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x
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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o
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Delaware
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36-4791999
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer
Identification Number)
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4 Copley Place, 7
th
Floor, Boston, MA
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02116
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(Address of principal executive offices)
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(Zip Code)
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Large accelerated filer
x
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Accelerated filer
o
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Non-accelerated filer
o
(Do not check if a smaller reporting company)
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Smaller reporting company
o
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Emerging growth company
o
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Class
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Outstanding at October 26, 2017
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Class A Common Stock, $0.001 par value per share
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56,541,838
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Class B Common Stock, $0.001 par value per share
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31,289,628
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Page
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•
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developments in, and the outcome of, legal and regulatory proceedings and investigations to which we are a party or are subject, and the liabilities, obligations and expenses, if any, that we may incur in connection therewith.
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September 30,
2017 |
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December 31,
2016 |
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Assets
|
|
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Current assets
|
|
|
|
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Cash and cash equivalents
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$
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553,721
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$
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279,840
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Short-term investments
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56,699
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|
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68,743
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Accounts receivable, net of allowance of $4,507
and $3,115 at September 30, 2017 and December 31, 2016, respectively
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27,521
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19,113
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Inventories
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18,613
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18,550
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Prepaid expenses and other current assets
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120,041
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90,845
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Total current assets
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776,595
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477,091
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Property and equipment, net
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318,873
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239,354
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Goodwill and intangible assets, net
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3,386
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4,230
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Long-term investments
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29,809
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30,967
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Other noncurrent assets
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9,477
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10,041
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Total assets
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$
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1,138,140
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$
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761,683
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Liabilities and Stockholders' Equity
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Current liabilities
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Accounts payable
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$
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381,661
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$
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379,493
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Accrued expenses
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121,218
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67,807
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Deferred revenue
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86,219
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65,892
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Other current liabilities
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61,151
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44,028
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Total current liabilities
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650,249
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557,220
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Lease financing obligation
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82,725
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28,900
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Long-term debt
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327,950
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—
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Other liabilities
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74,187
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96,179
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Total liabilities
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1,135,111
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682,299
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Commitments and contingencies (Note 6)
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Convertible preferred stock, $0.001 par value per share: 10,000,000 shares authorized and none issued at September 30, 2017 and December 31, 2016
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—
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—
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Stockholders’ equity:
