Wayfair Inc.

Hello, everyone. Thank you for joining us and welcome to the Wayfair Q2 2026 earnings release and conference call. After today's prepared remarks, we will host a question and answer session. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. I will now hand the conference 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 second quarter 2026 results. With me are Niraj 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 2026. 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 we have been reasonable in our expectations and assumptions. Our 10-K for 2025, 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 contribution profit, contribution margin, 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 Thanks, Ryan, and good morning, everyone. We're pleased to be with you today to discuss our second quarter results. Q2 marked another strong quarter of share capture and top-line momentum, with 7.5% net revenue growth.

Our growth this quarter was fueled by momentum in orders, which were up by 6% for the period. Compared to Q1, orders were up over 12%, the best sequential growth we've seen in a Q2 since the second quarter of 2020. AOV grew by 1.2% year over year, continuing a very consistent trend of low to mid single digits growth that we've been seeing for years now. Active customers also continued its upward trend, growing by more than 3% year over year in Q2. While there's still some broader macro uncertainty and depressed housing turnover, by our measure, this marked the first quarter of flat to slightly positive year-over-year category growth that we've seen in the US since 2021, though skewed towards higher growth in the higher income segments. Our US segment accelerated to nearly 9% year-over-year revenue growth, continuing the high single-digit share spread we've held since last fall. In fact, revenue growth in the US was the best we've seen in the entire post-COVID period. In keeping with the often discussed K-shaped recovery, we saw noteworthy outperformance from both our specialty retail brands, which grew by nearly 20% in the second quarter, and Paragold, which grew by more than 35% in the luxury segment. What is exciting for us is that we are seeing accelerating growth in the wafer business and complementing that with outsized growth in the specialty and luxury segments, all building to why we expect to see even further growth acceleration as our numerous initiatives further play out. Today, I'd like to spend a bit more time digging into Paragold because it's a good example of one of our numerous initiatives and the momentum we've seen there over the past few years has been tremendous. I'll start with a bit of history for those less familiar. We launched Paragold in 2017 with a simple thesis. The U.S. has roughly 15 million high-income households that together spend more than $100 billion a year on their homes. Prior to our entry, this customer had no real digital destination that matched the way she actually wants to shop. The best-designed brands in the world, names like Century Furniture or Vanguard, were locked behind exclusive showrooms available to the trade-only or scattered across single-style, single-category competitors. Nobody had built the whole of luxury home into one platform that was simple to access. That gap was the opportunity, and it's exactly what we set out to close. Today, Perigold offers close to 3.5 million products from 1,500 brands, spanning every style and category of the home. We see a long runway simply in continuing to expand the breadth of what we already do well. And you'll see us build the catalog over time, expanding our selection across classes like large appliances and kitchen cabinetry that historically were not offered on a luxury digital platform. On the financial side, Peargold has grown at a double digit rate every single year since launch, including 20 plus percent growth in both 2024 and 2025. And that growth has recently accelerated further. We posted robust double-digit year-over-year growth in both the first and second quarters of this year, meaningfully outpacing the broader luxury home market, which by our estimates and competitor reporting is growing in the low single digits. In round terms, Paragold is now a business doing a bit over $400 million a year in sales. Still modest next to Wayfair.com's overall scale, but growing quickly and doing so profitably. margins have also expanded even as we funded two store openings and stepped up our brand investment in Paragold. We have a clear line of sight to grow Paragold into a multi-billion dollar business in the years ahead. And importantly, we intend to get there while expanding profitability consistent with how we run every part of Wayfair. Driving the ongoing strength of Paragold is a substantial and growing customer file. We have an active customer base approaching 400,000 up nearly 20% year over year. That customer base spends almost three times what we see from a typical Wayfair.com shopper in a single year. Roughly 40% of Paragold customers each year are entirely new to the Wayfair family of brands, which tells you this isn't just a repackaging of existing demand, we're pulling in a customer we would not otherwise reach, one who is more affluent and more resilient across economic cycles. And while a novel aspect of Paragold is its B2C access and offering, our trade and business customer is a real and growing part of the story too. Following the relaunch of our trade program earlier this year, which introduced a simplified, more competitive discount structure for designers, architects, and other professionals, B2B has grown to an all-time high share of Paragold's volume. So how do we differentiate against a highly fragmented competitive set? Our competitors range from a few national chains who have a specific design point of view to thousands of small independent shops, each with a limited selection. Paragold's advantage is breadth without compromising quality. We built curation standards around materials and construction so that everything from our opening price point up through the most exclusive design trade brands all meet a consistent bar. The selection overlap