Wayfair Inc. · NYSE:W
Wayfair — ICR XChange Conference 2015
26 slides from Wayfair's conference presentation, Jan 13, 2015
Slide 1: Investor Presentation January 2015
Investor Presentation January, 2015
Slide 2: Safe Harbor
SAFE HARBOR This presentation includes forward-looking statements. Wayfair Inc. (“Wayfair” or the “Company”) has based these forward-looking statements largely on its current expectations and projections about future events and financial trends affecting its business. Forward-looking statements shou
Slide 3: Our Mission
OUR MISSION To transform the way people shop for their homes 3
Slide 4: A Clear Online Leader in Home Goods
A CLEAR ONLINE LEADER IN HOME GOODS MASSIVE ONLINE CATALOG with over 7,000,000 home products SUPPLIER DIRECT FULFILLMENT NETWORK connecting over 7,000 suppliers $916 MILLION of net revenue in 2013 with minimal inventory $1,206 MILLION of LTM net revenue as of September 30th, 2014 75% LTM GROWTH in d
Slide 5: Large Scale with Significant Growth
LARGE SCALE WITH SIGNIFICANT GROWTH • Founded as CSN STORES in 2002 • BOOTSTRAPPED for the first 9 years • FOUNDER-LED since inception $1,206 • REBRANDED AS WAYFAIR in 2011 • 75% LTM DIRECT RETAIL GROWTH; 50% total LTM growth $916 Net Revenue ($M) $802 LTM Q3 2013 $601 $517 2002 2003 2004 2005 2006
Slide 6: Five Distinct Home Brands
FIVE DISTINCT HOME BRANDS Typical customer: 35 to 65 year old woman with an annual household income of $60,000 to $175,000 Est. 2011 Est. 2011 Est. 2006 Acq. 2013 Est. 2014 6
Slide 7: Large, Highly Fragmented Market Moving Online
LARGE, HIGHLY FRAGMENTED MARKET MOVING ONLINE Growth Potential of U.S. Significant Upside in Total Furniture Home Goods Market Online Penetration Sales by Retailer $297 2013 Online Penetration of Selected $233 Verticals 100% 90% $233 80% 70% 60% 54% 50% 40% $90 30% 15%- 30% 15% 20% $45 $16 7% 10% 7%
Slide 8: Well Positioned Relative to Other Retailers
WELL POSITIONED RELATIVE TO OTHER RETAILERS High End Design Centers ($175K+) Mass Market ($60K-$175K) Low End ($60K) 8
Slide 9: Home Shoppers Desire Uniqueness
HOME SHOPPERS DESIRE UNIQUENESS We do not all sleep in the same style bed… ...but a lot of us own the same TV and view it as reassuring #1 in 42” #2 in 42” #3 in 42” #4 in 42” LCD TVs LCD TVs LCD TVs LCD TVs 9
Slide 10: Home Is Shopped Visually
HOME IS SHOPPED VISUALLY Inspiration Discovery & Education 10
Slide 11: Home Is Shopped Visually
HOME IS SHOPPED VISUALLY Search Based Site 11
Slide 12: Difficult to Inventory
DIFFICULT TO INVENTORY Home Category Example: Lighting CPG Category Example: Paper Towels INDUSTRY SIZE: $7B INDUSTRY SIZE: $7B Source: Freedonia, Fisher International, Euromonitor 12
Slide 13: Requires Custom-Built Technology and Operational Platform
REQUIRES CUSTOM-BUILT TECHNOLOGY AND OPERATIONAL PLATFORM Technology Platform Operational Platform • Proprietary and purpose built • Over 14 million orders since inception • Real-time data, dynamic changes • Q3 2014 North America average • Personalization time to ship of 2.1 days • Mobile optimized
Slide 14: Platform Shift to Mobile Amplifies Opportunity
PLATFORM SHIFT TO MOBILE AMPLIFIES OPPORTUNITY US eCommerce Mobile Sales ($B)1 27.9% 43.5% Direct Retail orders Joss & Main orders via via mobile in H1 20142 mobile in H1 2014, up from <37% a year ago $131 SIGNIFICANT OPPORTUNITY GOING FORWARD 26.2% CAGR $41 2013 2018 Source: eMarketer 1 Includes im
Slide 15: Increasing Personalization Drives Growth and Repeat Behavior
