Conference Transcript - W 2026-09-09

Speaker 1

I'll stick with precedent, and I know everyone's moving around, and unfortunately we only have five minutes between sessions, so there will be people that are trickling in. But I think in the interest of time, we should kick off. Our next fireside chat is with the team from Wayfair. I've never had the opportunity to interview them here at Communicopia in the five years. I've been at Goldman. We've always talked more at our New York-based conference, so it's great to see you guys here out in San Francisco. Thanks for coming to the show out here.

Niraj Shah, CEO

It's great to be here.

Speaker 1

So, look, I think, why don't we kick it off taking a step back before we take a step forward? You know, as you look back over the last several years, this business has evolved a lot. When you think about the journey you've been on from even going pre-COVID, through COVID, post-COVID, and where we are today, maybe set the stage for the evolution the business has been on, and then we'll use that as a jumping-off point to talk about all the exciting forward initiatives you guys have in place.

Niraj Shah, CEO

So I guess the quick summary I would give is, you know, pre-COVID, you know, we went public in 2014, and we were doing a billion dollars in sales that year, and pre-COVID 2019, so six years later, we were doing $9 billion. So we grew a lot in that period. Even at that time, pre-COVID, we sort of figured out that things had become a little bit inefficient, a lot of hiring tied to the rapid growth. We felt like we needed to become a little more lean and efficient again, kind of what had driven our success. But then COVID sort of threw us for a loop. So COVID had a short boom followed by a long bust for the category we're in and for online. And the bust was exacerbated in the category because of ocean freight inflation and some additional factors. And then we had hired a lot during COVID. So kind of the efficiency we were seeking had sort of gone the wrong way with the COVID loop. So effectively, the journey post-COVID is by 2022, we were back kind of focused on the strategy we had. We started taking share again in the market in 2022. And that was basically through the core recipe, like price, selection, availability, and speed of delivery. And the reason it was just through the core recipe is that we were putting our technology efforts, so half of our corporate staff is our technology folks, software, product, data science, to a large re-platforming effort that we started in that time frame. So by 2024 into 2025, we're pretty far along in that. So then we start putting technology cycles towards programs, Wayfair Rewards, our loyalty program, Wayfair Verified, retail stores, Wayfair Delivery Plus. And so you see our growth accelerate as we get into 25. And then as we get into this year, we're getting to the tail end of all this technology work, which is on the infrastructure, which then lets us put effort back into kind of one of the ways we've historically grown a lot, which is product-led growth. So as we go out of this year into next year, we'll have that. And this is why, going back a year now, we talked about how our growth, which had sort of been kind of flat year over year at the beginning of 25, how it could go to 5, then 10, then 15, 20% organically, even with the category out of favor. And we got to 5, and then we were at 7 or 8. We've guided this quarter to high single digits, and we're basically on that journey. Okay.

Speaker 1

So with that as a jumping off point, let's stick with the category first. What are you seeing about the current state of the category and the way consumers are interacting with it today?

Niraj Shah, CEO

Well, I think the category has some malaise in it, which is largely tied to the fact that the housing market has some malaise in it. And as everyone knows, that's largely tied to the interest rate. So you basically have folks not moving, and as a result, you sort of invest a little less into housing projects. You're not moving, which is a year where you'd spend a lot more than a year you don't move. And so the category overall, it had some negative comp years. Now it's back to sort of like flattish year over year. But it's not a booming category. But I'll just remind you, it's a very large category. So depending on how you define the TAM, $400 to $500 billion in the markets we're in, which is the U.S., Canada, U.K., and Ireland. And so the way we look at it is $12.5 billion last year in sales. We have a small piece of the category. but the category is flattish, but it's very fragmented. And so the opportunity is for share.

Speaker 1

Okay. So within that conversation around fragmented nature of the opportunity, when you think about growth going forward, do you break it into two pieces? We talk about this on the earnings calls about the macro piece, sort of out of your control and sort of the piece that's inside your control from an operational standpoint. So how do you think about aligning some of your key initiatives when the macro is X, but you're gaining share, You're outgrowing the category and then the elements that are inside your control.