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Class A common stock, par value $0.001 per share, 500,000,000 shares authorized, 56,355,606 and 49,945,202 shares issued and outstanding at September 30, 2017 and December 31, 2016, respectively
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56
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50
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Class B common stock, par value $0.001 per share, 164,000,000 shares authorized, 31,290,483 and 35,885,692 shares issued and outstanding at September 30, 2017 and December 31, 2016, respectively
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31
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36
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Additional paid-in capital
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515,380
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409,225
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Accumulated deficit
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(510,495
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)
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(329,940
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)
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Accumulated other comprehensive (loss) gain
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(1,943
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)
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13
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Total stockholders’ equity
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3,029
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79,384
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Total liabilities and stockholders’ equity
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$
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1,138,140
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$
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761,683
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Three months ended September 30,
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Nine months ended September 30,
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2017
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2016
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2017
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2016
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||||||||
Net revenue
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$
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1,198,198
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$
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861,525
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$
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3,281,879
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$
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2,395,801
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Cost of goods sold
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917,889
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659,864
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2,495,221
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1,826,570
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Gross profit
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280,309
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201,661
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786,658
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569,231
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Operating expenses:
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Customer service and merchant fees
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42,949
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33,872
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117,132
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91,286
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Advertising
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141,714
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101,333
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384,220
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293,436
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Merchandising, marketing and sales
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56,934
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48,550
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160,033
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129,679
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Operations, technology, general and administrative
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112,669
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79,526
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292,988
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207,289
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Total operating expenses
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354,266
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263,281
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954,373
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|
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721,690
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|
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Loss from operations
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(73,957
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)
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(61,620
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)
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(167,715
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)
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(152,459
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)
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Interest (expense) income, net
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(2,008
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)
|
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(292
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)
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(3,857
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)
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791
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|
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Other (expense) income, net
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(227
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)
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889
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400
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1,804
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Loss before income taxes
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(76,192
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)
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(61,023
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)
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(171,172
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)
