Ladies and gentlemen, thank you for being here. My name is Krista, and I will be your conference operator today. I want to welcome everyone to the Wayfair Second Quarter 2025 Earnings Release Conference Call. I will now turn the conference over to Ryan Barney, Head of Investor Relations. Ryan, you may begin.

Good morning, and thank you for joining us. Today, we will review our second quarter 2025 results. With me are Niraj Shah, Co-Founder, Chief Executive Officer, and Co-Chairman; Steve Conine, Co-Founder and Co-Chairman; and Kate Gulliver, Chief Financial Officer and Chief Administrative Officer. We will all be available for Q&A following today's prepared remarks. I would like to remind you that our call today will consist of forward-looking statements, including, but not limited to, those regarding our future prospects, business strategies, industry trends and our financial performance, including guidance for the third quarter of 2025. All forward-looking statements made on today's call are based on information available to us as of today's date. We cannot guarantee that any forward-looking statements will be accurate, although we believe that we have been reasonable in our expectations and assumptions. Our 10-K for 2024, our 10-Q for this quarter and our subsequent SEC filings identify certain factors that could cause the company's actual results to differ materially from those projected in any forward-looking statements made today. Except as required by law, we undertake no obligation to publicly update or revise any of these statements whether as a result of any new information, future events, or otherwise. Also, please note that during this call, we will discuss certain non-GAAP financial measures as we review the company's performance, including adjusted EBITDA, adjusted EBITDA margin, and free cash flow. These non-GAAP financial measures should not be considered replacements for and should be read together with GAAP results. Please refer to the Investor Relations section of our website to obtain a copy of our earnings release and investor presentation, which contain descriptions of our non-GAAP financial measures and reconciliations of non-GAAP measures to the nearest comparable GAAP measures. This call is being recorded, and a webcast will be available for replay on our IR website. I would now like to turn the call over to Niraj.

