Wayfair (W) Q4 Loss Narrower Than Anticipated, Revenues Beat

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Wayfair Inc.W reported non-GAAP loss of $1.12 per share in the fourth quarter of 2018, narrower than the Zacks Consensus Estimate of $1.24 and the year-ago figure of $1.28.

Total fourth-quarter revenues came in at $2.01 billion, up 39.9% year over year. The figure also outpaced the Zacks Consensus Estimate of $1.88 billion.

The year-over-year increase in revenues was driven by strengthening of the company's direct retail business across international regions.

Following the earnings release, its shares increased more than27%.

Quarter in Detail

The company's direct retail net revenues, which include sales generated primarily through Wayfair's sites, were $1.996 billion in the fourth quarter, increasing 40.6% year over year.

Active customers increased 37.9% from the prior-year quarter to 15.2 million. Also, LTM net revenues per active customer increased 5% year over year to $443 million.

Total number of orders delivered in the reported quarter was 8.8 million, up 42% year over year. Orders per customer in the quarter were 1.85 million, reflecting an increase of 4% from the year-ago period. Further, repeat customers placed 5.8 million orders in the fourth quarter, up 51.1% year over year.

Operating Results

In the fourth quarter, Wayfair's gross margin was 24.1%, up 100 basis points on a year-over-year basis.

Adjusted EBITDA margin was (2.7%) million compared with (1.5%) in the year-ago quarter. This was led by increasing investments, mainly in the international regions.

The company's operating expenses of $614.7 million increased 53.7% year over year. Operating loss came in at $142.8 million, which was wider than the prior-year quarter's $73 million.

Balance Sheet & Cash Flow

At the end of fourth quarter, cash, cash equivalents and short-term investments were $963.7 million, up from $518.7 million in the comparable year-ago period. Accounts receivables were $50.6 million, up from $41 million in the third quarter.

Cash from operations was $42.5 million and capital expenditure totaled $48.7 million. Free cash flow was ($23.2) million compared with ($58.8) 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 Expedia Group, Inc. EXPE , AMETEK, Inc. AME and Inphi Corporation IPHI , 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 rate for Expedia, AMETEK and Inphi is projected to be 13.4%, 9.6% and 18.5%, respectively.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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