Niraj Shah, CEO

So we don't tend to worry about the macro too much. And the reason, if you think about in 2014, we were a billion in sales. In 2019, we were 9 billion in sales. So 9x over a six-year period. Category was great in those years. Great is 3.5% to 4% growth. 3.5%, 4% growth doesn't really let you 9x, right? Or doesn't let you 5x, doesn't let you 3x. So the bulk of our growth will come from our own actions, which is the recipe, programs, and product-led growth, which will let us take share a good category. Category growing 3% or 4%, it's a lot better than zero. But the truth is that's like the icing on the cake. That's not the cake.

Kate Gulliver, CFO

Yeah, and we gave the guidance last, you know, for the high single digits for Q3. And when we talked about in your shareholder letter, when you talked about getting to, you know, 10, 15, 20, that was all just assuming sort of status quo in the category. So it's a potential tailwind, but it's not fastened into how we think about it.

Speaker 1

And then last one on this sort of from a big picture standpoint is you talked about fragmentation. Talk a little bit about the market share opportunity. Like how do you think about aligning your initiatives to capture more and more share? The growth you're talking about obviously is well above category level. So talk a little bit about how you align the initiatives the way you want the platform to go against the market share opportunity you guys see as a team.

Niraj Shah, CEO

Yeah. So, you know, the way to think about that is you start with, you know, so you understand your customer segments, right? And so we serve as consumers. We also have a B2B program, Wayfair Professional. You know, we're in Mass, which is a Wayfair brand. We're all the way up to Luxury, which is the Paragold brand. Those two are platforms. And we have three specialty retail brands, All Modern, Birch Lane, Joss & Main. Those play at the high end of Mass. And so we have these go-to-market strategies. We then look at what our customers in those segments want, like what is it that they would prefer, whether it's convenience and speed around delivery and assembly and hallway or whether it's, you know, a loyalty program that makes us top of mind or, you know, technology investments in the app or, you know, on the site. Or is it, you know, expanding the selection to have a more kind of the best selection through all the kind of, you know, our category. people don't want the same items as each other. So selection adds a lot of value. And so we understand what customers want. We then create initiatives to provide those to customers. In a lot of cases, we may already have a market-leading position, what we're providing customers, but we know we can make it better. We know as we make it better, we can see the response. So these initiatives are basically all about being a category specialist, aligning with our customer segments, and delivering them what they want, often which is not being provided by anyone else. And so it just draws them in, whether it be new customers or whether it be more purchases per year, more dollars per year from the existing base.

Kate Gulliver, CFO

Yeah, and if you think about some of the initiatives that we've started over the last few years, and you were just talking about moving from the recipe getting back in place to sort of launches of new initiatives and then product-led growth, something like loyalty is designed to obviously expand share of wallet among existing customers, although we've actually picked up quite a few lapsed customers. We've seen really nice momentum from lapsed customers and loyalty. And then something like the stores, we know, one, do expand share of wallet from existing customers, but they've actually been a great engine to bring in new customers. So it's continued to hold that 50% of the customers purchasing in-store are new to the customer file. So there's initiatives sort of designed at both, and our marketing efforts are designed at both. And then we also segment out, you know, Wayfair obviously plays, you know, broadly across Mass, but we talked about Paragold on the last call and gaining share, you know, in that sort of higher-end luxury segment as well. and then, obviously, our B2B segment.

Speaker 1

Maybe, Kate, sticking with you and building on that, how do you think about, when you think about the growth algorithms of the business, how do you think about volumes relative to AOV over time in terms of the building blocks and how do you think about, like, what will contribute to growth?

Kate Gulliver, CFO

Yeah, we want to put volume through the system, right? So we know that if we grow orders, that that begets more orders, right? You have a good experience with us, you come back, your customer lifetime value is stronger. AOV for us, if you think about sort of the AOV components, it's like-for-like product pricing, it's mixed, and then it's items per order. And generally speaking, over the long run, absent an inflationary period or non-inflationary period, AOV generally goes up a few points a year, sort of standard inflation on like-for-like product pricing and a little bit of mix shift as Paragold, for example, grows or B2B, which comes in at a higher AOV. AOV to us, though, is an output. So we know that it generally moves in that direction, but it's not something that we're intentionally driving. We focus more on we want that customer to come back, to repurchase, maybe add items in their original purchase, maybe purchase more frequently. And some of our programs might even bring AOV down, like loyalty, which drives frequency purchases, which tend to be lower AOV.