Thanks, Ryan, and good morning, everyone. We're pleased to be here today to discuss our second quarter results with you. The second quarter was a resounding success, defined by accelerating sales and share gain in tandem with expanding profitability. As we've discussed over the last few years, we can and will grow profitably while taking significant share in the market. We operate the business by balancing investing for the future with growing our current profitability with the objective of maximizing EBITDA and free cash flow over the long term. The second quarter was a nice proof point of the journey that we've been on and even more exciting of what is to come. Year-over-year revenue growth of 6%, excluding the impact of Germany, marks the highest growth rate we have seen since early 2021. Our over 6% adjusted EBITDA margin demonstrates the significant leverage in our model, and as previewed in our Investor Day 2 years ago, is just the beginning of what we believe we can achieve over time. Switching gears, as we started the quarter, there was intense focus from investors on the ramifications of tariffs on our sector and how this would impact Wayfair's competitive position. As we've previously described, the marketplace forces of our inventory-light model give us unmatched flexibility with our global network of more than 20,000 suppliers offering over 30 million products in constant competition to present the strongest value to the customer. The benefits of this model continue to prove self-evident despite the various ebbs and flows of the broad business environment. Specifically, when we look at the actual items that customers are viewing and purchasing today, prices have remained relatively consistent with the first quarter. As we spoke about in the spring, suppliers take different approaches to managing cost increases. While some may pass through price increases, others who want to win share in a demand-constrained environment, will choose to keep their prices more competitive, and we use all the methods at their disposal to do so. Our model allows us to service the products with the best value for our customers, enabling us and our suppliers to gain share and grow revenue. Pricing consistency is largely reflected in our results on average order value as well. Sequential growth in the second quarter mirrored what we saw last year. It's worth talking through some of the moving pieces. AOV is an output of unit prices, items per order, and mix. We've seen some modest growth in average items per order, but mix is the primary driver of year-over-year AOV growth. Our specialty retail brands in Perigold continue to outperform. Q2 is the peak of the outdoor category in which we're a large participant, and Wayfair Professional posted double-digit growth after a few quarters of increasing momentum. The strength in our top line was a combination of healthy AOV growth and a nice step-up in order growth from Q1. This is partially a function of the new long-cycle initiatives that we've been seeding and many of those efforts have started to bear fruit in 2025. We'll quickly run through a few of those now, but I'd encourage anyone less familiar with Wayfair to review some of our prior calls for more detail. We introduced Wayfair Verified in the fourth quarter, a curation program designed to give customers a shortcut to items in the catalog that reflect the highest quality and value standards across every style and price point. Wayfair Verified is an editorial review program where our merchants hand inspect key items and provide firsthand detail on why they have selected that specific item. The Verified checkmark provides a guidepost for shoppers as they navigate our endless aisle, and the response from customers has been very positive. These items are driving outsized performance, converting over 25% better, achieving approximately 20% higher Net Promoter Scores and generating higher repeat purchase behavior compared to non-verified items. The number of items in the program and the prominence of them in the experience will continue to grow over the course of the year. The second initiative to call out is Wayfair Rewards, our paid loyalty program that launched last holiday season. The initial excitement we saw for Wayfair Rewards at the time of launch continues to gain traction with member growth and customer lifetime value curves exceeding our initial expectations. We'll have more details to share on the success we're having in the not-too-distant future. Finally, physical retail continues to generate momentum across our portfolio of brands as May marked the 1-year anniversary of our first large format Wayfair store outside of Chicago. We saw an impressive in-store response to major promotional events in the quarter like Way Day and Memorial Day, showcasing the power of bringing the Wayfair brand to life in an omnichannel experience. While the sales halo in the metro area from the store has been tremendous, the impact on categories where Wayfair is less top of mind is even more pronounced. In the Chicago DMA, we've seen over a 50% increase in lower ticket frequency purchases like kitchen accessories and a more than 35% increase in higher consideration home improvement purchases like bathroom renovation items and kitchen cabinets. Earlier this year, we announced additional Wayfair stores coming to Atlanta in 2026 and New York in 2027. And just this past week, we announced plans for a Wayfair store outside of Denver to open in late 2026. We're excited to see the impact that these stores have in these key metros as we look to replicate the success we've had in Chicago. We also opened our first Perigold store in May in Highland Village in Houston, and it's off to a great start with a second store opening in West Palm Beach this fall. These are just three initiatives. The full list of initiatives is quite long and some of the most exciting ones are due to the tech replatforming efforts over the last few years. Ongoing improvements in the shopping experience, genAI-powered enhancements for customers and suppliers, and an expansion of our supply chain capabilities are just a few of the areas seeing rapid advances. Stepping back now, the roadmap we have on these various initiatives, combined with our relentless focus on top-tier execution, paints an exciting picture ahead where Wayfair is accelerating share capture and growth. All of this is possible due to the deep partnerships we have with our suppliers across technology and people, but also via deep operational