Wayfair (NYSE:W) Posts Better-Than-Expected Sales In Q1, Stock Soars

W Cover Image — Wayfair (NYSE:W) Posts Better-Than-Expected Sales In Q1, Stock Soars

Petr Huřťák

Thu, May 1, 2025, 6:32 AM 4 min read

Revenue: $2.73 billion vs analyst estimates of $2.71 billion (flat year on year, 0.7% beat)
Adjusted EPS: $0.10 vs analyst estimates of -$0.20 (significant beat)
Adjusted EBITDA: $106 million vs analyst estimates of $79.21 million (3.9% margin, 33.8% beat)
Operating Margin: -4.5%, up from -8.6% in the same quarter last year
Free Cash Flow was -$139 million, down from $102 million in the previous quarter
Active Customers: 21.1 million, down 1.2 million year on year
Market Capitalization: $3.83 billion

"Despite persistent category volatility which marked a fourth consecutive year beginning with contraction, we were able to once again outperform our peers and take healthy market share while driving meaningful improvements in profitability. Year-over-year growth excluding the impact of Germany came in nicely positive - driven by the US business up 1.6% against a category that we estimate declined over the same time frame. Tariffs are clearly top of mind for everyone - while there's a lot of uncertainty in the broader economy, we have direct line of sight and strong conviction on what we need to do for both our customers and our suppliers," said Niraj Shah, CEO, co-founder and co-chairman, Wayfair.

Company Overview

Founded in 2002 by Niraj Shah, Wayfair (NYSE:W) is a leading online retailer of mass-market home goods in the US, UK, Canada, and Germany.

Sales Growth

A company’s long-term sales performance can indicate its overall quality. Even a bad business can shine for one or two quarters, but a top-tier one grows for years. Over the last three years, Wayfair’s demand was weak and its revenue declined by 3.6% per year. This wasn’t a great result and suggests it’s a low quality business.

This quarter, Wayfair’s $2.73 billion of revenue was flat year on year but beat Wall Street’s estimates by 0.7%.

Looking ahead, sell-side analysts expect revenue to remain flat over the next 12 months. Although this projection indicates its newer products and services will spur better top-line performance, it is still below average for the sector.

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Active Customers

Buyer Growth

As an online retailer, Wayfair generates revenue growth by expanding its number of users and the average order size in dollars.

Wayfair struggled with new customer acquisition over the last two years as its active customers have declined by 2.1% annually to 21.1 million in the latest quarter. This performance isn't ideal because internet usage is secular, meaning there are typically unaddressed market opportunities. If Wayfair wants to accelerate growth, it likely needs to enhance the appeal of its current offerings or innovate with new products.

In Q1, Wayfair’s active customers once again decreased by 1.2 million, a 5.4% drop since last year. The quarterly print was lower than its two-year result, suggesting its new initiatives aren’t moving the needle for buyers yet.

Revenue Per Buyer

Average revenue per buyer (ARPB) is a critical metric to track because it measures how much customers spend per order.

Wayfair’s ARPB has been roughly flat over the last two years. This raises questions about its platform’s health when paired with its declining active customers. If Wayfair wants to increase its buyers, it must either develop new features or provide some existing ones for free.

This quarter, Wayfair’s ARPB clocked in at $562. It grew by 4.7% year on year, faster than its active customers.

Key Takeaways from Wayfair’s Q1 Results

We were impressed by how significantly Wayfair blew past analysts’ EPS and EBITDA expectations this quarter. On the other hand, its number of buyers declined and fell short of Wall Street’s estimates. Overall, this was a mixed quarter, the stock traded up 8.9% to $32.88 due to the profitability numbers.

So do we think Wayfair is an attractive buy at the current price? If you’re making that decision, you should consider the bigger picture of valuation, business qualities, as well as the latest earnings. We cover that in our actionable full research report which you can read here, it’s free.

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