Niraj Shah, CEO

Yeah, the unit we care about, to echo what Kate just said, is not like an order-level AOV. It's the dollars per customer per year. Right, so we're trying to grow our share of their wallet. You know, not necessarily, we want the low ticket frequency purchase, you know, the decorative accents, the pillows, the bedding, right, which you say lower AOV. We also, you know, we want to grow our large appliances business, which would grow AOV. Right, okay, understood.

Speaker 1

One of the more interesting phenomenons around the company is the route you're going down with physical retail. Maybe talk a little bit about what you've learned from what you've already built and scaled, even though it's still relatively early days with physical retail. And then, obviously, you keep making announcements about expanding on the strategy, so you must be getting a signal that you feel good about. And how should investors think about how far this strategy will go over the medium to long term against measured against the signal you've gotten so far?

Niraj Shah, CEO

I'll throw out a few thoughts, and then Kate can jump in. But, you know, we're really excited about what's happening with stores, and, you know, we opened our first one north of Chicago in Wilmette in 2024, right before Memorial Day in May, and we immediately saw a great response. Now, what's happened over the two subsequent years is we've seen that we're attracting a lot of new customers to the brand. They know us, but, you know, when we're purely online, we weren't tangible enough for them in the category. But then our existing customers in that trade area, we see that the spend for that cohort per quarter from the time they first visit the store, it goes up and it stays up. And so we basically have nice cohort, steady purchasing from these new customers to file, and then we actually have steady at an increased level from existing. And if you think about it in our category, it makes sense because you say, well, in this category, I may want to lay on a mattress, sit on a sofa. I may want to work with a designer. I may want to talk about financing. I may want to design a kitchen with appliances and cabinetry. Everything I just mentioned, you would argue, is easier in a store. Then you may say, well, I have young kids. I want to shop in the evening when they're in bed. I want to just look at the selection without having to drive around. My time is limited. Both spouses work. And you say, oh, well, online has a value proposition, right? And so what's obvious is they both have value propositions. And if you offer a customer in that trade area both, it makes a lot more sense that you could take more share of wallet and be more top of mind and provide them with experiences like a buy online return in store, which economically is better for us than when they have to pay to ship it back. And for them, they, of course, love it more. And so it sort of makes sense. Well, we were able to prove it out. And then we've opened up this year one in Columbus, Ohio, one in Atlanta, Georgia, and we're seeing the exact behavior we expected. So we have a series of stores coming, but we're pretty excited about what it does.

Speaker 1

Maybe just building on that, though, how do you think about what it does for the broader brand awareness, the top-of-the-funnel dynamic? How does that compare to other means of which you can introduce your brand and build your brand into the consumer landscape if you're doing it on sort of a local basis for the physical location?

Niraj Shah, CEO

So we have five brands. For Wayfair, I'd say we're a household brand, so people know our brand. But they may not have purchased from us. They may not have an in-depth understanding of all the categories we're in, how strong the price value is, how tremendous the selection is. And so a store might be the easiest way for some folks to really get familiar with us. For other folks, they may have already spent a lot of time on the app or in our site. They may already be very familiar with us. But even for a lot of existing customers, when they come in the store, they're still surprised and learn about the breadth of our categories and the depth of the offering. So it has a very strong effect on the brand. And so how does the store economics play out over time? There's obviously the incremental revenue and the profits from that. There's how it changes. It provides leverage on our advertising because of the brand impacts. There's a bunch of categories that because the customer is effectively taking the small items home with them, there's a lot of leverage on shipping costs for those categories because they're effectively doing the shipping to their home by carrying it out in a bag. So there's different benefits.

