10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2016

OR

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from         to      

Commission File Number: 001-36666

Wayfair Inc.

(Exact name of registrant as specified in its charter) 

Delaware	36-4791999
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification Number)
4 Copley Place, 7th Floor, Boston, MA	02116
(Address of principal executive offices)	(Zip Code)

(617) 532-6100

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes x   No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes x    No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. 

Large accelerated filer x	Accelerated filer o
Non-accelerated filer o (Do not check if a smaller reporting company)	Smaller reporting company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). 

Yes o No x

Class	Outstanding at July 31, 2016
Class A Common Stock, $0.001 par value per share	48,191,578
Class B Common Stock, $0.001 par value per share	36,803,486

WAYFAIR INC.

INDEX TO QUARTERLY REPORT ON FORM 10-Q

For the Quarterly Period Ended June 30, 2016

		Page
PART 1. FINANCIAL INFORMATION
Item 1.	Unaudited Consolidated and Condensed Financial Statements
	Consolidated and Condensed Balance Sheets as of June 30, 2016 and December 31, 2015	3
	Consolidated and Condensed Statements of Operations for the Three and Six Months Ended June 30, 2016 and 2015	4
	Consolidated and Condensed Statements of Comprehensive Loss for the Three and Six Months Ended June 30, 2016 and 2015	5
	Consolidated and Condensed Statements of Cash Flows for the Six Months Ended June 30, 2016 and 2015	6
	Notes to the Unaudited Consolidated and Condensed Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	17
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	30
Item 4.	Controls and Procedures	31
PART 2. OTHER INFORMATION
Item 1.	Legal Proceedings	32
Item 1A.	Risk Factors	32
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	32
Item 6.	Exhibits	33
Signatures		34

1

PART I

FINANCIAL INFORMATION

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements. All statements other than statements of historical fact contained in this Quarterly Report on Form 10-Q, including statements regarding our future results of operations and financial position, business strategy and plans and objectives of management for future operations, are forward-looking statements. In some cases, you can identify forward-looking statements by terms such as "may," "will," "should," "expects," "plans," "anticipates," "could," "intends," "target," "projects," "contemplates," "believes," "estimates," "predicts," "potential" or "continue" or the negative of these terms or other similar expressions.

Forward-looking statements are based on current expectations of future events. We cannot guarantee that any forward-looking statement will be accurate, although we believe that we have been reasonable in our expectations and assumptions. Investors should realize that if underlying assumptions prove inaccurate or that known or unknown risks or uncertainties materialize, actual results could vary materially from the Company’s expectations and projections. Investors are therefore cautioned not to place undue reliance on any forward-looking statements. These forward-looking statements speak only as of the date of this Quarterly Report on Form 10-Q and, except as required by applicable law, we undertake no obligation to publicly update or revise any forward-looking statements contained herein, whether as a result of any new information, future events or otherwise.

Factors that could cause or contribute to differences in our future results include the cautionary statements herein and in our other filings with the Securities and Exchange Commission, including those set forth under Part I, Item 1A, Risk Factors in our Annual Report on Form 10-K for the fiscal year ended December 31, 2015. We qualify all of our forward-looking statements by these cautionary statements.

2

WAYFAIR INC.

CONSOLIDATED AND CONDENSED BALANCE SHEETS

(In thousands, except share and per share data)

(Unaudited)

	June 30, 2016			December 31, 2015
Assets
Current assets
Cash and cash equivalents	$	220,299		$	334,176
Short-term investments	82,712			51,895
Accounts receivable, net of allowance of $3,229 and $2,767 at June 30, 2016 and December 31, 2015, respectively	14,163			9,906
Inventories	17,396			19,900
Prepaid expenses and other current assets	88,117			76,446
Total current assets	422,687			492,323
Property and equipment, net	179,142			112,325
Goodwill and intangible assets, net	3,309			3,702
Long-term investments	50,527			79,883
Other noncurrent assets	8,303			6,348
Total assets	$	663,968		$	694,581
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable	$	265,775		$	270,913
Accrued expenses	73,500			51,560
Deferred revenue	53,522			50,884
Other current liabilities	32,344			23,669
Total current liabilities	425,141			397,026
Lease financing obligation	29,856			—
Other liabilities	46,887			55,010
Total liabilities	501,884			452,036
Commitments and contingencies (Note 6)
Convertible preferred stock, $0.001 par value per share: 10,000,000 shares authorized and none issued at June 30, 2016 and December 31, 2015	—			—
Stockholders’ equity:
Class A common stock, par value $0.001 per share, 500,000,000 shares authorized, 48,105,571 and 45,814,237 shares issued and outstanding at June 30, 2016 and December 31, 2015, respectively	48			46
Class B common stock, par value $0.001 per share, 164,000,000 shares authorized, 36,800,012 and 38,496,562 shares issued and outstanding at June 30, 2016 and December 31, 2015, respectively	37			38
Additional paid-in capital	387,186			378,162
Accumulated deficit	(225,044		)	(135,565		)
Accumulated other comprehensive loss	(143		)	(136		)
Total stockholders’ equity	162,084			242,545
Total liabilities and stockholders’ equity	$	663,968		$	694,581