integration across all aspects of their business. Our logistics offering is one of our key competitive moats and an area where we see growing supplier eagerness to lean in. As a reminder to those new to Wayfair, CastleGate is our proprietary logistics network spanning inbound logistics, storage, and outbound fulfillment and is possible due to the exhaustive technology and operations with more than 60 buildings totaling 22 million square feet across multiple continents. We've been investing in CastleGate since 2015 and have built out one of the world's only networks custom designed for the fragile, heavy, and bulky products that define the home category. CastleGate Forwarding is our inbound logistics and ocean freight forwarding operations. We enable suppliers to maintain a regular flow of goods as production shifts around the globe and they scale up operations in new geographies. Many of our suppliers are small businesses who individually lack the volume to consistently secure cost-effective and reliable ocean freight capacity on their own. Our forwarding services provide access to large high-quality ocean carriers on amenable terms, which we can then share at competitive rates with our suppliers. We enable this by not just providing the transportation capability to move the goods but by also offering cost-effective ways to consolidate the goods to enable forward positioning to many locations. We've seen a 40% year-over-year increase in total volume using our CastleGate Forwarding offerings over the last year, driven by increases in both active suppliers shipping on our service and average containers per supplier. We've also expanded to new markets like Brazil and India, unlocking additional volume and enabling suppliers to more easily diversify their production footprint. Recent supply chain volatility has only reinforced the value we offer our suppliers. In fact, we've seen a more than 30% increase in long-term inbound commitments with suppliers compared to where we started the year. Once product has made its way into the domestic markets, suppliers are keen to leverage our CastleGate fulfillment network as the best way to forward position their products. The percentage of our revenue that comes from products shipped out of our fulfillment centers, what we call CastleGate penetration, sits at roughly 25% today, up about 400 basis points year-over-year. The benefits from the CastleGate network are numerous. Suppliers achieve broad forward positioning and speed badging, which lifts conversion, lowers incidents and return rates, lowers shipping costs, and thereby lowers retail prices to consumers. Lower prices, of course, drive conversion and enhance customer perception, leading to improved customer lifetime value. Logistics is one of the few areas where improvements help the supplier, the customer, and Wayfair all at the same time. With the uptick in CastleGate penetration, we've seen the percentage of items on-site with speed badging increase by over 800 basis points year-over-year, and the percentage of items with 1- and 2-day badges increase by approximately 400 basis points as we exited the second quarter. We've also seen a nice drop in average ship distance per order versus last year, driven by the growth in penetration. CastleGate further enhances the customer experience from improved reliability with materially higher exact on-time reliability rates than drop-ship, driven by our tight control over fulfillment and carrier partnerships. This enhances the customer order-to-delivery experience and results in higher customer Net Promoter Scores. Suppliers enjoy the benefits they get from participating in the CastleGate network, and one piece of feedback we've heard over the years is they desire to take advantage of our capabilities for more of their order volume. To that end, we're excited to share a key development in our logistics offering, the expansion and marketing of CastleGate to suppliers for fulfilling orders outside of their Wayfair business, what we call multichannel. Multichannel has existed in the background for quite some time, but in a different format and a very small scale, used primarily for clearing distressed inventory. Over the past 18 months, we've invested in operational and technology efforts to evolve this offering into a comprehensive third-party logistics service tailored for the home category. Pick and ship is our core service offering and provides suppliers with competitive rates, premium service, integrated inventory management, and streamlined order fulfillment for any of their customers. After testing with a small subset of suppliers in 2024, we launched the full offering to our entire supplier base earlier this year. The response has been resounding. Multichannel volumes are rapidly scaling, and we now have hundreds of suppliers utilizing the offering. We have line of sight to continued momentum as existing multichannel suppliers are growing their inbound volumes and with a healthy pipeline of new suppliers onboarding to the program. For suppliers, multichannel provides a competitive third-party logistics alternative specializing in heavier, larger home goods. For Wayfair, the benefits are significant as well. First, we generate an additional revenue stream and profit center that is accretive to adjusted EBITDA margins; second, and perhaps more importantly, multichannel opens up the next leg of CastleGate penetration by growing the inventory pool with which we can offer an enhanced customer experience. Suppliers can now more efficiently include a broader product set in CastleGate and can stock it deeper, expanding our offering of forward-positioned items and growing their in-stock rates, translating to better speed and lower prices for customers while improving our network efficiency. Ultimately, the multichannel offering creates a win for our suppliers, a win for our customers and a win for Wayfair. That's the philosophy we bring to everything we do. Every dollar we spend solves for the best outcome across our customers, suppliers, and Wayfair. Two decades of this approach has taught us that building great things takes time, but when done with thought, care, and prudence, we can have a payoff well worth the wait. You're seeing some of that this quarter. With years of work leading to some of the best growth and profitability flow through our business that we've seen since the pandemic. We couldn't be more excited for what lies ahead in 2025 and beyond. And thank you. And with that, let me turn it over to Kate.