Speaker 1

Okay, understood. And you've talked a little bit, I just want to make sure the framing is out there, you've talked a little bit about how investors should think about the pace and cadence of store evolution. How do you think about that over the next five to ten years? Is there a certain number of stores or square footage per year that you think is sort of the building block? I have a number, but I let Kate provide these types of things.

Kate Gulliver, CFO

We have not put a number out there, Neurich. No, we feel very good about how they're evolving. As you saw, we had that Wilmette store open for a little bit of time before we started adding because we wanted to get confident in the performance of it. We've obviously announced at this point a number of new leases opening, you know, throughout 2027. So I think what you're seeing is a nice build. And that's really because we continue to see this strong performance. What we're trying to test out now, and you talked a little bit about it in some of, you know, what we've learned from the stores, we're testing a bit different types of, you know, shopping centers that we're in. We're testing a little bit the size format, two levels versus one level. So we'll keep learning, and we want to make sure that we're iterating as we go and we have enough time to sort of do a batch, learn a little bit, and iterate. But we do intend to keep expanding.

Speaker 1

Well, I appreciate the framing. I wasn't trying to put you on the spot. I think as an analyst, you see a building momentum of announcements, and you naturally start to think about the second derivative. Yeah, you should ask Kate some follow-up questions for specific numbers.

Kate Gulliver, CFO

We're excited by the momentum, and we will continue to share as it evolves.

Speaker 1

I will defer to Kate on this. and be respectful. So I do appreciate it, though. I think it's going to be a really interesting thing to continue to track it and watch how it scales. In the last set of results, the luxury market, Paragold in particular, was a source of a lot of operating momentum. Talk a little bit about what you're seeing in the luxury market and what that market presents as an opportunity for you over the medium to long term.

Niraj Shah, CEO

Sure. So we talked a lot about Paragold because I think in the last call just to feature it, because I think, obviously, the company name is Wayfair. Our largest brand is Wayfair. Folks know us for Wayfair, but they may be less familiar with our specialty retail brands, All Modern, Birch Lane, Joss & Main, and then Paragold and Luxury, and they also may be less familiar with Wayfair Professional or B2B programs. So we try to talk about each of those and some sort of rotation. I think on Paragold, that's still a business that's relatively small compared to the TAM, and it's quite small. And we think Wayfair is small compared to its TAM. Paragold will be even smaller compared to its TAM. And we're making really nice progress there. We have a very novel offering. So all the brands that you would find in the design centers that historically were open to the trade but not open to the affluent consumer, that consumer now has access to. And for the vast majority of those brands, the only place you can really find them online is Paragold. When you couple that offering with the fact that we have industry-leading logistics, when you think about what we can do for delivery and consolidation, when you think about the technology that we can support it with, a lot of which is leverage from it being part of this broader family of brands and the size of our business, we can really do something exciting for the consumer. And so that's growing quite nicely, and it's a great opportunity.

Speaker 1

And obviously, when we talk about the housing market is a little bit of a depressing factor on the category, our strategy is to just take share, which we can at every segment. but as you would imagine affluent customers are probably you know will still spend more on a relative basis than less affluent consumers in that type of environment okay and not to tie two themes together but how do you think about the luxury market offering also fitting back into the physical retail strategy more broadly typically i've found when we've done surveys of the category the higher up you go in the price point the more a touch and feel component and a high touch component continues become part of the proposition are those tied somewhat together as well well so

Niraj Shah, CEO

What we were talking about earlier are the Wayfair stores specifically. For Perigold, we opened two stores last year in 2025, one in West Palm Beach in City Place and one in Highland Village in Houston, both of which are great markets for us. And they're both doing great. There will be a point at which we'll start expanding the stores. And so the same effect we're seeing with Wayfair of how you can get the best of both worlds when you have the extensive online offering with great technology coupled with the store's experience all kind of supported by the supply chain logistics capability we have and the supply relationships we have. It's a really powerful combination. So we're executing that not just for the Wayfair brand but across each of our brands.

Speaker 1

Okay, understood. Sticking with this concept of growth, and you've talked a little bit about how the category could evolve, talk a little bit about the underserved or under elements of penetration in the category that could provide other areas of growth to you? Are there verticals? Are there categories of product that you under-index to today that you see as an opportunity for growth contribution over the medium to long term?