The accompanying notes are an integral part of these Unaudited Consolidated and Condensed Financial Statements.

3

WAYFAIR INC.

CONSOLIDATED AND CONDENSED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

(Unaudited)

	Three months ended June 30,						Six months ended June 30,
	2016			2015			2016			2015
Net revenue	$	786,928		$	491,752		$	1,534,276		$	916,123
Cost of goods sold	598,414			370,951			1,166,706			692,487
Gross profit	188,514			120,801			367,570			223,636
Operating expenses:
Customer service and merchant fees	30,064			18,330			57,414			34,308
Advertising	94,426			61,539			192,103			119,538
Merchandising, marketing and sales	43,273			23,814			81,129			47,048
Operations, technology, general and administrative	69,481			36,591			127,763			69,461
Total operating expenses	237,244			140,274			458,409			270,355
Loss from operations	(48,730		)	(19,473		)	(90,839		)	(46,719		)
Interest income, net	531			308			1,083			572
Other income (expense), net	246			(96		)	915			(204		)
Loss before income taxes	(47,953		)	(19,261		)	(88,841		)	(46,351		)
Provision for income taxes	321			73			638			119
Net loss	$	(48,274	)	$	(19,334	)	$	(89,479	)	$	(46,470	)
Net loss per share, basic and diluted	$	(0.57	)	$	(0.23	)	$	(1.06	)	$	(0.56	)
Weighted average number of common stock outstanding used in computing per share amounts, basic and diluted	84,786			83,603			84,615			83,407

The accompanying notes are an integral part of these Unaudited Consolidated and Condensed Financial Statements.

4

WAYFAIR INC.

CONSOLIDATED AND CONDENSED STATEMENTS OF COMPREHENSIVE LOSS

(In thousands)

(Unaudited)

	Three months ended June 30,						Six months ended June 30,
	2016			2015			2016			2015
Net loss	$	(48,274	)	$	(19,334	)	$	(89,479	)	$	(46,470	)
Other comprehensive loss:
Foreign currency translation adjustments	(302		)	(192		)	(635		)	(48		)
Net unrealized gain (loss) on available-for-sale investments	131			(48		)	628			(2		)
Comprehensive loss	$	(48,445	)	$	(19,574	)	$	(89,486	)	$	(46,520	)

The accompanying notes are an integral part of these Unaudited Consolidated and Condensed Financial Statements.

5

WAYFAIR INC.

CONSOLIDATED AND CONDENSED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

	Six months ended June 30,
	2016			2015
Cash flows from operating activities
Net loss	$	(89,479	)	$	(46,470	)
Adjustments to reconcile net loss to net cash used in operating activities
Depreciation and amortization	23,065			14,144
Equity based compensation	20,462			14,234
Other non-cash adjustments	408			749
Changes in operating assets and liabilities:
Accounts receivable	(4,218		)	(1,199		)
Inventories	2,508			(1,548		)
Prepaid expenses and other current assets	(11,650		)	(19,533		)
Accounts payable and accrued expenses	9,748			2,438
Deferred revenue and other liabilities	22,862			30,583
Other assets	(7		)	(147		)
Net cash used in operating activities	(26,301		)	(6,749		)
Cash flows from investing activities
Purchase of short-term and long-term investments	(69,055		)	(108,311		)
Sale and maturities of short-term investments	67,895			37,000
Purchase of property and equipment	(61,436		)	(25,204		)
Site and software development costs	(12,263		)	(8,426		)
Other investing activities, net	—			302
Net cash used in investing activities	(74,859		)	(104,639		)
Cash flows from financing activities
Taxes paid related to net share settlement of equity awards	(12,374		)	(7,837		)
Net proceeds from exercise of stock options	130			272
Net cash used in financing activities	(12,244		)	(7,565		)
Effect of exchange rate changes on cash and cash equivalents	(473		)	(332		)
Net decrease in cash and cash equivalents	(113,877		)	(119,285		)
Cash and cash equivalents
Beginning of period	334,176			355,859
End of period	$	220,299		$	236,574
Supplemental disclosure of non-cash investing activities
Purchase of property and equipment included in accounts payable and accrued expenses and in other liabilities	$	8,295		$	6,312
Construction costs capitalized under finance lease obligations	$	8,102		$	165

