Slide 1: Investor Presentation Q2 2020
Investor Presentation Q2 2020
Slide 2: Safe Harbor
This presentation contains forward-looking statements within the meaning of federal and state securities laws. All statements other than statements of historical fact contained in this presentation—including statements regarding our future results of operations and financial position, business strat
Slide 3: A Brief History of Wayfair
A Brief History of Wayfair CSN Stores CSN Stores rebrands Wayfair IPO Logistics Concentrated efforts in New initiatives Over $9Bn in founded to Wayfair, exceeding network test International segment; staffed up and net revenue, $600M in net revenue and launch Canada launch supplier value-added with a
Slide 4: Investment Highlights
Investment Highlights ● ~$600B+ total addressable market rapidly moving from brick and mortar to online ● Utilizing in-house software development capability to build and leverage proprietary technology ● Partnering with fragmented and largely unbranded supplier base of over 12,000 suppliers ● Solvin
Slide 5: Overview
OVERVIEW 01. Our Business 02. Strategic Priorities 03. KPIs & Financial Metrics 04. Appendix 5
Slide 6: Our Business
01. OUR BUSINESS 6
Slide 7: Billions in Revenue Is Up For Grabs with Secular Shift from Brick-and-Mortar to Online
OUR BUSINESS: INDUSTRY BACKDROP Billions in Revenue Is Up For Grabs with Secular Shift from Brick-and-Mortar to Online Large, Addressable Market ...with Further Headroom for Transitioning Away from Brick and Mortar... Online Penetration... U.S. Home Market by Channel ($B) Estimated U.S. Online Penet
Slide 8: We Are Winning with Customers and Taking Market Share
OUR BUSINESS: INDUSTRY BACKDROP We Are Winning with Customers and Taking Market Share With the Home Category Online Growing by ...We Are Taking a Significant Share of Approximately 15% in the U.S. in 2019... Dollars as They Shift Online U.S. Home Online Market Size Forecast 2019 Online Growth Breakd
Slide 9: Home Category Has Specific Challenges When Shopped Online
OUR BUSINESS: BUILT FOR THE HOME CATEGORY Problem Home Category Has 1 Confidence To Buy: In the absence of being able to touch and feel a product, customers Specific Challenges typically require greater comfort and advice on the item they are buying. When Shopped Online Visualizing Products: 2 Under
Slide 10: We Have Built an Experience that Enables Customers to Confidently Shop for Their Home
OUR BUSINESS: BUILT FOR THE HOME CATEGORY We Have Built an Experience that Enables Customers to Confidently Shop for Their Home Online 1 Confidence To Buy: Inspires Confidence in the Purchase ● In-depth product information ● Customer reviews & specifications ● Visualization tools ● Customer Q&A ● Pl
Slide 11: We Help Shoppers Visualize Their Purchase Through Technology
OUR BUSINESS: BUILT FOR THE HOME CATEGORY We Help Shoppers Visualize Their Purchase Through Technology 2 Visualizing Products: Customers “See” Before They Buy ● 3D View in Room ● Room Ideas ● “Shop the Look” offerings ● Search with Photo ● Customer-uploaded product photos ● Plus more... 11
Slide 12: We Help Inspire Shoppers and Equip Them to Plan Their Perfect Room
OUR BUSINESS: BUILT FOR THE HOME CATEGORY We Help Inspire Shoppers and Equip Them to Plan Their Perfect Room 3 Inspiration and Product Discovery: Find the Right Product Faster ● Product recommendations ● Personalization ● Visual filters ● Idea Boards ● Plus more... 12
Slide 13: Flagship Brands Across Styles and Price Points Help Customers Find Products They Like
OUR BUSINESS: BUILT FOR THE HOME CATEGORY Flagship Brands Across Styles and Price Points Help Customers Find Products They Like 3 Inspiration and Product Discovery: Curated brand experience, with increasingly exclusive products, enabling customers to more easily discover the items they love from our
Slide 14: Customer Service is a Competitive Differentiator