INCREASING PERSONALIZATION DRIVES GROWTH AND REPEAT BEHAVIOR Emails from 12/2; Ability to send 1M+ variations “Prep for in-laws and overnight guests “Tikes’ top picks: Playroom furniture “Purrr-fectly affordable finds for with holiday furniture for every room” and toys by KidKraft” cats (and feline
Slide 16: Technology and Operations Are Run at Scale: Day of Orders
TECHNOLOGY AND OPERATIONS ARE RUN AT SCALE: 1 DAY OF ORDERS 16
Slide 17: Scale Drives Powerful Network Effects
SCALE DRIVES POWERFUL NETWORKS EFFECTS 1 2 Active Customers Repeat Orders (in thousands) (as % of total orders) 49.1% 61% 2,858 1,775 More More Customers Repeat 44.5% Purchases LTM Q3 '13 LTM Q3 '14 LTM Q2 '13 LTM Q2 '14 Advertising Spend Net Revenue ($M) ($M) $173 Direct Retail Enables Fuels Other
Slide 18: Investment in Advertising Spend Results in Higher Revenue/Customer
INVESTMENT IN ADVERTISTING SPEND RESULTS IN HIGHER REVENUE/CUSTOMER… Wayfair.com Gross Revenue Per Customer Over Time 18x$ • Customers acquired in more recent 16x$ periods consistently spend more over Revenue/Customer/Month 14x$ time than customers acquired in older periods 12x$ • For example in the
Slide 19: ...and Growing Awareness
…AND GROWING AWARENESS Google Trends – Interest in “Wayfair” over time Grew to 52% brand awareness since Wayfair launch in 20111 2006 2008 2010 2012 2014 Source: Hanover Research 1 Aided Brand Awareness as of August 2014. 19
Slide 20: Customer Economics Continue to Improve
CUSTOMER ECONOMICS CONTINUE TO IMPROVE 2.86 2.64 2.41 10.3% Q2 2012 – Q2 2014 CAGR 2.09 1.77 1.51 1.30 1.37 1.29 1.28 1.26 51.6% 50.7% 47.3% 48.0% 47.1% 46.8% 40.2% 41.1% $342 35.2% $332 $322 $323 30.7% $313 $315 $300 $305 $287 $273 $278 Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 201
Slide 21: Capital Efficient with Minimal Inventory
CAPITAL EFFICIENT WITH MINIMAL INVENTORY Minimal Inventory Capital Efficient $1,206 34.7 $916 $601 $21 1.6 $8 $15 2012 2013 LTM Days Receivable Days Payable ($M) Net Revenue Inventory FCF Performance Consistently Better than Adjusted EBITDA 21
Slide 22: Long Term Target Model
LONG TERM TARGET MODEL Long-Term 2012 2013 Q3 2014 Target Net Revenue 100% 100% 100% 100% Gross Margin 24.2% 24.5% 23.3% 25 - 27% Merchant Fees + Customer 4.3% 3.9% 4.2% 4.2% Service Advertising 10.5% 11.8% 14.8% 6 - 8% Primarily headcount Other Sales and Marketing 4.0% 3.7% 4.0% 2 - 3% General & Ad
Slide 23: Well Defined Growth Strategy
WELL DEFINED GROWTH STRATEGY CONTINUE BUILDING LEADING RETAIL HOME BRANDS • Acquire More Customers • Invest in Consumer Experience • Increase Repeat Purchasing • Add New Suppliers • Invest in Technology and Operations ADDITIONAL GROWTH STRATEGIES • Expand Internationally • Pursue Strategic Acquisiti
Slide 24: Dull Srdie BIRCH LANE
Dull Srdie BIRCH LANE * wayfalrcom
Slide 25: Reconciliation of Adjusted EBITDA
RECONCILIATION OF ADJUSTED EBITDA ($ in millions) 2012 2013 YTD Q3‘13 YTD Q3’14 Net Loss ($21.055) ($15.526) ($11.369) ($75.544) Depreciation and Amortization $9.335 $13.091 $9.352 $14.438 Equity-Based Compensation - - - $5.528 Interest Income, net ($0.234) ($0.245) ($0.185) ($0.222) Other (Expense)
Slide 26: Reconciliation of Free Cash Flow
RECONCILIATION OF FREE CASH FLOW ($ in millions) 2012 2013 YTD Q3’13 YTD Q3’14 Net Cash Provided by Operating $3.945 $34.413 ($6.425) ($50.837) Activities, Net of Acquisition Purchase of Property, Equipment and ($8.031) ($6.739) ($4.421) ($31.168) Leasehold Improvements Site and Software Development