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(149,864
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)
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Provision for (benefit from) income taxes
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237
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|
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(83
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)
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671
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|
|
555
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|
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Net loss
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$
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(76,429
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)
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$
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(60,940
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)
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$
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(171,843
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)
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$
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(150,419
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)
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Net loss per share, basic and diluted
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$
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(0.88
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)
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$
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(0.72
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)
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$
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(1.98
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)
|
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$
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(1.77
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)
|
Weighted average number of common stock outstanding used in computing per share amounts, basic and diluted
|
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87,283
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|
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85,105
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|
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86,679
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|
|
84,779
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|
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Three months ended September 30,
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Nine months ended September 30,
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||||||||||||
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2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Net loss
|
|
$
|
(76,429
|
)
|
|
$
|
(60,940
|
)
|
|
$
|
(171,843
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)
|
|
$
|
(150,419
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)
|
Other comprehensive loss:
|
|
|
|
|
|
|
|
|
||||||||
Foreign currency translation adjustments
|
|
(856
|
)
|
|
(240
|
)
|
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(1,959
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)
|
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(875
|
)
|
||||
Net unrealized (loss) gain on available-for-sale investments
|
|
(40
|
)
|
|
(163
|
)
|
|
3
|
|
|
465
|
|
||||
Comprehensive loss
|
|
$
|
(77,325
|
)
|
|
$
|
(61,343
|
)
|
|
$
|
(173,799
|
)
|
|
$
|
(150,829
|
)
|
|
|
Nine months ended September 30,
|
||||||
|
|
2017
|
|
2016
|
||||
Cash flows from operating activities
|
|
|
|
|
|
|
||
Net loss
|
|
$
|
(171,843
|
)
|
|
$
|
(150,419
|
)
|
Adjustments to reconcile net loss to net cash used in operating activities
|
|
|
|
|
||||
Depreciation and amortization
|
|
62,588
|
|
|
38,528
|
|
||
Equity based compensation
|
|
46,740
|
|
|
35,188
|
|
||
Amortization of discount and issuance costs on convertible notes
|
|
874
|
|
|
—
|
|
||
Other non-cash adjustments
|
|
913
|
|
|
(134
|
)
|
||
Changes in operating assets and liabilities:
|
|
|
|
|
||||
Accounts receivable
|
|
(8,697
|
)
|
|
(6,773
|
)
|
||
Inventories
|
|
(38
|
)
|
|
716
|
|
||
Prepaid expenses and other current assets
|
|
(27,776
|
)
|
|
(12,493
|
)
|
||
Accounts payable and accrued expenses
|
|
44,692
|
|
|
53,443
|
|
||
Deferred revenue and other liabilities
|
|
50,450
|
|
|
33,556
|
|
||
Other assets
|
|
(1,148
|
)
|
|
(2,292
|
)
|
||
Net cash used in operating activities
|
|
(3,245
|
)
|
|
(10,680
|
)
|
||
|
|
|
|
|
||||
Cash flows from investing activities
|
|
|
|
|
|
|||
Purchase of short-term and long-term investments
|
|
(47,639
|
)
|
|
(76,458
|
)
|
||
Sale and maturities of short-term investments
|
|
60,540
|
|
|
82,060
|
|
||
Purchase of property and equipment
|
|
(76,528
|
)
|
|
(81,844
|
)
|
||
Site and software development costs
|
|
(34,885
|
)
|
|
(21,444
|
)
|
||
Cash received from the sale of a business, net of cash sold
|
|
—
|
|
|
1,508
|
|
||
Other investing activities, net
|
|
—
|
|
|
(1,000
|
)
|
||
Net cash used in investing activities
|
|
(98,512
|
)
|
|
(97,178
|
)
|
||
|
|
|
|
|
||||
Cash flows from financing activities
|
|
|
|
|
|
|||
Proceeds from issuance of convertible notes, net of issuance costs
|
|
420,449
|
|
|
—
|
|
||
Premiums paid for capped call confirmations
|
|
(44,160
|
)
|
|
—
|
|
||
Taxes paid related to net share settlement of equity awards
|
|
(1,277
|
)
|
|
(18,426
|
)
|
||
Net proceeds from exercise of stock options
|
|
213
|
|
|
166
|
|
||
Net cash provided by (used in) financing activities
|
|
375,225
|
|
|
(18,260
|
)
|
||
Effect of exchange rate changes on cash and cash equivalents
|
|
413
|
|
|
286
|
|
||
Net increase (decrease) in cash and cash equivalents
|
|
273,881
|
|
|
(125,832
|
)
|
||
|
|
|
|
|
||||
Cash and cash equivalents
|
|
|
|
|
|
|
||
Beginning of period
|
|
279,840
|
|
|
334,176
|
|
||
End of period
|
|
$
|
553,721
|
|
|
$
|
208,344
|
|
|
|
|
|
|
||||
Supplemental disclosure of non-cash investing activities
|
|
|
|
|
|
|
||
Purchase of property and equipment included in accounts payable and accrued expenses and in other liabilities
|
|
$
|
9,255
|
|
|
$
|
5,744
|
|
Construction costs capitalized under finance lease obligation and other leases
|
|
$
|
16,153
|
|
|
$
|
29,726
|
|
|
|
September 30, 2017
|
||||||||||||||
|
|
Amortized
Cost
|
|
Gross
Unrealized
Gains
|
|
Gross
Unrealized
Losses
|
|
Estimated
Fair Value
|
||||||||
Short-term:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Investment securities
|
|
$
|
56,719
|
|
|
$
|
12
|
|
|
$
|
(32
|
)
|
|
$
|
56,699
|
|
Long-term:
|
|
|
|
|
|
|
|
|
|
|||||||
Investment securities
|
|
29,837
|
|
|
22
|
|
|
(50
|
)
|
|
29,809
|
|
||||
Total
|
|
$
|
86,556
|
|
|
$
|
34
|
|
|
$
|
(82
|
)
|
|
$
|
86,508
|
|
|
|
December 31, 2016
|
||||||||||||||
|
|
Amortized
Cost
|
|
Gross
Unrealized
Gains
|
|
Gross
Unrealized
Losses
|
|
Estimated
Fair Value
|
||||||||
Short-term:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Investment securities
|
|
$
|
63,135
|
|
|
$
|
7
|
|
|
$
|
(39
|
)
|