between Paragold and Wayfair is very narrow. And by having both platforms, we offer customers the ability to shop the wide expanse of home under one umbrella and benefit from our loyalty programs, delivery capabilities, and technology features. We are, for the large majority of our supplier base, the primary online partner, which means when a customer comes to Paragold, she's getting the deepest version of that brand's assortment anywhere online, not a curated subset. Just as important, Paragold isn't building all of this on its own. It draws directly on the infrastructure we spent nearly two decades building for Wayfair. Our logistics network, including Castlegate and our broader delivery network, gives Paragold a level of shipping speed and reliability that a business of its scale would be challenged to build independently. The same is true of our technology platform, search, personalization, checkout, and all the engineering investment that goes into it, and our marketing engine, from our paid media scale to our supplier advertising programs. Because Paragold can lean on that shared investment rather than duplicating it, its own team and dollars go almost entirely towards the things that make it distinctly luxury. Curation, Brand, and Service. That's a structural advantage a standalone luxury competitor simply doesn't have. And it's a big part of why Paragold can punch so far above its weight. Because the luxury customer's bar for service is even higher than it is for the rest of our business, we built free white-globe delivery into the model, along with proactive, high-touch order monitoring on larger purchases, which has driven meaningfully higher repeat rates and post-delivery satisfaction scores. This past year, we extended that differentiation by pushing into stores, opening our first two stores for Paragold in Houston and West Palm Beach. About 20% of our store staff are trained designers offering complimentary design services, both in-store and virtually. And those stores are already showing us average order values even higher than what we see online, alongside strong early design-led project pipelines. Real proof that the immersive high-touch model customers expect from luxury retail translates into our own four walls. We're seeing the same pattern in our virtual design business where a small team is driving average order values many multiples of our typical online site order precisely because pairing real design expertise with our vast catalog enables customers to embark on larger and more complex design projects. Let me now turn to where we're applying AI because it's one of the clearest examples of how much a team of parable size can get done with the right tools. We recently wanted to feature a seasonal outdoor imagery spread The kind of project that traditionally means location shoots, travel, styling crews, and can run into the millions of dollars and take months. Instead, we use a proprietary AI pipeline that was built in-house. It curates products that work together, composes them into a room, and renders it photorealistically using image models with automated quality checks on every image and our stylists guiding the work to hold to Paragold's luxury stand. That's roughly $2 million in traditional production costs, travel, cruise, studio time, replaced by less than $10,000. Well over a 99% reduction. And it means we can refresh and expand imagery across our broad catalog far faster than would otherwise be possible. That quality bar matters enormously here because a luxury shopper expects every image to look as considered and premium as the product itself. She notices lighting, styling, and finish. So this only works because the output meets that standard. We're extending these tools across product and environmental imagery, and we expect them to make our product pages steadily more complete and compelling over the coming quarters. It also means we can refresh and expand imagery far faster and more often than traditional production would allow. Beyond imagery, we're using AI to improve product content and merchandising accuracy across the catalog. We're building tools to help our design consultants, both our virtual team and the designers in our stores, source and present the right products to a customer faster. This builds on the broader company-wide investment we're making in AI, and Paragold is a good example of how those platform-level capabilities pay off in a specific high-value part of the business. As AI reshapes how customers discover and evaluate products, a curated luxury catalog like Paragold's with its complexity and its emphasis on craftsmanship and detail is exactly the kind of place where these tools create outsized value. And we intend to keep meaning it. So what are we most excited about looking ahead? There are a number of exciting efforts underway. So let me share a couple examples. We're planning to launch a Paragold loyalty program later this year, purpose-built for our luxury customers. Also in stores, Houston and West Palm Beach are still early, but the underlying signals, design driven basket sizes, strong repeat interest, growing trade engagement, give us real conviction. And our ambition over the next several years is to grow our store presence across the country's luxury markets using the same test and scale approach we've used across every other part of the company. We'll keep pushing on the fundamentals that got us here, broadening the catalog, deepening our trade offering and continuing to raise the bar on availability, delivery speed and service. all of which translate directly into loyalty and repeat purchases from this customer. Paragold is a great example of something Steve and I have long believed about Wayfair, that this platform can extend into new customer segments and keep compounding for years to come. It also shows the discipline we try to bring to every part of the company. Grow quickly, but do it profitably and keep reinvesting in the things that actually earn a customer's loyalty over time. We're proud of what this team has built and even more excited about what's ahead. With that, let me hand it to Kate to walk through our financials.