OUR BUSINESS: BUILT FOR THE HOME CATEGORY Customer Service is a Competitive Differentiator 4 Customer Service and Delivery: In-house customer service team of over 4,000 people in the U.S. and Europe. NPS incentivized compensation structure, making customer experience our top priority. Specialized cu
Slide 15: Wayfair is our Central Brand and the Driver of our Business
OUR BUSINESS: BRANDS AND CUSTOMERS Wayfair is our Central Brand and the Driver of our Business Our Marquee Brand 1. 2. 3. 87% U.S. aided In every country where we In the U.S. and Canada, brand awareness operate, Wayfair has one of the Wayfair is the #1 place since Wayfair.com highest NPS scores amon
Slide 16: Wayfair Brand Focuses on the Mass Market Customer; Our Lifestyle Brands Serve Specific Customer Styles
OUR BUSINESS: BRANDS AND CUSTOMERS Wayfair Brand Focuses on the Mass Market Customer; Our Lifestyle Brands Serve Specific Customer Styles and Segments High End ($175K+ household income) Mass Market ($60K – $175K household income) Low End ($60K household income) 16
Slide 17: Our Four Distinct Home Sites Each Have a Unique Identity
OUR BUSINESS: BRANDS AND CUSTOMERS Our Four Distinct Home Sites Each Have a Unique Identity Est. 2006 Est. 2011 Est. 2014 Est. 2017 The best of modern, Stylish designs to Classic home. The widest-ever selection of priced for real life. discover daily. Comfortable cost. luxury home furnishings. 17
Slide 18: Increasing Engagement from Repeat Customers
OUR BUSINESS: BUILT FOR Loyalty is Growing THE HOME CATEGORY ● Our base of loyal customers is growing ● In 2019, 53% of Wayfair.com orders came from customers who had made 3 or more lifetime Increasing purchases; in 2015, this figure was ~30% Engagement from ● On average, repeat customers with 4 or
Slide 19: Marketing to Customers Via Paid and Free Channels
OUR BUSINESS: BRANDS AND CUSTOMERS Marketing to Customers Via Paid and Free Channels People are consuming more content than ever, and in different places Brand Integrations Online Paid Partnering with Reaching Discovery/Scripps and shoppers through other networks to reach display, social, our target
Slide 20: Suppliers are Our Partners
OUR BUSINESS: SUPPLIER RELATIONSHIPS Suppliers are Our Partners We view suppliers as our partners and create value-added services to propel their businesses with Wayfair 1 Logistics ● Consolidate different suppliers’ products in Asia, and then sort and transport them to our CastleGate warehouses ● R
Slide 21: Strategic Priorities
02. STRATEGIC PRIORITIES 21
Slide 22: Taking a Long-Term Approach to Growth
STRATEGIC PRIORITIES Taking a Long-Term Approach to Growth We are investing in three main areas of strategic importance: 1 Logistics Scaling our logistics capabilities in warehousing, supply services, transportation, and delivery to improve customer experience and drive efficiencies. 2 International
Slide 23: Home Category Characterized by Heavy, Bulky, and Damage-Prone Items
STRATEGIC PRIORITIES Home Category Characterized by Heavy, Bulky, and Damage-Prone Items Shipped using Wayfair Delivery Network (WDN): ~90% Average Wayfair Small Parcel Item Shipped using common carriers from CastleGate and supplier warehouses through WDN middle mile; ~70% through WDN last mile Aver
Slide 24: Investing in CastleGate and Supply Chain
United Canada Kingdom Germany United States CastleGate Facilities 1 Logistics: CastleGate CastleGate warehouses forward-position supplier inventory to create fast delivery for small parcel (1+ days) and large parcel (3+ days). STRATEGIC PRIORITIES We have built our strategic network of warehouses in
Slide 25: Taking Control of Large Parcel Transportation and Delivery with the Wayfair Delivery Network
STRATEGIC PRIORITIES Taking Control of Large Parcel Transportation and Delivery with the Wayfair Delivery Network Logistics: Wayfair 1 WDN Locations Delivery Network (WDN) Over 90% of our U.S. large parcel orders flow through the Wayfair-controlled middle mile network, and today our last mile delive
Slide 26: Scaling our Business in Canada, the UK, and Germany
