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Wayfair (W) Q4 Earnings Surpass Estimates, Revenues Lag

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Zacks Equity Research
·3 min read
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Wayfair Inc. W reported fourth-quarter 2020 non-GAAP earnings of $1.24 per share, which surpassed the Zacks Consensus Estimate of 91 cents.

Total revenues came in at $3.67 billion, up 44.9% year over year. However, the figure missed the Zacks Consensus Estimate of $3.75 billion.

The year-over-year increase in revenues was driven by strong acceleration in new and repeat customer orders. Also, increase in active customers and strength in the company's direct retail business aided year-over-year revenue growth.

Wayfair Inc. Price, Consensus and EPS Surprise

Wayfair Inc. Price, Consensus and EPS Surprise
Wayfair Inc. Price, Consensus and EPS Surprise

Wayfair Inc. price-consensus-eps-surprise-chart | Wayfair Inc. Quote

Quarter in Detail

Net revenues in the United States increased 40.1% year over year to $3 billion and international net revenues grew 70.7% to $671.8 million.

Active customers increased 53.7% from the prior-year quarter to 31.2 million. Moreover, LTM net revenues per active customer increased 1.1% year over year to $453 million.

Total number of orders delivered in the reported quarter was 16.5 million, up 47.1% year over year. In addition, orders per customer for the quarter were 1.96 million, reflecting an increase of 5.4% from the year-ago period. Further, repeat customers placed 11.9 million orders in the fourth quarter, up 55.6% year over year.

Operating Results

For the fourth quarter, Wayfair’s gross margin was 29%, up 620 basis points on a year-over-year basis.

Adjusted EBITDA margin was 7.2% versus (7.1%) in the year-ago quarter.

The company’s operating expenses of $827.3 million increased 5.8% year over year. Operating income was $100.6 million versus the prior-year loss of $305.4 million.

Balance Sheet & Cash Flow

At fourth quarter-end, cash, cash equivalents and short-term investments were $2.6 billion, flat with the prior quarter. Accounts receivables were $110.3 million, up from $109.7 million in the third quarter.

Cash from operations was $206.7 million and capital expenditure totaled $39.7 million. Free cash flow was $128.3 million compared with $255 million in the third quarter.

Zacks Rank and Stocks to Consider

Wayfair currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the broader technology sector include Semtech Corporation SMTC, KLA Corporation KLAC and Facebook FB, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Long-term earnings growth for Semtech, KLA Corp., and Facebook is currently projected at 12.5%, 11.6%, and 19.2%, respectively.

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