The accompanying notes are an integral part of these Unaudited Consolidated and Condensed Financial Statements.

6

Notes to Consolidated and Condensed Financial Statements

(Unaudited)

1. Basis of Presentation

Wayfair Inc. (the “Company”) is an e-commerce business offering visually inspiring browsing, compelling merchandising, easy product discovery and attractive prices for over seven million products from over 7,000 suppliers across five distinct brands—Wayfair.com, Joss & Main, AllModern, DwellStudio, and Birch Lane. In addition to generating net revenue through Direct Retail sales, which includes all sales generated primarily through the Company’s websites, mobile optimized websites, and mobile applications (“sites”), net revenue is also generated through sites operated by third parties and through third party advertising distribution providers that pay the Company based on the number of advertisement related clicks, actions, or impressions for advertisements placed on the Company’s sites.

The consolidated and condensed financial statements and other disclosures contained in this Quarterly Report on Form 10-Q are those of the Company. The consolidated and condensed balance sheet data as of December 31, 2015 was derived from audited financial statements. The accompanying consolidated and condensed balance sheet as of June 30, 2016, the consolidated statements of operations, consolidated statements of comprehensive loss, and consolidated statements of cash flows for the periods ended June 30, 2016 and 2015 are unaudited. The unaudited interim financial statements have been prepared on the same basis as the audited consolidated financial statements and in the opinion of management, reflect all adjustments, consisting of only normal recurring adjustments, necessary for the fair statement of the Company’s financial position as of June 30, 2016 and statements of operations, comprehensive loss, and cash flows for the periods ended June 30, 2016 and 2015. The financial data and the other information disclosed in these notes to the consolidated and condensed financial statements related to these periods are unaudited.

The consolidated and condensed statements of operations, comprehensive loss, and cash flows for the period ended June 30, 2016 are not necessarily indicative of the results of operations and cash flows that may be expected for the year ending December 31, 2016, or for any other period. 

2. Summary of Significant Accounting Policies

The Company has identified the significant accounting policies that are critical to understanding its business and results of operations. The Company believes that there have been no significant changes during the six months ended June 30, 2016 to the items disclosed in Note 2, Summary of Significant Accounting Policies, in the Notes to the Consolidated Financial Statements included in Part II, Item 8, Financial Statements and Supplementary Data, of the Company’s Annual Report on Form 10-K for the year ended December 31, 2015 other than those noted below.

Property and Equipment

Property and equipment are stated at cost, net of depreciation and amortization. Depreciation and amortization on property and equipment is calculated on the straight-line method over the estimated useful lives of the assets as follows:

Class	Range of Life (In Years)
Furniture and computer equipment	3 to 7
Site and software development costs	2
Leasehold improvements	Lesser of useful life or lease term
Building	30

3. Marketable Securities and Fair Value Measurements

Marketable Securities

As of June 30, 2016 and December 31, 2015, all of the Company’s marketable securities were classified as available-for-sale and their estimated fair values were $98.2 million and $96.8 million, respectively. We periodically review our available-for-sale securities for other-than-temporary impairment. We consider factors such as the duration, severity and the reason for the decline in value, the potential recovery period, and our intent to sell. As of June 30, 2016, the Company’s available-for-sale securities primarily consisted of corporate bonds and other government obligations that are priced at fair value. During the three and six months ended June 30, 2016 and 2015, we did not recognize any other-than-temporary impairment loss. The maturities of the Company’s long-term marketable securities generally range from one to three years.