|
$
|
63,103
|
|
Commercial paper
|
|
5,641
|
|
|
1
|
|
|
(2
|
)
|
|
5,640
|
|
||||
Long-term:
|
|
|
|
|
|
|
|
|
||||||||
Investment securities
|
|
30,985
|
|
|
16
|
|
|
(34
|
)
|
|
30,967
|
|
||||
Total
|
|
$
|
99,761
|
|
|
$
|
24
|
|
|
$
|
(75
|
)
|
|
$
|
99,710
|
|
▪
|
Level 1—Unadjusted quoted prices in active markets for identical assets or liabilities
|
▪
|
Level 2—Unadjusted quoted prices in active markets for similar assets or liabilities, unadjusted quoted prices for identical or similar assets or liabilities in markets that are not active, or inputs other than quoted prices that are observable or can be corroborated by observable market data for substantially the full-term of the asset or liability
|
▪
|
Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the asset or liability
|
|
|
September 30, 2017
|
||||||||||||||
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Cash equivalents:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Money market funds and other funds
|
|
$
|
512,929
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
512,929
|
|
Short-term investments:
|
|
|
|
|
|
|
|
|
|
|||||||
Investment securities
|
|
—
|
|
|
56,699
|
|
|
—
|
|
|
56,699
|
|
||||
Restricted cash:
|
|
|
|
|
|
|
|
|
||||||||
Certificate of deposit
|
|
5,000
|
|
|
—
|
|
|
—
|
|
|
5,000
|
|
||||
Long-term:
|
|
|
|
|
|
|
|
|
|
|||||||
Investment securities
|
|
—
|
|
|
29,809
|
|
|
—
|
|
|
29,809
|
|
||||
Total
|
|
$
|
517,929
|
|
|
$
|
86,508
|
|
|
$
|
—
|
|
|
$
|
604,437
|
|
|
|
December 31, 2016
|
||||||||||||||
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Cash equivalents:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Money market funds
|
|
$
|
200,867
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
200,867
|
|
Short-term investments:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Investment securities
|
|
—
|
|
|
63,103
|
|
|
—
|
|
|
63,103
|
|
||||
Commercial paper
|
|
—
|
|
|
5,640
|
|
|
—
|
|
|
5,640
|
|
||||
Restricted cash:
|
|
|
|
|
|
|
|
|
||||||||
Certificate of deposit
|
|
5,000
|
|
|
—
|
|
|
—
|
|
|
5,000
|
|
||||
Long-term:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Investment securities
|
|
—
|
|
|
30,967
|
|
|
—
|
|
|
30,967
|
|
||||
Total
|
|
$
|
205,867
|
|
|
$
|
99,710
|
|
|
$
|
—
|
|
|
$
|
305,577
|
|
|
|
Weighted - Average Amortization
Period (Years)
|
|
September 30, 2017
|
||||||||||
|
|
|
Gross Carrying
Amount
|
|
Accumulated
Amortization
|
|
Net Book Value
|
|||||||
Trademarks
|
|
5
|
|
$
|
1,900
|
|
|
$
|
(1,583
|
)
|
|
$
|
317
|
|
Technology
|
|
3
|
|
1,453
|
|
|
(525
|
)
|
|
928
|
|
|||
Customer relationships
|
|
5
|
|
1,300
|
|
|
(1,083
|
)
|
|
217
|
|
|||
Total
|
|
|
|
$
|
4,653
|
|
|
$
|
(3,191
|
)
|
|
$
|
1,462
|
|
|
|
Weighted - Average Amortization
Period (Years)
|
|
December 31, 2016
|
||||||||||
|
|
|
Gross Carrying
Amount
|
|
Accumulated
Amortization
|
|
Net Book Value
|
|||||||
Trademarks
|
|
5
|
|
$
|
1,900
|
|
|
$
|
(1,298
|
)
|
|
$
|
602
|
|
Technology
|
|
3
|
|
1,453
|
|
|
(161
|
)
|
|
1,292
|
|
|||
Customer relationship
|
|
5
|
|
1,300
|
|
|
(888
|
)
|
|
412
|
|
|||
Total
|
|
|
|
$
|
4,653
|
|
|
$
|
(2,347
|
)
|
|
$
|
2,306
|
|
|
|
September 30,
2017 |
|
December 31,
2016 |
||||
Furniture and computer equipment
|
|
$
|
198,903
|
|
|
$
|
133,297
|
|
Site and software development costs
|
|
108,456
|
|
|
77,429
|
|
||
Leasehold improvements
|
|
80,512
|
|
|
62,090
|
|
||
Construction in progress
|
|
10,416
|
|
|
47,013
|
|
||
Buildings (leased - Note 6)
|
|
83,681
|
|
|
29,856
|
|
||
|
|
481,968
|
|
|
349,685
|
|
||
Less accumulated depreciation and amortization
|
|
(163,095
|
)
|
|
(110,331
|
)
|
||
Property and equipment, net
|
|
$
|
318,873
|
|
|
$
|
239,354
|
|
|
|
Options
|
|
Weighted-
Average Exercise
Price
|
|
Weighted-
Average
Remaining
Contractual
Term (Years)
|
|||
Outstanding at December 31, 2016
|
|
209,759
|
|
|
$
|
2.98
|
|
|
4.5
|
Options exercised
|
|
(72,296
|
)
|
|
$
|
2.92
|
|
|
|
Outstanding and exercisable at September 30, 2017
|
|
137,463
|
|
|
$
|
3.01
|
|
|
3.7
|
|
|
Shares
|
|
Weighted-
Average Fair Value
|
|||
Outstanding at December 31, 2016
|
|
60,000
|
|
|
$
|
35.05
|
|
Unvested at September 30, 2017
|
|
60,000
|
|
|
$
|
67.40
|
|
|
|
Shares
|
|
Weighted-
Average Grant
Date Fair Value
|
|||
Outstanding at December 31, 2016
|
|
6,986,776
|
|
|
$
|
34.21
|
|
RSUs granted
|
|
2,271,235
|
|
|
$
|
52.39
|
|
RSUs vested
|
|
(1,766,511
|
)
|
|
$
|
32.30
|
|
RSUs forfeited/canceled
|
|
(1,117,090
|
)
|
|
$
|
37.53
|
|
Outstanding at September 30, 2017
|
|
6,374,410
|
|
|
$
|
41.04
|
|
|
|
Three months ended September 30,
|
|
Nine months ended September 30,
|
||||||||||||
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
U.S. Direct Retail
|
|
$
|
1,033,669
|
|
|
$
|
759,674
|
|
|
$
|
2,847,898
|
|
|
$
|
2,134,782
|
|
U.S. Other
|
|
16,975
|
|
|
28,127
|
|
|
57,843
|
|
|
91,613
|
|
||||
U.S. segment net revenue
|
|
1,050,644
|
|
|
787,801
|
|
|
2,905,741
|
|
|
2,226,395
|
|
||||
International Direct Retail
|
|
147,554
|
|
|
72,724
|
|
|
376,138
|
|
|
165,119
|
|
||||
International Other
|
|
—
|
|
|
1,000
|
|
|
—
|
|
|
4,287
|
|
||||
International segment net revenue
|
|
147,554
|
|
|
73,724
|
|
|
376,138
|
|
|
169,406
|
|
||||
Total net revenue
|
|
$
|
1,198,198
|
|
|
$
|
861,525
|
|
|
$
|
3,281,879
|
|
|
$
|
2,395,801
|
|
|
|
Three months ended September 30,
|
|
Nine months ended September 30,
|
||||||||||||
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Adjusted EBITDA
|
|
|
|
|
|
|
|
|
||||||||
U.S.
|
|
$
|
4,531
|
|
|
$
|
(7,857
|
)
|
|
$
|
28,684
|
|
|
$
|
(11,816
|
)
|
International
|
|
(27,203
|
)
|
|
(22,992
|
)
|
|
(74,498
|
)
|
|
(64,850
|
)
|
||||
Total reportable segments Adjusted EBITDA
|
|
(22,672
|
)
|
|
(30,849
|
)
|
|
(45,814
|
)
|
|
(76,666
|
)
|
||||
Less: reconciling items (1)
|
|
(53,757
|
)
|
|
(30,091
|
)
|
|
(126,029
|
)
|
|
(73,753
|
)
|
||||
Net loss
|
|
$
|
(76,429
|
)
|
|
$
|
(60,940
|
)
|
|
$
|
(171,843
|
)
|
|
$
|
(150,419
|
)
|
|
|
Three months ended September 30,
|
|
Nine months ended September 30,
|
||||||||||||
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Depreciation and amortization (1)
|
|
$
|
22,913
|
|
|
$
|
15,463
|
|
|
$
|
62,588
|
|
|
$
|
38,528
|
|
Equity based compensation and related taxes
|
|
19,598
|
|
|
15,308
|
|
|
50,539
|
|
|
37,265
|
|
||||
Interest expense (income), net
|
|
2,008
|
|
|
292
|
|
|
3,857
|
|
|
(791
|
)
|
||||
Other expense (income), net
|
|
227
|
|
|
(889
|
)
|
|
(400
|
)
|
|
(1,804
|
)
|
||||
Provision for (benefit from) income taxes
|
|
237
|
|
|
(83
|
)
|
|
671
|
|
|
555
|
|
||||
Other (1)
|
|
8,774
|
|
|
—
|
|
|
8,774
|
|
|
—
|
|
||||
Total reconciling items
|
|
$
|
53,757
|
|
|
$
|
30,091
|
|
|
$
|
126,029
|
|
|
$
|
73,753
|
|
|
|
Three months ended September 30,
|
|
Nine months ended September 30,
|
||||||||||||
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Net revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Direct Retail
|
|
$
|
1,181,223
|
|
|
$
|
832,398
|
|
|
$
|
3,224,036
|
|
|
$
|
2,299,901
|
|
Other
|
|
16,975
|
|
|
29,127
|
|
|
57,843
|
|
|
95,900
|
|
||||
Net revenue
|
|
$
|
1,198,198
|
|
|
$
|
861,525
|
|
|
$
|
3,281,879
|
|
|
$
|
2,395,801
|
|
|
|
September 30,
2017 |
|
December 31,
2016 |
||||
Geographic long-lived assets
|
|
|
|
|
|
|
||
U.S.