Thanks, Niraj, and good morning, everyone. Let's dive into our results for the second quarter. Starting with the top line, net revenue grew 5% year-over-year and 6% excluding the impact of our exit from Germany. This was driven by strong performance across all of our brands and geographies, with our U.S. business up over 5% and our International segment growing over 3% compared to the second quarter of last year, showcasing the momentum we're seeing in Canada, the U.K., and Ireland. Our Q2 sequential order growth of 10% reflects strong execution and share capture despite a complex operating backdrop. Let me continue to walk down the P&L. As I do, please note that the remaining financials include depreciation and amortization, but exclude equity-based compensation, related taxes, and other adjustments. I will use the same basis when discussing our outlook as well. Gross margin for the quarter came in at 30.1% of net revenue. For over a year now, we've discussed how our ability to measure demand elasticity in virtually real-time enables us to make tactical investments on a level of granularity and precision that few other retailers can replicate. The result of this work drives our share spread wider and leads to outcomes like we saw in the second quarter. Growing orders as well as growing gross profit dollars, and we continue to see high return from these investments today. Niraj spoke at length about CastleGate and the ways that our model is advantaged as we drive penetration higher. This gives us more flexibility as we think about strategic areas of reinvestment in our goal to maximize adjusted EBITDA dollars. Multichannel is an important part of that puzzle. So it might be worthwhile to walk through the economics as it starts to scale. Multichannel revenue gets recognized as net revenue and program costs mostly sit in cost of goods sold. The offering has a similar gross margin profile to the business in aggregate and critically, the flow-through becomes very attractive as we think about bridging from the gross margin rate of the multichannel business to its profit contribution. The costs after gross profit are much smaller than they are for the business at large, meaning multichannel has a variable profit profile closer to its gross margin, making for accretive economics as this business grows. This is an important concept that we've discussed in pieces before but bears some reiteration now. We are always solving for growing multi-quarter adjusted EBITDA dollars. We achieve this by optimizing revenue growth with our flow-through after accounting for gross profit, customer service and merchant fees and advertising costs. Most of these expenses are largely variable by gross profit and customer service and merchant fees or can be dialed up and down based on payback like advertising expense. These flow-through dollars offset our selling, operations, technology, general and administrative or SOTG&A expense, our bucket of fixed costs. Let's walk through how we did on that basis this quarter. Customer service and merchant fees came in at 3.6% of net revenue for the quarter. Advertising was 11.4%, showing a solid path of sequential decline from the peak Q4 2024 and Q1 2025 levels. There are multiple factors coming together to drive the advertising leverage seen in this quarter. First, as we've shared in the past, we are rigorous about holding each of our channels to specific payback periods and that we adjust spend when testing data indicates that we are over or under our threshold. We were also seeing some efficiency here from areas where testing data has shown we should pull back spend to hold to our target. We are constantly evaluating the effectiveness of our marketing spend and due to our proprietary ad tech stack and tooling, we can nimbly react to ROI data. Second, as we discussed last year, we made a sizable push into the middle and upper funnel channels beginning in the fourth quarter of last year. Some of those are more nascent channels to Wayfair like TikTok, Instagram, YouTube, and more where we are testing the efficacy of these investments. Last fall, we explained how there is an initial deleverage period that comes as you ramp to scale spending across several channels at the same time and that many of these take multiple quarters to pay back. These investments set the stage for future revenue, and you see this bearing fruit here today as revenue of dollars associated with prior quarter spend flows in. It's also worth noting that we are seeing encouraging momentum in direct traffic. Starting with our loyalty program, Wayfair Rewards is more than a way to generate incremental share of wallet and order momentum but naturally leads to more direct traffic as customers return to Wayfair to spend the rewards dollars on their next find for their home. We also continue to see healthy engagement with our app, where the second quarter marked the highest level of installs since Q4 2020, and the percent of Wayfair U.S. revenue from the app continues to climb steadily to an all-time high of approximately 30%. Now coming back to the concept of flow-through, we drove a rate of 15.2% in the second quarter. 30.1% gross margin, less 3.6% for customer service and merchant fees and 11.4% for advertising. That's the best result we've had since 2023 and was critical to the success we had on driving EBITDA and free cash flow dollars in the quarter. We think this is a helpful construct for investors to bear in mind as they model the business as it takes a more comprehensive view of our cost structure than any one of our variable line items alone and combined with SOTG&A leverage drive total EBITDA flow-through. Selling operations, technology, general and administrative expenses were $370 million in the second quarter. This was down by roughly $30 million compared to the second quarter of last year. While we did see a modest sequential growth, some of this was due to mix shift between OpEx and capitalized labor. In fact, when you pair the SOTG&A with our site and software development costs in the quarter, our capitalized labor line, we have now reached the lowest levels of combined spend since Q2 2019, a testament to the years of cost efficiency we have driven across the organization. In total, we generated $205 million of adjusted EBITDA dollars in the second quarter for a 6.3% margin on net revenue, including a 7.8% adjusted EBITDA margin in our U.S. segment. As Niraj mentioned earlier, we are now realizing the powerful profitability flow-through of our model, which we have been building towards for years even in a very challenging environment. We ended the quarter with $1.4 billion of cash, cash equivalents, and short-term investments and $1.8 billion of total liquidity. Cash from operations was $273 million, and capital expenditures came in at $43 million. This reflects the March technology restructuring following our replatforming efforts, which drove lower capitalized labor combined with tight discipline around fulfillment CapEx and some timing variance on physical retail, some of which will rebalance in the quarters ahead. Free cash flow in the second quarter was $230 million, the strongest free cash flow generation since the third quarter of 2020, with approximately 20% quarter-over-quarter revenue growth driving a healthy working capital benefit. We deployed approximately $200 million of cash in the quarter to retire more of our 2025 notes and nearly all of our remaining 2026 notes at attractive discounts to par. Looking ahead, after just a small step of the remaining 2025 due in October, we will sit with a clean balance sheet all the way out to September of 2027. This has been a remarkable evolution in our capital structure over the last year, driven by intense operating discipline and rapid profitability growth. Let's now turn to guidance for the third quarter of 2025. Beginning with the top line quarter-to-date, we are trending up in the mid-single digits year-over-year, and we would expect to end the quarter up in the low to mid-single digits. This outlook for the full quarter continues to include approximately 100 basis points of drag from the exit of our German business earlier in the year. Turning to gross margins. We will guide you to the lower end of the 30% to 31% range once again. Just like our operating philosophy across all parts of our business, whether it's investments in the customer experience and sharp pricing or thinking about the growth of multichannel over time, we will always be thoughtful and data-driven about whether to pocket gross margin gains or tactically reinvest them. Customer service and merchant fees should be just below 4%, in line with recent quarters. We expect advertising to be in the range of 11% to 12% of net revenue, reflecting a continuation of the dynamics we saw last quarter. This range should be the correct ballpark going forward. Stepping back, we do not view any of these line items in isolation. In any given period, $1 of investment that impacts the gross margin line may have higher ROI than $1 on the advertising line and vice versa. As you've seen us demonstrate, we remain nimble in our investment mix across the P&L, solving for the highest volume of revenue and EBITDA dollars across a multiyear view. Finally, SOTG&A is expected to be in the range of $360 million to $370 million once again in the third quarter. This is the right quarterly run rate for the business today in light of all of our operating efficiency work. Following the guidance down, we anticipate adjusted EBITDA margin to be in the 5% to 6% range for Q3. Now let me touch on a few housekeeping items. We expect equity-based compensation and related taxes of roughly $75 million to $95 million, depreciation and amortization should be approximately $73 million to $79 million, net interest expense of approximately $30 million, weighted average shares outstanding of approximately 130 million and CapEx in a $55 million to $65 million range. Wrapping up, this quarter's results are just an early illustration of the strength of our model. Our healthy top line growth and robust profitability are a reflection of the value we bring to both our customers and our suppliers as well as the tremendous evolution we've undertaken in our cost structure, all while continuing to invest for the years ahead. As you've heard us say many times in the past, this is a Wayfair now built to both drive exciting share capture and profitability expansion at the same time. We have never been more focused on the opportunity in front of us and confident in our strategy, discipline, and execution.