7

The following tables present details of the Company’s marketable securities as of June 30, 2016 and December 31, 2015 (in thousands):

	June 30, 2016
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
Short-term:
Investment securities	$	44,780	$	51	$	(3	)	$	44,828
Commercial paper	2,883		1		—			2,884
Long-term:
Investment securities	50,250		284		(7		)	50,527
Total	$	97,913	$	336	$	(10	)	$	98,239

	December 31, 2015
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
Short-term:
Investment securities	$	16,908	$	—	$	(13	)	$	16,895
Long-term:
Investment securities	80,172		2		(291		)	79,883
Total	$	97,080	$	2	$	(304	)	$	96,778

Fair Value Measurements

The Company's financial assets and liabilities are measured at fair value, which is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). The three levels of inputs used to measure fair value are as follows:

▪ 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

This hierarchy requires the Company to use observable market data, when available, and to minimize the use of unobservable inputs when determining fair value. The Company measures its cash equivalents and short-term and long-term investments at fair value. The Company classifies its cash equivalents and restricted cash within Level 1 because the Company values these investments using quoted market prices. The fair value of the Company's Level 1 financial assets is based on quoted market prices of the identical underlying security. The Company classifies short-term and long-term investments within Level 2 because unadjusted quoted prices for identical or similar assets in markets are not active. The Company does not have any assets or liabilities classified as Level 3 financial assets.  

8

The following tables set forth the fair value of the Company’s financial assets measured at fair value on a recurring basis as of June 30, 2016 and December 31, 2015 based on the three-tier value hierarchy (in thousands):

	June 30, 2016
	Level 1		Level 2		Level 3		Total
Cash equivalents:
Money market funds	$	130,644	$	—	$	—	$	130,644
Commercial paper	—		2,884		—		2,884
Short-term investments:
Certificates of deposit	35,000		—		—		35,000
Investment securities	—		44,828		—		44,828
Restricted cash:
Certificate of deposit	5,000		—		—		5,000
Long-term:
Investment securities	—		50,527		—		50,527
Total	$	170,644	$	98,239	$	—	$	268,883

	December 31, 2015
	Level 1		Level 2		Level 3		Total
Cash equivalents:
Money market funds	$	267,300	$	—	$	—	$	267,300
Short-term investments:
Certificates of deposit	35,000		—		—		35,000
Investment securities	—		16,895		—		16,895
Restricted cash:
Certificate of deposit	5,000		—		—		5,000
Long-term:
Investment securities	—		79,883		—		79,883
Total	$	307,300	$	96,778	$	—	$	404,078

4. Intangible Assets and Goodwill

The following table summarizes intangible assets as of June 30, 2016 and December 31, 2015 (in thousands): 

	Weighted - Average Amortization Period (Years)	June 30, 2016
		Gross Carrying Amount		Accumulated Amortization			Net Book Value
Trademarks	5	$	1,900	$	(1,109	)	$	791
Customer relationships	5	1,300		(758		)	542
Non-compete agreements	3 - 5	100		(97		)	3
Other intangibles	3	373		(326		)	47
Domain names	5	2,687		(2,685		)	2
Total		$	6,360	$	(4,975	)	$	1,385

9

	Weighted-Average	December 31, 2015
	Amortization Period (Years)	Gross Carrying Amount		Accumulated Amortization			Net Book Value
Trademarks	5	$	1,900	$	(918	)	$	982
Customer relationships	5	1,300		(628		)	672
Non-compete agreements	3 - 5	100		(81		)	19
Other intangibles	3	373		(270		)	103
Domain names	5	2,687		(2,685		)	2
Total		$	6,360	$	(4,582	)	$	1,778

Amortization expense related to intangible assets was $0.2 million for the three months ended June 30, 2016 and 2015 and $0.4 million and $0.5 million for the six months ended June 30, 2016 and 2015, respectively.

Goodwill as of June 30, 2016 was $1.9 million, unchanged from December 31, 2015.