Niraj Shah, CEO

I'll start and then maybe Kate can jump in. I'd say, you know, absolutely. So I talked a minute ago about how, you know, luxury is something we entered only a number of years ago. That's an opportunity to grow. I touched on Wafer Professional, the share we have on the B2B side, quite small relative to the potential. In categories, I think we're best known for furniture and decor and within that for furniture, which is a large category. But when you start thinking about the expansiveness of what we provide in home improvement, which ranges from lighting to plumbing to flooring and tile to door cabinet hardware and to cabinetry. We design full kitchens, including the large appliances, and we can do everything there from soup to nuts, which is a growing segment for us, but again, we're tiny compared to potential. There's a lot of room there. And then for housewares, there's a lot of room for housewares. And housewares is a great category, for example, in stores, where we over-index and what happens in stores because of the nature of the category. So we have kind of room on multiple dimensions to grow. And so when you think about the share, you say, well, okay, so you want to grow. You say you can grow not just 5% year over year, but you said it can grow to 10, it can grow to 15, and it can grow to 20. You're saying that it can do that organically. It can do that with the category flat, and it can do it while you grow profits faster than you grow revenue. How is that possible? The answer is sort of when you add up all these initiatives, they show you how it's possible.

Speaker 1

That's helpful. Look, it's a technology conference, so I'm somewhat contractually obligated to ask about AI. Maybe we could talk a little bit about your broader AI strategy. What I find is companies are talking about it both in the way it's getting deployed inside their business and the way it could change the customer journey outside their business and amplify growth. Maybe just level set with how you think about AI and the implementation of AI across the company and the platform.

Niraj Shah, CEO

So, you know, my background is as an engineer. Our co-founder, Steve Conine's background is as an engineer. We've always been a technology-driven-led company. And I mentioned of our corporate staff, half of the folks on our corporate staff are software engineers. There's product managers, data scientists, and that's well over 2,000 people. So that's a large size technology team. And so the technology changes that came along the way, obviously when we started the company it was the Internet, but then you think about cloud and mobile. These were all exciting opportunities for us and ones that we leaned into. AI is effectively that, but on a larger scale opportunity than the ones I mentioned. And so we were, I think, relatively early to make the decision to lean into that, and we sort of did that with like three pillars in mind. So one was, what do you do for your internal operations? So how do you help everyone in the company learn how to leverage AI to do what they do better, to get more done, to get things done at a higher quality, at a lower cost, add efficiency? The second pillar is what can we do for our suppliers to make it easier for them to operate their business on our platform, for them to do more things, for them to get better insights, for them to basically more quickly get done with the busy work of their job so they can spend more time on growing their sales on our platform, participating in more programs. And then the third pillar is what can we do for the customer? How can we change the customer journey in ways that make it more engaging, more productive, more exciting for them in ways that are also very intuitive so that it's not like they have to go up a learning curve to figure out how to change what they're doing.

Speaker 1

And then over time, when you think about changing the consumer journey, what do you guys see as a team as the opportunity set around conversion, personalization, discovery? Like how different will the shopping experience potentially evolve to? There's been a lot of talk about agente commerce here at the conference over the first two days, but generally it mostly boils down to conversations around personalization and conversion. How do you guys think about those broad topics? That would be our view.

Niraj Shah, CEO

We don't believe that individual consumers are likely to defer to an agent to make all the decisions on their behalf about how they're going to outfit their home. There are certain categories where there's a lot of personal decision-making in what you want to buy. I think fashion would be one of those categories. I think home is another one of those categories, whereas there's other categories that are more purely transactional, like I want replenishment of my dish soap and my paper towels, or I want execution of an order to get me three more USB-C iPhone cables. And there I might be willing to defer a lot just with basic criteria about what I prioritize between cost and quality or whatever, speed. And so in our category, we're basically doing a few things. Obviously, we partnered with all the AI platforms to make sure we draw in traffic. But really, it's more like when you get on our platform, it is exactly what you said. It's how can we make the experience more immersive around personalization, around basically intuitively helping folks have an experience that's more enjoyable and more productive for them. So it draws them in deeper in ways that are interesting, both in understanding the context of what they want and helping them with that, but also understanding them to the degree where we can do things proactively for them that are more exciting and interesting.

