Why Wayfair’s Revenue Trends Have Impressed in 2018



Recent trends

Over the trailing 11 quarters, Wayfair (W) has beaten top-line estimates ten times, missing estimates just once.

Wayfair beat analysts’ projections for all three quarters of 2018. On a year-over-year basis, revenue rose 46.2%, 47.4%, and 42.4%, respectively, in the first three quarters of 2018.

Wayfair’s top line is driven by growth in both its Domestic and International segments. The company is aggressively expanding its operations in Canada, the United Kingdom, and Germany.

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It’s investing in human resources and developing its logistics network to capture more market share. The company is also ramping up its advertisement spending. Wayfair is working on driving revenue from repeat customers because it can lower its advertisement spending by increasing orders from repeat customers.

On November 28, Wayfair announced that its direct retail gross sales rose 58% over the five-day Thanksgiving weekend. Compelling deals and free shipping led to strong sales. Also, the company added that its extensive assortment (from everyday essentials to big furniture to seasonal decor) also helped its revenue growth. The good showing over the holiday weekend could lead to a robust holiday season for the online furniture retailer.

For the fourth quarter of 2018, Wayfair’s management had projected revenues of $1.92 billion–$1.97 billion on a year-over-year basis. Analysts’ growth projections stand at $1.96 billion, indicating 36.5% growth on a year-over-year basis.

For fiscal 2018, analysts expect Wayfair’s revenue to be up 42.6% to $6.73 billion. The company hasn’t provided an outlook for fiscal 2018.

A look at other online retailers’ top lines

Meanwhile, Etsy (ETSY) beat analysts’ top-line estimate in all three quarters of 2018 so far. On a year-over-year basis, the company has reported double-digit revenue growth in all quarters. Etsy’s revenue growth is driven by strategic measures and its recent increases in seller fees.

Conversely, Overstock (OSTK) missed analysts’ top-line projections in two of three quarters. However, the company has reported year-over-year revenue growth in all three quarters of 2018 so far. Its revenue growth is driven by increased marketing investments.


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