|
|
$
|
311,565
|
|
|
$
|
233,099
|
|
International
|
|
7,308
|
|
|
6,255
|
|
||
Total
|
|
$
|
318,873
|
|
|
$
|
239,354
|
|
|
|
Three months ended September 30,
|
|
Nine months ended September 30,
|
||||||||||||
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Net loss
|
|
$
|
(76,429
|
)
|
|
$
|
(60,940
|
)
|
|
$
|
(171,843
|
)
|
|
$
|
(150,419
|
)
|
Weighted average common shares used for basic and diluted net loss per share computation
|
|
87,283
|
|
|
85,105
|
|
|
86,679
|
|
|
84,779
|
|
||||
Net loss per share:
|
|
|
|
|
|
|
|
|
||||||||
Basic and Diluted
|
|
$
|
(0.88
|
)
|
|
$
|
(0.72
|
)
|
|
$
|
(1.98
|
)
|
|
$
|
(1.77
|
)
|
|
|
Three months ended September 30,
|
|
Nine months ended September 30,
|
||||||||||||
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
U.S. Direct Retail
|
|
$
|
1,033,669
|
|
|
$
|
759,674
|
|
|
$
|
2,847,898
|
|
|
$
|
2,134,782
|
|
U.S. Other
|
|
16,975
|
|
|
28,127
|
|
|
57,843
|
|
|
91,613
|
|
||||
U.S. segment net revenue
|
|
1,050,644
|
|
|
787,801
|
|
|
2,905,741
|
|
|
2,226,395
|
|
||||
International Direct Retail
|
|
147,554
|
|
|
72,724
|
|
|
376,138
|
|
|
165,119
|
|
||||
International Other
|
|
—
|
|
|
1,000
|
|
|
—
|
|
|
4,287
|
|
||||
International segment net revenue
|
|
147,554
|
|
|
73,724
|
|
|
376,138
|
|
|
169,406
|
|
||||
Total net revenue
|
|
$
|
1,198,198
|
|
|
$
|
861,525
|
|
|
$
|
3,281,879
|
|
|
$
|
2,395,801
|
|
|
|
Three months ended September 30,
|
|
|
|||||||
|
|
2017
|
|
2016
|
|
% Change
|
|||||
Consolidated Financial Metrics
|
|
|
|
|
|
|
|
|
|
||
Net Revenue
|
|
$
|
1,198,198
|
|
|
$
|
861,525
|
|
|
39.1
|
%
|
Adjusted EBITDA
|
|
$
|
(22,672
|
)
|
|
$
|
(30,849
|
)
|
|
|
|
Free cash flow
|
|
$
|
(18,463
|
)
|
|
$
|
(13,968
|
)
|
|
|
|
Direct Retail Financial and Operating Metrics
|
|
|
|
|
|
|
|
||||
Direct Retail Net Revenue
|
|
$
|
1,181,223
|
|
|
$
|
832,398
|
|
|
41.9
|
%
|
Active Customers
|
|
10,250
|
|
|
7,362
|
|
|
39.2
|
%
|
||
LTM Net Revenue per Active Customer
|
|
$
|
408
|
|
|
$
|
406
|
|
|
0.5
|
%
|
Orders Delivered
|
|
4,719
|
|
|
3,417
|
|
|
38.1
|
%
|
||
Average Order Value
|
|
$
|
250
|
|
|
$
|
244
|
|
|
2.5
|
%
|
|
|
Nine months ended September 30,
|
|
|
|||||||
|
|
2017
|
|
2016
|
|
% Change
|
|||||
Consolidated Financial Metrics
|
|
|
|
|
|
|
|
|
|
||
Net Revenue
|
|
$
|
3,281,879
|
|
|
$
|
2,395,801
|
|
|
37.0
|
%
|
Adjusted EBITDA
|
|
$
|
(45,814
|
)
|
|
$
|
(76,666
|
)
|
|
|
|
Free cash flow
|
|
$
|
(114,658
|
)
|
|
$
|
(113,968
|
)
|
|
|
|
Direct Retail Financial and Operating Metrics
|
|
|
|
|
|
|
|
||||
Direct Retail Net Revenue
|
|
$
|
3,224,036
|
|
|
$
|
2,299,901
|
|
|
40.2
|
%
|
Active Customers
|
|
10,250
|
|
|
7,362
|
|
|
39.2
|
%
|
||
LTM Net Revenue per Active Customer
|
|
$
|
408
|
|
|
$
|
406
|
|
|
0.5
|
%
|
Orders Delivered
|
|
13,209
|
|
|
9,343
|
|
|
41.4
|
%
|
||
Average Order Value
|
|
$
|
244
|
|
|
$
|
246
|
|
|
(0.8
|
)%
|
▪
|
Although depreciation and amortization are non-cash charges, the assets being depreciated and amortized may have to be replaced in the future, and Adjusted EBITDA does not reflect cash capital expenditure requirements for such replacements or for new capital expenditure requirements;
|
▪
|