Kate Gulliver, CFO

I would just add that our general view has been that we're agnostic to where the traffic is coming in from. And so we, as Neeraj mentioned, we've partnered with Google on universal commerce protocols. They've developed that. We've partnered with OpenAI on ads. We've partnered with perplexity around checkout. So all sorts of, we're saying we can play wherever. We think ultimately, as Neeraj said, it's a highly emotive category. So there is an element of customer choice that is important here. But we can work with you wherever you want to come to our site from. I do think, you know, we often hear from, you know, folks in the investor community expectations around how much traffic is coming from AI that are a bit wildly inflated relative. You know, our customer is a 50-something-year-old, you know, typically woman. And so less is coming right now, although it's growing rapidly from the different LLMs than folks may expect. But we're prepared to work with that, as we've always done with new technology, and we think we can make the experience on the site that much more enjoyable to the shopper from a personalization and conversion perspective. So we're really looking at it at both angles.

Speaker 1

Maybe turning to some other initiatives, Kate, maybe talk about Castlegate in terms of what you're building, what you're scaling, how it can create differentiation on both the buyer and the seller part of the platform. I'd love to go a little bit deeper on that.

Kate Gulliver, CFO

Yeah. I mean, when we started Castlegate back in sort of really 2015, the idea was that we could leverage our scale to create an experience that was both better for the customer and ultimately more economically efficient. So we could forward position that inventory, get it closer to where the consumer was. And that would result in speed and cost efficiency and probably reduce damage as well. Over many years, we've, you know, built the overall, not just the Castlegate Network, but what we call the Wayfair Delivery Network, which is where we do, you know, last mile delivery of large parcel products to your home. And we sort of have middle mile facilities where we can move that product even closer to the customer. So all of that combined, you know, we now have, you know, and you always state the number of how many millions of square footage we have across the network now.

Niraj Shah, CEO

Over 20 million square feet across 75-plus buildings.

Kate Gulliver, CFO

So that includes, you know, U.S., Canada, and the U.K., where we have locations in all of those sites. We've also improved over the last several years the experience for our suppliers in Castlegate. You know, we obviously added the multichannel offering a little over a year ago to enable suppliers to be able to, you know, have sort of a broader array of products with us and be able to go a little bit deeper in those products. But the end goal on all of this is to improve that customer experience. So it helps drive that speed. We know we can put a speed badge on it, and that helps improve conversion, and it lowers damage so the ultimate experience of the customer is better.

Speaker 1

Understood. And maybe just talk a little bit to the building, the scale around it. What kind of competitive advantages for you as a platform do you think that can build over time as well, having that kind of logistics network relative to your approach?

Kate Gulliver, CFO

Yeah, I mean, Neera referenced it in the shareholder letter two years ago when we talked about our competitor modes. One of the sort of key competitor modes was our logistics network. And so that's not just Catholic. It would actually include wafer delivery network and the overall piece in it. And you really have to have significant scale to make that work. Most of the furniture players that have somewhat of a logistics network are doing that regionally. So to do that nationally is quite unique. And that allows us to do other value-added services for the customer. So we've talked about delivery plus a little bit on the calls from time to time. But that's something that's rolling out now where the customer can have an enhanced, if they choose, an enhanced delivery experience in terms of, you know, removal of all of the product packaging, going exactly as they want, scheduling it at the exact hours that they want. We also now do, we started this a few years ago, deluxing, where we open up the products that are more highly damage prone in our facility. So imagine, say, a vanity or a cabinet, and we can touch that up before we deliver it to you. that's something that a regional furniture player, you know, used to do, but nobody was really doing that at scale. It would be very hard to replicate that kind of network today, and we do think that that's a, you know, very important moat for us.