5.Property and Equipment, net

The following table summarizes property and equipment, net as of June 30, 2016 and December 31, 2015 (in thousands): 

	June 30, 2016			December 31, 2015
Furniture and computer equipment	$	107,449		$	68,416
Site and software development costs	60,968			50,907
Leasehold improvements	49,733			29,315
Construction in progress	14,492			27,563
Building	29,856			—
	262,498			176,201
Less accumulated depreciation and amortization	(83,356		)	(63,876		)
Property and equipment, net	$	179,142		$	112,325

Property and equipment depreciation and amortization expense was $12.4 million and $7.2 million for the three months ended June 30, 2016 and 2015, respectively, and $22.7 million and $13.7 million for the six months ended June 30, 2016 and 2015, respectively. 

6. Commitments and Contingencies

Leases

The Company leases office and warehouse spaces under non-cancelable leases. These leases expire at various dates through 2027 and include discounted rental periods and fixed escalation clauses, which are amortized straight-line over the terms of the lease. Rent expense under operating leases was $7.9 million and $4.6 million in the three months ended June 30, 2016 and 2015, respectively, and $14.8 million and $8.7 million in the six months ended June 30, 2016 and 2015, respectively. The Company has issued letters of credit for approximately $10.4 million and $5.9 million as security for these lease agreements as of June 30, 2016 and December 31, 2015, respectively. The Company has entered into additional leases throughout the United States ("U.S.") and Europe subsequent to December 31, 2015, where the future minimum rental commitments under non-cancelable leases with initial or remaining terms in excess of one year are $359.1 million in the aggregate.

The Company establishes assets and liabilities for the estimated construction costs incurred under lease arrangements where the Company is considered the owner for accounting purposes only, or build-to-suit leases, to the extent the Company is involved in the construction of structural improvements or takes construction risk prior to commencement of a lease. Upon occupancy of facilities under build-to-suit leases, the Company assesses whether these arrangements qualify for sales recognition under the sale-leaseback accounting guidance. If the Company continues to be the deemed owner, the facilities are accounted for as financing leases.

10

The construction of one warehouse lease arrangement was completed during the three months ended June 30, 2016, and because the Company concluded it had a letter of credit of $1.2 million, the Company did not meet the sale-leaseback criteria for derecognition of the building asset and liability. Therefore, the lease is accounted for as a financing obligation and is recorded in "Lease financing obligation" in the Company’s unaudited consolidated and condensed balance sheets. The monthly rent payments made to the lessor under the lease agreement are recorded in the Company’s financial statements as land lease expense and principal and interest on the financing obligation. Interest expense on the lease financing obligation reflects the portion of the Company's monthly lease payments that is allocated to interest expense. For the three and six months ended June 30, 2016, land lease expense and interest expense on lease financing obligation was not material. As of June 30, 2016, future minimum commitments related to the financing obligation were $2.7 million and $11.2 million for principal and interest, respectively, through June 30, 2021.

Collection of Sales or Other Similar Taxes

 Based on the location of the Company’s current operations, it collects and remits sales tax in Kentucky, Massachusetts, New York, Utah, California, Illinois, Texas, New Jersey, and North Carolina. The Company does not currently collect sales or other similar taxes for the sale of goods in states where no obligation to collect these taxes is required under applicable law. Several states have presented the Company with assessments, alleging that it is required to collect and remit sales or other similar taxes. The aggregate amount of claims from these states, not including taxes allegedly owed for periods subsequent to such assessments or interest and penalties after the date the Company last received such assessments, is approximately $28.1 million. The Company does not believe that it was obligated to collect and remit such taxes, and intends to vigorously defend its position. At this time, the Company believes a loss is not probable and therefore has not recorded a liability; however, no assurance can be given as to the outcome of these assessments.

Legal Matters

 On September 2, 2015, a putative class action complaint was filed against the Company in the U.S. District Court for the Southern District of New York (Dingee v. Wayfair Inc., et al., Case No. 1:15-cv-06941) by an individual on behalf of himself and on behalf of all other similarly situated individuals, under sections 10(b) and 20(a) of the Exchange Act related to a drop in stock price that had followed a report issued by Citron Research. The Company moved to dismiss all counts in February 2016. On May 24, 2016, the court granted the Company's motion to dismiss the Dingee complaint in its entirety, with prejudice.