So some related top-line questions. Can you talk about how you think the market grew and how your share gains have shaped up over the past year or so and through the second quarter here? And do you think any of the strength in the business is related to consumer pull forward around fear about tariffs? Obviously, the quarter-to-date is still very strong. But anything you pick up on the consumer side, whether it's pull forward or some differential between the low- and high-end consumer would be really helpful.

Thanks, Chris. Let me share a few thoughts on the market and Wayfair specifically. Overall, the market this year is definitely better than the previous three years, which saw significant declines. However, it still seems relatively flat, possibly down low single digits. I would describe the market as not particularly strong, more like it's hitting a bottom and just maintaining that level. Regarding demand, we haven't noticed any signs of pull forward related to tariffs in the demand charts. There's no clear correlation between demand fluctuations and tariff announcements. The high-end market is certainly performing better than the mass market, which makes sense given the discretionary nature of the category. So, while the category feels somewhat stable at this point, Wayfair's situation is markedly different. Our strength is structural, and we've been building momentum throughout this year from Q1 to Q2 and continuing that into Q3. This growth is driven by specific factors related to Wayfair. We've maintained a focus on one primary pillar: gaining market share every quarter since Q4 of 2022 by enhancing our core offerings—price, selection, availability, and delivery speed—through close partnerships with suppliers. This focus has improved the customer experience and contributed to our share gains. Historically, we've relied on three pillars for growth; the first pillar is now back intact, allowing us to gain share. The second pillar involves our significant technology team, which includes 2,500 professionals. For the last few years, they concentrated on replatforming core systems, which was essential, even if it temporarily slowed our business progress. Now that we've made significant progress in that area, our team is focusing on developing features that enhance customer and supplier experiences, positively impacting conversion rates and operational efficiency. The third pillar ties into our efforts to optimize our organizational structure post-COVID, balancing senior and junior team members and resizing teams. After considerable effort, we now have a strong team that is driving the business forward more quickly than before, launching new initiatives like Wayfair rewards, Wayfair Verified, and brick-and-mortar stores. These new programs are reliant on having the right team resources and technological support. With all three pillars back in place—the improved recipe, the technology capable of advancing our business, and the launch of new programs—this is where we are seeing the momentum build.

