Wayfair Inc. · NYSE:W
Wayfair — 35th Annual Canaccord Genuity Growth Conference (September 2015)
27 slides from Wayfair's conference presentation, September 2015
Slide 1: Investor Presentation
Investor Presentation September 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 $1,661 MILLION of LTM net revenue with minimal inventory 81% Q2 YoY GROWTH in direct retail, 66% total growth 4
Slide 5: Large Scale with Significant Growth
LARGE SCALE WITH SIGNIFICANT GROWTH • Founded as CSN STORES in 2002 • BOOTSTRAPPED for the first 9 years $1,661 • FOUNDER-LED since inception • REBRANDED AS WAYFAIR in 2011 $1,319 • 81% Q2 YoY DIRECT RETAIL GROWTH; 66% total LTM growth $916 $601 $517 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
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: $7B Source: 2013 data from Freedonia, Fisher International, Euromonitor 12
Slide 13: Requires Custom-Built Technology and Operational Platform
REQUIRES CUSTOM-BUILT TECHNOLOGY AND OPERATIONAL PLATFORM Technology Platform Operational Platform • Proprietary and purpose built • Over 20 million orders since inception • Real-time data, dynamic changes • 2014 North America average time • Personalization to ship of 2.2 days • Mobile optimized • E
Slide 14: Platform Shift to Mobile Amplifies Opportunity
PLATFORM SHIFT TO MOBILE AMPLIFIES OPPORTUNITY US eCommerce Mobile Sales ($B)1 34% 45% Direct Retail orders Joss & Main orders via via mobile in Q2 2015 2 mobile in Q2 2015 $131 SIGNIFICANT OPPORTUNITY GOING FORWARD 26.2% CAGR $41 2013 2018 Source: eMarketer as of 2014. 1 Includes impact of smartpho
Slide 15: Increasing Personalization Drives Growth and Repeat Behavior
INCREASING PERSONALIZATION DRIVES GROWTH AND REPEAT BEHAVIOR Emails from 12/2; Ability to send 1M+ variations “Prep for in-laws and overnight guests “Tikes’ top picks: Playroom furniture “Purrr-fectly affordable finds for with holiday furniture for every room” and toys by KidKraft” cats (and feline
Slide 16: Technology and Operations Are Run at Scale: 1 Day of Orders
TECHNOLOGY AND OPERATIONS ARE RUN AT SCALE: 1 DAY OF ORDERS 16
Slide 17: Scale Drives Powerful Network Effects
SCALE DRIVES POWERFUL NETWORKS EFFECTS 1 2 Active Customers Repeat Orders (in thousands) (as % of total orders) 4,044 57% 2,635 54% More More 52% Customers Repeat Purchases Q2 2014 Q2 2015 Q2 2014 Q2 2015 Advertising Spend Net Revenue ($M) ($M) 224 Direct Retail 47% Enables Fuels Other $1,465 Strate
Slide 18: Investment in Advertising Spend Results in Higher Revenue/Customer
INVESTMENT IN ADVERTISTING SPEND RESULTS IN HIGHER REVENUE/CUSTOMER… Wayfair.com Gross Revenue Per Customer Over Time 20x$ • Customers acquired in more recent periods consistently spend more over time than 16x$ Revenue/Customer/Month customers acquired in older periods • For example in the 6th month
Slide 19: ...and Growing Awareness
…AND GROWING AWARENESS Google Trends – Interest in “Wayfair” over time Grew to 62% brand awareness since Wayfair launch in 20111 2006 2008 2010 2012 2014 2015 Source: Hanover Research 1 Aided Brand Awareness as of April 2015. 19
Slide 20: Customer Economics Continue to Improve
CUSTOMER ECONOMICS CONTINUE TO IMPROVE 4.04 3.60 3.22 2.86 2.64 2.41 2.09 1.77 1.37 1.51 1.29 1.28 1.26 1.30 56.6% 53.9% 50.7% 51.6% 50.3% 49.8% 47.3% 48.0% 47.1% 46.8% 40.2% 41.1% 35.2% $357 $342 $342 $346 30.7% $332 $322 $323 $313 $315 $300 $305 $287 $273 $278 Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 20
Slide 21: Capital Efficient with Minimal Inventory
CAPITAL EFFICIENT WITH MINIMAL INVENTORY Minimal Inventory Capital Efficient1 $1,661 36.0 $1,319 $916 $15 $20 $21 1.4 2013 2014 LTM Days Receivable Days Payable ($M) Net Revenue Inventory FCF Performance Consistently Better than Adjusted EBITDA 1 Average of last four quarters. 21
Slide 22: Long Term Target Model
LONG TERM TARGET MODEL Long-Term 2013 2014 Q2 2015 Target Net Revenue 100% 100% 100% 100% Gross Margin 24.5% 23.6% 24.6% 25 - 27% Customer Service + Merchant 3.9% 4.1% 3.7% 4% Fees Advertising 11.8% 14.5% 12.5% 6 - 8% Primarily headcount Merchandising, Marketing, and 3.7% 3.9% 4.2% 2 - 3% Sales Oper
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: wayfalircom
* wayfalircom S & Main BIRCH LANE ‘Ste
Slide 25: Reconciliation of Adjusted EBITDA
RECONCILIATION OF ADJUSTED EBITDA ($ in millions) 2013 2014 Q2 2015 Net Loss ($15.526) ($148.098) ($19.334) Depreciation and Amortization $13.091 $22.003 $7.400 Equity-Based Compensation - $63.244 $7.101 Interest Income, net ($0.245) ($0.350) ($0.308) Other (Expense) Income, net ($0.294) $0.489 $0.0
Slide 26: Reconciliation of Free Cash Flow
RECONCILIATION OF FREE CASH FLOW ($ in millions) 2013 2014 Q2 2015 Net Cash Provided by Operating $34.413 $11.692 $28.453 Activities, Net of Acquisition Purchase of Property, Equipment and ($6.739) ($39.422) ($13.153) Leasehold Improvements Site and Software Development Costs ($9.040) ($14.130) ($4.
Slide 27: Illustrative Customer Acquisition Cost
Illustrative Customer Acquisition Cost (All units in 000s, except per customer figures) 2014 Total Advertising Spend $191,284 Assumed Partner Ad Spend (1) $24,300 Direct Retail Ad Spend $166,984 Active Customers 3,217 Total Orders 5,237 % of Orders from Repeat Customers 50.5% Implied "Gross" New Cus
Wayfair — 35th Annual Canaccord Genuity Growth Conference (September 2015) on 6ix