we've been on the forefront of machine learning for a long time, leveraging algorithms to drive everything from pricing decisions to marketing investments. Today, there's new ground being broken with the proliferation and sophistication of generative AI, and Wayfair is a leader in the application of AI in retail. To that end, I'm excited to have Fiona Tan, our Chief Technology Officer, here today to spend some time diving deeper into the ways we're bringing generative AI to bear across all of Wayfair. Let me now turn it over to her.