Adjusted EBITDA does not reflect equity based compensation and related taxes;
|
▪
|
Adjusted EBITDA does not reflect changes in our working capital;
|
▪
|
Adjusted EBITDA does not reflect income tax payments that may represent a reduction in cash available to us;
|
▪
|
Adjusted EBITDA does not reflect depreciation and interest expenses associated with the lease financing obligations; and
|
▪
|
Other companies, including companies in our industry, may calculate Adjusted EBITDA differently, which reduces its usefulness as a comparative measure.
|
|
|
Three months ended September 30,
|
|
Nine months ended September 30,
|
||||||||||||
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Reconciliation of Adjusted EBITDA
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net loss
|
|
$
|
(76,429
|
)
|
|
$
|
(60,940
|
)
|
|
$
|
(171,843
|
)
|
|
$
|
(150,419
|
)
|
Depreciation and amortization (1)
|
|
22,913
|
|
|
15,463
|
|
|
62,588
|
|
|
38,528
|
|
||||
Equity based compensation and related taxes
|
|
19,598
|
|
|
15,308
|
|
|
50,539
|
|
|
37,265
|
|
||||
Interest expense (income), net
|
|
2,008
|
|
|
292
|
|
|
3,857
|
|
|
(791
|
)
|
||||
Other expense (income), net
|
|
227
|
|
|
(889
|
)
|
|
(400
|
)
|
|
(1,804
|
)
|
||||
Provision for (benefit from) income taxes
|
|
237
|
|
|
(83
|
)
|
|
671
|
|
|
555
|
|
||||
Other (1)
|
|
8,774
|
|
|
—
|
|
|
8,774
|
|
|
—
|
|
||||
Adjusted EBITDA
|
|
$
|
(22,672
|
)
|
|
$
|
(30,849
|
)
|
|
$
|
(45,814
|
)
|
|
$
|
(76,666
|
)
|
|
|
Three months ended September 30,
|
|
Nine months ended September 30,
|
||||||||||||
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Net cash provided by (used in) operating activities
|
|
$
|
24,752
|
|
|
$
|
15,621
|
|
|
$
|
(3,245
|
)
|
|
$
|
(10,680
|
)
|
Purchase of property and equipment
|
|
(30,980
|
)
|
|
(20,408
|
)
|
|
(76,528
|
)
|
|
(81,844
|
)
|
||||
Site and software development costs
|
|
(12,235
|
)
|
|
(9,181
|
)
|
|
(34,885
|
)
|
|
(21,444
|
)
|
||||
Free cash flow
|
|
$
|
(18,463
|
)
|
|
$
|
(13,968
|
)
|
|
$
|
(114,658
|
)
|
|
$
|
(113,968
|
)
|
|
|
Three months ended September 30,
|
|
|
|||||||
|
|
2017
|
|
2016
|
|
% Change
|
|||||
Cost of goods sold
|
|
$
|
917,889
|
|
|
$
|
659,864
|
|
|
39.1
|
%
|
As a percentage of net revenue
|
|
76.6
|
%
|
|
76.6
|
%
|
|
|
|
|
|
Three months ended September 30,
|
|
|
|||||||
|
|
2017
|
|
2016
|
|
% Change
|
|||||
Customer service and merchant fees (1)
|
|
$
|
42,949
|
|
|
$
|
33,872
|
|
|
26.8
|
%
|
Advertising
|
|
141,714
|
|
|
101,333
|
|
|
39.8
|
%
|
||
Merchandising, marketing and sales (1)
|
|
56,934
|
|
|
48,550
|
|
|
17.3
|
%
|
||
Operations, technology, general and administrative (1)
|
|
112,669
|
|
|
79,526
|
|
|
41.7
|
%
|
||
|
|
$
|
354,266
|
|
|
$
|
263,281
|
|
|
34.6
|
%
|
As a percentage of net revenue:
|
|
|
|
|
|
|
|
|
|
||
Customer service and merchant fees (1)
|
|
3.6
|
%
|
|
3.9
|
%
|
|
|
|
||
Advertising
|
|
11.8
|
%
|
|
11.8
|
%
|
|
|
|
||
Merchandising, marketing and sales (1)
|
|
4.8
|
%
|
|
5.6
|
%
|
|
|
|
||
Operations, technology, general and administrative (1)
|
|
9.4
|
%
|
|
9.2
|
%
|
|
|
|
||
|
|
29.6
|
%
|
|
30.5
|
%
|
|
|
|
|
|
Three months ended September 30,
|
|
|
||||||
|
|
2017
|
|
2016