Yes. Thanks, Chris. So as you alluded to in the Analyst Day in '23, we spoke to getting towards north of 10% adjusted EBITDA margins. And I think you're seeing us actually make really nice progress on that path, and we feel very good about our ability to achieve that and continue to see momentum there. To your point, there are a few different elements to that. I referenced on the call, part of how we look at it internally is to think through the components that really drive to what we would call our contribution margin. So the gross margin less the customer service and merchant fees and less the ad costs, and ensuring that we're optimizing on that contribution margin to then cover off on the SOTG&A and provide that really nice incremental flow-through that you saw this quarter, and we want to continue to see. And we do trade off across the elements within there to ensure that we're doing the right thing to maximize over time adjusted EBITDA dollars, which ultimately then drives one of our core north stars, which is driving positive owners' earnings. So the adjusted EBITDA dollars less the CapEx, less the SBC. You saw that very nicely positive this quarter. And so the combination of the gross margin, the customer service, the ACNR, those things driving to that contribution margin, trying to drive that up over time, helps you get to that adjusted EBITDA dollars and helps you get to that adjusted EBITDA margin that we talked about. So I wouldn't say that there's anything fundamentally different in the way that we're looking at the business, but we do want to provide a framework to help folks think through how we make trade-offs across those lines to ensure that we are driving to maximizing adjusted EBITDA dollars, which then in turn, obviously drives that margin.

And the only thing I would just chime in to add to what Kate said because Kate, I think, recapped it really well is that positive owners' earnings and maximizing that is really a goal we have. So if you think about that, well, how would you do that? Well, if you kind of run out scenarios, you would see that, hey, if I believe I can grow revenue at a pretty meaningful rate and do it while protecting the flow-through at a significant level, you would see that that compounds very quickly. And so you end up optimizing for that because that is what's going to give you the kind of that asymmetric upside. And so we're very focused on that. You're starting to see that manifest when you see the highest revenue growth, highest profit since 2021. And we're telling you momentum is building. Well, okay, well, where could that go if that builds over time? Well, that's where we believe the opportunity is. But so that's not focusing on revenue growth, and that's not focusing on profitability; it's a combination of the two, right? So you need you need to have the flow-through. And if you couple that with meaningful revenue growth, then you really are going to maximize the dollars.