STRATEGIC PRIORITIES Scaling our Business in Canada, the UK, and Germany 2 International Canada The international United Kingdom competitive landscape is similar to the U.S., with a Germany fragmented base of Europe brick-and-mortar retailers ~$290B that is typically regionalized with no dominant on
Slide 27: Invested in Dozens of Product Categories and Services to Further Penetrate our Total Addressable Market
STRATEGIC PRIORITIES Invested in Dozens of Product Categories and Services to Further Penetrate our Total Addressable Market 3 Further Penetrating the TAM Growing share of wallet by deepening and broadening our value proposition to customers within the home category. Over the past two years we have
Slide 28: KPIs & Financial Metrics
03. KPIs & FINANCIAL METRICS 28
Slide 29: Robust Growth at Scale
KPIs & FINANCIAL METRICS Robust Growth at Scale $11,474 $9,127 $6,779 $4,721 $3,380 $2,250 240+ Niche Websites; Wayfair Brand Wayfair U.S. Platform Development Launched Brand Building U.S. Net Revenue ($M) International Net Revenue ($M) 29 Note: International net revenue not disclosed separately bef
Slide 30: Strong Customer Acquisition and Growing Share of Wallet
KPIs & FINANCIAL METRICS Strong Customer Acquisition and Growing Share of Wallet 26.0 $440 2.4 $323 30
Slide 31: New and Repeat Orders Both Growing with Repeat Taking Share
KPIs & FINANCIAL METRICS New and Repeat Orders Both Growing with Repeat Taking Share 31
Slide 32: Customers are Ordering More Frequently
KPIs & FINANCIAL METRICS Customers are Ordering More Frequently 1.89 1.61 32
Slide 33: Long-Term Target Model
KPIs & FINANCIAL METRICS Long-Term Target Model Long-Term 2014 (IPO) 2018 2019 Q2 ‘20 Target - Better wholesale economics with increasing scale Net Revenue 100% 100% 100% 100% 100% - Logistics cost efficiency gains - Improved economics as newer categories and 23.6% 23.4% 23.6% 30.7% 25–27% regions m
Slide 34: Capital-Efficient Business Model
KPIs & FINANCIAL METRICS Capital-Efficient Business Model Net Revenue and Inventory Receivable and Payable Days1 $11,474 41.2 $2,250 3.3 $20 $43 34 1 Average of last four quarters
Slide 35: Appendix
04. APPENDIX 35
Slide 36: Headcount (Thousands)
APPENDIX We Doubled Headcount in the Last Two Years, and are now Optimizing for Efficiency Headcount (Thousands) 1 21 Note: Figures may not add due to rounding. 1 After a reclassification of some headcount in Q2’20, note that Q2’18 to Q1’20 figures have been restated from prior disclosures for compa
Slide 37: CastleGate & Wayfair Delivery Network (WDN) for Small Parcel & Large Parcel Deliveries
APPENDIX CastleGate & Wayfair Delivery Network (WDN) for Small Parcel & Large Parcel Deliveries CastleGate for Small Parcel Example End customer CastleGate warehouse Wayfair-dedicated in New York in New Jersey transportation Common Carrier Pre-sorting at Wayfair builds dedicated trailer CastleGate w
Slide 38: Net Revenue and Adjusted Profitability by Segment ($ in Millions)
APPENDIX Net Revenue and Adjusted Profitability by Segment ($ in Millions) Q2 ‘18 Q3 ‘18 Q4 ‘18 FY 2018 Q1’19 Q2 ‘19 Q3 ‘19 Q4 ‘19 FY 2019 Q1 ‘20 Q2 ‘20 U.S. Total Net Revenue 1,411.3 1,473.3 1,726.9 5,813.1 1,657.7 2,000.5 1,966.7 2,140.0 7,764.8 1,975.0 3,651.7 Total Growth 41.5% 40.2% 38.5% 40.0%
Slide 39: Reconciliation of Adjusted EBITDA ($ in Millions)
APPENDIX Reconciliation of Adjusted EBITDA ($ in Millions) 2015 2016 2017 2018 2019 Q2 2019 Q2 2020 Net Income / (Loss) ($77.4) ($194.4) ($244.6) ($504.1) ($984.6) ($181.9) $273.9 Depreciation and Amortization $32.4 $55.6 $87.0 $123.5 $192.4 $44.3 $69.1 Equity-Based Compensation1 $33.0 $52.0 $72.6 $
Slide 40: Reconciliation of Free Cash Flow ($ in Millions)
APPENDIX Reconciliation of Free Cash Flow ($ in Millions) 2015 2016 2017 2018 2019 Q2’19 Q2’20 Net Cash Provided by (Used in) Operating Activities $135.1 $62.8 $33.6 $84.9 ($196.8) ($2.7) $1,135.3 Purchase of Property and Equipment ($44.6) ($96.7) ($100.4) ($159.2) ($271.7) ($54.7) ($44.8) Site and
Slide 41: Wayfair
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