|
|
|
||||
Customer service and merchant fees
|
|
$
|
636
|
|
|
$
|
627
|
|
|
|
Merchandising, marketing and sales
|
|
$
|
8,849
|
|
|
$
|
6,588
|
|
|
|
Operations, technology, general and administrative
|
|
$
|
9,831
|
|
|
$
|
7,881
|
|
|
|
|
|
Three months ended September 30,
|
|
|
||||
|
|
2017
|
|
2016
|
|
|
||
|
|
|
|
|
|
|
|
|
Customer service and merchant fees
|
|
3.5
|
%
|
|
3.9
|
%
|
|
|
Merchandising, marketing and sales
|
|
4.0
|
%
|
|
4.9
|
%
|
|
|
Operations, technology, general and administrative
|
|
8.6
|
%
|
|
8.3
|
%
|
|
|
|
|
Nine months ended September 30,
|
|
|
|||||||
|
|
2017
|
|
2016
|
|
% Change
|
|||||
Cost of goods sold
|
|
$
|
2,495,221
|
|
|
$
|
1,826,570
|
|
|
36.6
|
%
|
As a percentage of net revenue
|
|
76.0
|
%
|
|
76.2
|
%
|
|
|
|
|
|
Nine months ended September 30,
|
|
|
|||||||
|
|
2017
|
|
2016
|
|
% Change
|
|||||
Customer service and merchant fees (1)
|
|
$
|
117,132
|
|
|
$
|
91,286
|
|
|
28.3
|
%
|
Advertising
|
|
384,220
|
|
|
293,436
|
|
|
30.9
|
%
|
||
Merchandising, marketing and sales (1)
|
|
160,033
|
|
|
129,679
|
|
|
23.4
|
%
|
||
Operations, technology, general and administrative (1)
|
|
292,988
|
|
|
207,289
|
|
|
41.3
|
%
|
||
Total operating expenses
|
|
$
|
954,373
|
|
|
$
|
721,690
|
|
|
32.2
|
%
|
As a percentage of net revenue
|
|
|
|
|
|
|
|
|
|
||
Customer service and merchant fees (1)
|
|
3.6
|
%
|
|
3.8
|
%
|
|
|
|
||
Advertising
|
|
11.7
|
%
|
|
12.2
|
%
|
|
|
|
||
Merchandising, marketing and sales (1)
|
|
4.9
|
%
|
|
5.4
|
%
|
|
|
|
||
Operations, technology, general and administrative (1)
|
|
8.9
|
%
|
|
8.7
|
%
|
|
|
|
||
|
|
29.1
|
%
|
|
30.1
|
%
|
|
|
|
|
|
Nine months ended September 30,
|
|
|
||||||
|
|
2017
|
|
2016
|
|
|
||||
Customer service and merchant fees
|
|
$
|
1,866
|
|
|
$
|
1,488
|
|
|
|
Merchandising, marketing and sales
|
|
$
|
24,014
|
|
|
$
|
16,910
|
|
|
|
Operations, technology, general and administrative
|
|
$
|
24,027
|
|
|
$
|
18,510
|
|
|
|
|
|
Nine months ended September 30,
|
|
|
||||
|
|
2017
|
|
2016
|
|
|
||
As a percentage of net revenue
|
|
|
|
|
|
|
|
|
Customer service and merchant fees
|
|
3.5
|
%
|
|
3.7
|
%
|
|
|
Merchandising, marketing and sales
|
|
4.1
|
%
|
|
4.7
|
%
|
|
|
Operations, technology, general and administrative
|
|
8.2
|
%
|
|
7.9
|
%
|
|
|
|
|
September 30,
2017 |
|
December 31,
2016 |
||||
|
|
(in thousands)
|
||||||
Cash and cash equivalents
|
|
$
|
553,721
|
|
|
$
|
279,840
|
|
Short-term investments
|
|
$
|
56,699
|
|
|
$
|
68,743
|
|
Accounts receivable, net
|
|
$
|
27,521
|
|
|
$
|
19,113
|
|
Long-term investments
|
|
$
|
29,809
|
|
|
$
|
30,967
|
|
Working capital
|
|
$
|
126,346
|
|
|
$
|
(80,129
|
)
|
|
|
Nine months ended September 30,
|
||||||
|
|
2017
|
|
2016
|
||||
|
|
(in thousands)
|
||||||
Net loss
|
|
$
|
(171,843
|
)
|
|
$
|
(150,419
|
)
|
Net cash used in operating activities
|
|
$
|
(3,245
|
)
|
|
$
|
(10,680
|
)
|
Net cash used in investing activities
|
|
$
|
(98,512
|
)
|
|
$
|
(97,178
|
)
|
Net cash provided by (used in) financing activities
|
|
$
|
375,225
|
|
|
$
|
(18,260
|
)
|
Exhibit
|
|
|
|
Incorporated by Reference
|
|||
Number
|
|
Exhibit Description
|
Filed Herewith
|
Form
|
File No.
