Wayfair beats on profit and narrowly misses on revenue as US orders rise 12%

Chief executive Niraj Shah credits structural share gains, but active customers grew just over 4% and international revenue fell.

Wayfair earned adjusted EPS of $0.93 in the third quarter, $0.13 above forecast, while revenue of $3.42B fell just short of the $3.44B expected. The profit beat is the larger surprise and the revenue miss is small. Both figures were above what Wayfair itself guided in August: EPS of $0.73 and revenue of $3.27B.

Chief executive Niraj Shah said US revenue growth of more than 11% reflected structural market share gains. Orders rose 12% from a year earlier and active customers rose just over 4%. That claim will need several more quarters of order and customer data to test. If customer growth keeps trailing order growth, the share-gain case will rest more on spending per customer than on the size of the customer base.

Profit and cash both improved. Adjusted EBITDA was $236M, against $208M a year earlier, and free cash flow was $136M, against $93M. They rose even as adjusted gross margin eased to 29.6% from 30.1%.

The gains are American. International net revenue was $380M, down 2.3% from a year earlier, and down 1.8% in constant currency, which strips out exchange-rate moves.