Wayfair (NYSE:W) said fourth-quarter results capped what management called “a tremendous year,” highlighting accelerating share gains, expanding profitability, and continued investment in initiatives such as physical retail and its paid loyalty program.
Fourth-quarter growth driven by orders and AOV gains
Co-founder and CEO Niraj Shah said fourth-quarter revenue grew 7.8% year over year excluding the impact of the company’s exit from Germany, with growth “evenly split” between order growth and average order value expansion, both rising more than 3%. Shah noted Wayfair posted its third consecutive quarter of new customer growth alongside “healthy growth in repeat orders,” despite what he described as a home category that contracted in the low single digits during the quarter.
Margins: contribution gains and EBITDA flow-through
Wayfair reported adjusted gross margin of 30.3% of net revenue in Q4. Gulliver said the company has held gross margin at the low end of its 30% to 31% range for more than two years while balancing structural benefits from programs such as Supplier Advertising and CastleGate against customer experience investments.
Gulliver also signaled that later in 2026 the company may “dip gross margin slightly below 30%” to capture share faster, stressing the magnitude would be “measured in the tens of basis points, not hundreds.” She framed Wayfair Rewards as an example where gross margin may face pressure, but variable-cost efficiency can improve through advertising leverage.
In Q4, Wayfair’s contribution margin was 15.3%, reflecting 3.7% of net revenue in customer service and merchant fees and 11.4% in advertising expense. Gulliver said contribution margin improved 250 basis points compared with Q4 2024 as Wayfair lapped a prior period of investment in newer advertising channels.
SOT G&A totaled $358 million in Q4. Wayfair generated adjusted EBITDA of $224 million for a 6.7% margin, which Gulliver said was more than double the adjusted EBITDA dollars delivered in Q4 2024. For the full year 2025, Wayfair reported adjusted EBITDA of $743 million, up more than 60% year over year, with adjusted EBITDA margin improving by more than 200 basis points.
Cash flow, liquidity, and leverage actions
Wayfair ended the quarter with $1.5 billion of cash and $1.9 billion of total liquidity including revolver availability. Cash from operations was $202 million and capital expenditures were $57 million, resulting in Q4 free cash flow of $145 million, which Gulliver said was a more than 40% year-over-year improvement.
On capital structure, Gulliver said the company issued its third high-yield bond during the quarter, retired the remainder of its 2025 notes, and repurchased just over $200 million of principal on its 2027 convertible notes. She said the convertible repurchases in the back half of the year (including earlier 2028 note repurchases) effectively offset “more than five million shares of potential dilution.” Net leverage fell to under 2.5x, down from roughly 4x at the end of 2024 and over 6x at the end of 2023, she said.
Stores and Wayfair Rewards highlighted as growth levers
Shah emphasized a growth framework described in the company’s annual shareholder letter: improving its “core recipe” (selection, price, availability, delivery speed), inventing and scaling new initiatives, and leveraging technology—including AI—to improve operations, supplier tools, and customer engagement.
On physical retail, Shah said Wayfair plans to open additional large-format stores in 2026 following the Chicago-area location that has been open for nearly two years. He said the next store is slated for Atlanta early in the year, followed by Columbus and Denver. Atlanta and Denver are expected to be in the 150,000-square-foot range, while Columbus will be about 70,000 square feet.
Shah said more than half of customers who have visited the Chicago store were “entirely new to file,” and that the company has seen post-visit lift in surrounding sales. In the Chicago DMA, he said Wayfair has seen a “nearly 30% spread” in performance for frequency categories such as bedding, décor, kitchen, and tabletop versus similar DMAs. In Q&A, Shah added that Illinois has shown “over 10% CAGR” growth versus national since the store opening, based on figures included in Wayfair’s refreshed investor materials.
Wayfair also discussed Wayfair Rewards, launched in fall 2024 and priced at $29 per year. Shah said the program includes free shipping, members-only sales and events, and 5% in rewards. The company reported more than 1 million members and said Rewards members drove more than 15% of Wayfair U.S. revenue exiting 2025. Shah said recent subscriber cohorts skewed toward reactivating shoppers, with “more than half of new paid members” coming from non-active customers. He also said Rewards shoppers purchased across more than three occasions in their first year and spent “multiples more” than non-members, with conversion rates nearly 3x higher for furniture and décor and more than 3.5x higher for housewares versus non-members.
Management reiterated that while Rewards can pressure gross margin due to rewards dollars and free shipping on smaller orders, it can be offset by reduced advertising needs as members return more frequently, benefiting contribution margin and adjusted EBITDA. Shah and Gulliver said the company plans to expand Rewards marketing across specialty retail brands, launch the program in Canada and the U.K. in the months ahead, and debut a Perigold-focused rewards offering for luxury customers later in the year.
Q1 2026 guidance: mid-single-digit growth and contribution margin around 15%
For the first quarter of 2026, Wayfair guided to mid-single-digit year-over-year revenue growth, citing continued share capture in a category management expects to be down low single digits. Wayfair guided to gross margin of 30% to 31% (likely at the low end), customer service and merchant fees just below 4% of net revenue, and advertising expense of 11% to 12%. The company said those assumptions imply contribution margin of roughly 15% for Q1.
SOT G&A is expected to be $360 million to $370 million, likely at the lower end, and adjusted EBITDA is guided to 4.5% to 5.5% of net revenue. Gulliver also reminded investors the first quarter is typically a cash outflow period due to working-capital dynamics, and she provided additional outlook items including equity-based compensation and related taxes of $70 million to $90 million, depreciation and amortization of $67 million to $73 million, net interest expense of about $37 million, and CapEx of $55 million to $65 million.
During Q&A, Shah said the company is not building its plan around a near-term housing rebound, describing the recovery as potentially a “slow burn,” and reiterated Wayfair expects to keep taking share through its own initiatives. Management also discussed AI efforts focused on internal productivity (including customer service automation and agent-assisted workflows), supplier tools, and early partnerships with major AI platforms to improve product representation and explore potential commerce protocols.
About Wayfair (NYSE:W)
Wayfair Inc (NYSE: W) is an e-commerce company focused on home furnishings and décor. Through its platform, Wayfair offers a broad assortment of furniture, lighting, home textiles, kitchenware and decorative accessories. The company’s portfolio includes flagship sites such as Wayfair.com, as well as specialty retail brands like Joss & Main, AllModern, Birch Lane and Perigold, each catering to distinct design styles and price points.
Founded in 2002 by Niraj Shah and Steve Conine under the name CSN Stores, the business rebranded as Wayfair in 2011 and went public in 2014.