Speaker 1

And then a few more, as we just have a few minutes left, but maybe margins. You know, one of the themes and debates that have been coming up at the conference is just how to balance all the investments companies want to make in growth relative to also continuing to deliver on margin expansion. You know, Kate, one for you, and then maybe I'll end on a bigger picture one. But just how do we think about the balance to be struck between investments that you want to make relative to continue to prove out margin trajectory in the business?

Kate Gulliver, CFO

Yeah, we are, I mean, you heard Neeraj say it actually a few questions ago. We're quite focused on growing top line and bottom line and improving that bottom line faster than top line, right? And so we're very focused on the profitability. I think you've seen us sort of continue on that path over the last many quarters. So we have a high degree of conviction that we can continue to accelerate the top line while improving those EBITDA dollars and EBITDA margin, you know, ultimately continuing to improve to net income positive. So we feel quite good about our ability to invest in the initiatives that we want to on the P&L. And then from the capital structure side, you know, you just asked about the logistics That's, you know, very well built out at this point. We talk about some maintenance there. obviously we've been investing in stores and we'll continue to invest in that, but we can all fund that from our own cash flows. And so we feel quite good, again, about our ability to fund that and actually continue to improve our leverage ratios, which we've done pretty significantly over the last few years.

Speaker 1

In other words, when you look at the investments that the business is making for the long term, talk to me a little bit about what you're the most excited about when you think about deploying capital into the business against the potential return profile of those dollars And then bringing Kate into the second part of the question as we wrap up, you know, how do you think about striking a balance around all the elements of buy versus build, capital return, you know, all the things that measure against trying to strike a balance more broadly with capital? So excitement about what the return will be relative to striking a balance for the two of you.

Niraj Shah, CEO

Yeah, so I think, you know, we kind of early on talked about this, you know, so maybe about 20 minutes ago where, you know, how do we decide what programs, what initiatives we drive, right? And we do that by working from what our customers want and then figure out how to deliver what they want, either in a traditional or non-traditional way, whatever is going to be the most effective way of doing that. And we aim to not be beholden by how things traditionally work or what we were doing yesterday. And so when you think about the places where we're investing, whether it be stores, whether it be in the technology, whether it be in the logistics network, whether it be new programs like Verify, merchants and curators, or whether it be rewards and then marketing the loyalty program to customers, all these things tie back to basically a customer need and then us devising an exciting way to deliver that to customers that drive economic gains for us. and the economic gains are an outcome of customers basically reacting positively to what we're doing and rewarding us with orders, right? And we're protecting the economics so that as we get the orders, we get the profits, right? And so that's sort of how we do everything. So this idea that what we could invest in would be at odds with profits isn't really there because the way we can grow profits the most is by protecting the economics and growing the volumes. And so as long as you're doing that, in our business and a lot of businesses, the economies of scale drive a lot more profits. You know, it's impossible to do when you're smaller. Logistics is a perfect example. As we grow and the logistics network expands, we reduce damage, we increase speed of delivery, and we reduce cost. And so our customer gets the benefit of, you know, those things, but we get the benefit of those things. Our suppliers get the benefit of those things. And so these things are mutually consistent.

Kate Gulliver, CFO

Yeah, I mean, I think you hit on all of it. You know, I guess I'd go back to sort of overarching we've talked at various points over the years about sort of our goal of ultimately improving free cash flow per share, right? And so to do that, the business needs to be growing the top line but profitable. We need to be self-funding, you know, that from our cash flow, and we need to do that in a way that's not dilutive. And, you know, I think you've seen us make steps on each element of this. We've improved the margin profile. We've improved the cash flow. and we, you know, have actually managed what was going to be significant dilution from the converse. We've now, you know, managed most of that at this point. And so we're in a pretty good position on each of those to continue to improve. And when you think about a metric that, you know, something like free cash flow per share, what I love about that is, you know, as Neeraj spoke to, to hit that goal, we have to be driving the volume and driving the profitability at the same time and in a way that on the capital structure, you know, continues to improve the capital structure. And I think that's where we've been chipping away at.

Speaker 1

Okay. I'm the urge, Kate, thanks so much for giving me the opportunity to have the conversation. Really enjoyed it. Thank you. Please join me in thanking Wayfair for being part of the conference.