|
Filing Date
|
Exhibit Number
|
4.1
|
|
|
8-K
|
001-36666
|
9/15/2017
|
4.1
|
|
|
|
|
|
|
|
|
|
10.1
|
|
|
8-K
|
001-36666
|
9/15/2017
|
10.1
|
|
|
|
|
|
|
|
|
|
10.2
|
|
|
8-K
|
001-36666
|
9/15/2017
|
10.2
|
|
|
|
|
|
|
|
|
|
10.3
|
|
|
8-K
|
001-36666
|
9/15/2017
|
10.3
|
|
|
|
|
|
|
|
|
|
10.4
|
|
|
8-K
|
001-36666
|
9/15/2017
|
10.4
|
|
|
|
|
|
|
|
|
|
10.5
|
|
|
8-K
|
001-36666
|
9/15/2017
|
10.5
|
|
|
|
|
|
|
|
|
|
10.6
|
|
|
8-K
|
001-36666
|
9/15/2017
|
10.6
|
|
|
|
|
|
|
|
|
|
10.7
|
|
|
8-K
|
001-36666
|
9/15/2017
|
10.7
|
|
|
|
|
|
|
|
|
|
10.8
|
|
|
8-K
|
001-36666
|
9/12/2017
|
10.1
|
|
|
|
|
|
|
|
|
|
10.9
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31.1
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31.2
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
32.1#
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
32.2#
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
101.INS
|
|
XBRL Instance Document
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
101.SCH
|
|
XBRL Taxonomy Extension Schema Document
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
101.CAL
|
|
XBRL Taxonomy Calculation Linkbase Document
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
101.DEF
|
|
XBRL Taxonomy Definition Linkbase Document
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
101.LAB
|
|
XBRL Taxonomy Labels Linkbase Document
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
101.PRE
|
|
XBRL Taxonomy Presentation Linkbase Document
|
X
|
|
|
|
|
+
|
|
Indicates a management contract or compensatory plan
|
|
|
|
#
|
|
This certification is deemed not filed for purposes of section 18 of the Securities Exchange Act of 1934, as amended (Exchange Act), or otherwise subject to the liability of that section, nor shall it be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended or the Exchange Act.
|
|
|
WAYFAIR INC.
|
|
|
|
|
|
|
Date: November 2, 2017
|
By:
|
/s/ NIRAJ SHAH
|
|
|
Niraj Shah
|
|
|
President and Chief Executive Officer
|
|
|
(Principal Executive Officer)
|
|
|
|
|
|
|
Date: November 2, 2017
|
By:
|
/s/ MICHAEL FLEISHER
|
|
|
Michael Fleisher
|
|
|
Chief Financial Officer
|
|
|
(Principal Financial Officer)
|
1.
|
Parking
. For periods from and after the date hereof, Article 37 of the Original Lease is amended by adding the following provisions to the end of said Article 37 (as revised in the Fifth Amendment):
|
By:
|
SPG COPLEY ASSOCIATES, LLC, a Delaware limited liability company,
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q of Wayfair Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c.
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d.
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an Annual Report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Date: November 2, 2017
|
|
/s/ NIRAJ SHAH
|
|
|
Niraj Shah
|
|
|
President and Chief Executive Officer
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q of Wayfair Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c.
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d.
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an Annual Report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Date: November 2, 2017
|
|
/s/ MICHAEL FLEISHER
|
|
|
Michael Fleisher
|
|
|
Chief Financial Officer
|
1)
|
the Report which this statement accompanies fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
|
2)
|
the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
Date: November 2, 2017
|
|
/s/ NIRAJ SHAH
|
|
|
Niraj Shah
|
|
|
President and Chief Executive Officer
|
1)
|
the Report which this statement accompanies fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
|
2)
|
the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
Date: November 2, 2017
|
|
/s/ MICHAEL FLEISHER
|
|
|
Michael Fleisher
|
|
|
Chief Financial Officer
|