Great results, guys. Following up on the flow-through question. So the flow-through margin does look particularly good right now, and the Q3 guide looks like it's holding steady at a strong level, maybe even strengthening. I'm wondering, are we at like a new normal, we can see the power of the model with revenue growth? Or is there somewhat of an elevated contribution margin today as we're kind of coming off the bottom and now starting to see some of that incremental growth?

Yes, I can begin, and Niraj can add if needed. For several quarters, we've discussed how our cost discipline over the past few years has positively affected our overall profitability as we’ve begun to see growth in our revenue. This momentum is now translating into significant contributions, and we are pleased with the contribution margin this quarter. Additionally, the incremental margins are strong this quarter, thanks in part to our SOTG&A remaining stable in the $360 million to $370 million range, as we mentioned. What we’re emphasizing is that this is in line with our expectations. We’ve been steering the business in this direction for many years, and the growth in revenue is clearly reflected in a healthy adjusted EBITDA flow-through and a solid adjusted EBITDA margin. There's nothing out of the ordinary here; it’s simply the result of our sustained efforts over the last few years bringing us to this point.

Peter, I believe I understood your question correctly. Regarding the contribution margin of 15%, I think you were asking if there’s a reason it might be too high. I would say, reflecting on the Investor Day discussions, we believe that’s a solid level. The key takeaway is that if you maintain that level of contribution margin alongside meaningful revenue growth, that’s how you achieve the results we are discussing. Yes. So what I would say, so if you kind of look inside the ad cost bucket, I think what you would see is there's two significant trends that are both happening at the same time. One is that the emerging channels, which would be things like influencers or things like TikTok, like segments where we've been underpenetrated, arguably behind and we focused on figuring out the right recipe to crack them economically. But we made really good headway there, and we're growing them quite nicely, and they are getting us in front of a new incremental set of customers. So we're really excited about that. I will say that the amount of the total budget that's spent in those areas is still pretty modest but it's actually performing really well, growing nicely. I would say the bigger thing that's happened on the ad cost line is through a lot of testing and some enhances to some of our measurement models, we've also been able to identify pockets of our spend, which we do not believe were contributing at the economic payback we wanted. So even though they were creating some revenue for us, it was not at a cost level that would make sense to us. So there, what we've done is we've trimmed out those pockets of spend because we're now able to identify them better. And as we trim them out, it creates a revenue headwind. So like-for-like, ad costs would be higher, and revenue would be higher. But it makes sense to trim them out, they're not worth that level of spend. And so what you've seen is that overall, even though we're growing these emerging channels, on net, we're getting a lot of advertising cost leverage because of how those two add together. And we're pretty excited about the combination of those two things that are happening.

Nice quarter. My first question may be repetitive, and I apologize for that. However, looking at the sales trajectory in Q2 and the guidance for Q3, there has clearly been a noticeable improvement. So, my question is, during this period, did Wayfair make any specific changes, or was it more about the business aligning to drive the stronger top line?

Yes. Thanks, Brian. I would actually say I think the demand has been building. And I think it's just now building to a level that it's easier to see and obviously, as it continues to build, it will become increasingly easier to see, right? So I think the way I would describe it is that there's no single lever. In fact, I think I highlighted that if you do add costs like-for-like, you would actually see a higher level of revenue growth. So in other words, we created a revenue headwind by rationalizing some of the ad costs based on some of the improvements we were able to make in the way we were able to measure and model different tranches of the ad cost in a way that's actually been a great benefit for us overall. Because, again, as I mentioned, revenue growth is one goal, the contribution margin flow-through is the other goal. The combination creates this growth in dollars in the owner's earnings, which is really the ultimate goal. And so there's not one lever. It's what I described with the three pillars playing out and that's been playing out, not necessarily this quarter, but over the course of this year, and you're seeing this building.

I just want to thank everyone for your interest in Wayfair and for joining us today. We look forward to talking with you again next quarter and I hope everyone is enjoying the summer.

This concludes today's conference call. Thank you for your participation, and you may now disconnect.