On February 2, 2016, a putative class action complaint was filed against the Company in the U.S. District Court for the Central District of California (Carson, et al., v. Wayfair Inc., Case No. 2:16-cv-00716) by two individuals on behalf of themselves and on behalf of all other similarly situated individuals (collectively, the "Carson Plaintiffs"). The complaint alleged that Wayfair engaged in a deceptive marketing campaign in which the Company advertised certain “original” or “regular” retail prices, which the Carson Plaintiffs alleged were false. In May 2016, the Carson Plaintiffs voluntarily withdrew this action without prejudice.

The Company is subject to legal proceedings and claims in the ordinary course of business. However, the Company is not currently aware of any legal proceedings or claims that it believes will have, individually or in the aggregate, a material adverse effect on the Company’s financial position, results of operations or cash flows.

7. Equity-Based Compensation

In 2010, the Company established an equity incentive plan and, in 2011, the plan was amended and restated as the Wayfair LLC Amended and Restated 2010 Common Unit Plan (the “2010 Plan”). The 2010 Plan was administered by the board of directors of Wayfair LLC and provided for the issuance of common option units, restricted common units (all common units), and deferred units, which currently represent Class A or Class B common stock of the Company.

In connection with the IPO, the board of directors of the Company adopted the 2014 Incentive Award Plan ("2014 Plan") to grant cash and equity incentive awards to eligible service providers in order to attract, motivate and retain the talent for which the Company competes. The 2014 Plan is administered by the board of directors of the Company with respect to awards to non-employee directors and by the compensation committee with respect to other participants and provides for the issuance of stock options, SARs, restricted stock, RSUs, performance shares, stock payments, cash payments, dividend awards and other incentives. The 2014 Plan authorizes up to 8,603,066 shares of Class A common stock to be issued, of which RSUs for 5,208,379 shares had been issued as of June 30, 2016. Shares or RSUs forfeited, withheld for minimum statutory tax obligations, and unexercised stock option lapses from the 2010 and 2014 Plans are available for grants of awards under the 2014 Plan. In addition, on the first day of each calendar year beginning January 1, 2016 and ending on and including January 1, 2024, the shares available for future grant are increased in accordance with the 2014 Plan.

11

The following table presents activity relating to stock options for the six months ended June 30, 2016: 

	Shares		Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term (Years)
Outstanding at December 31, 2015	279,591		$	2.98	5.5
Options exercised	(43,694	)	$	2.97
Options forfeited/canceled	(176	)	$	3.42
Outstanding at June 30, 2016	235,721		$	2.98	5.0
Exercisable at June 30, 2016	235,706		$	2.98	5.0
Expected to vest at June 30, 2016	15		$	3.42	5.0

Intrinsic value of stock options exercised was $1.6 million for the six months ended June 30, 2016. Aggregate intrinsic value of stock options outstanding and currently exercisable is $8.5 million. Unrecognized equity based compensation expense related to stock options expected to vest over time is less than $0.1 million with a weighted average remaining vesting term of less than 0.1 years at June 30, 2016.

The following table presents activity relating to restricted common stock for the six months ended June 30, 2016: 

	Shares		Weighted- Average Grant Date Fair Value
Outstanding at December 31, 2015	1,993		$	4.75
Restricted stock vested	(1,993	)	$	4.75
Unvested at June 30, 2016	—		$	—
Expected to vest at June 30, 2016	—		$	—

The intrinsic value of restricted common stock vested was less than $0.1 million for the six months ended June 30, 2016. All restricted common stock shares were fully vested at June 30, 2016. 

The following table presents activity relating to RSUs for the six months ended June 30, 2016: 

	Shares		Weighted- Average Grant Date Fair Value
Outstanding at December 31, 2015	5,607,867		$	28.30
RSUs granted	2,110,220		$	39.56
RSUs vested	(854,800	)	$	21.98
RSUs forfeited/canceled	(250,938	)	$	31.19
Outstanding at June 30, 2016	6,612,349		$	32.59
Expected to vest at June 30, 2016	4,897,025		$	33.04

The intrinsic value of RSUs vested was $35.2 million for the six months ended June 30, 2016. Aggregate intrinsic value of RSUs outstanding is $257.9 million as of June 30, 2016. Unrecognized equity based compensation expense related to RSUs expected to vest over time is $131.8 million with a weighted average remaining vesting term of 1.7 years at June 30, 2016.

8. Segment and Geographic Information

Operating segments are defined as components of an enterprise for which separate financial information is available that is evaluated on a regular basis by the Chief Operating Decision Maker (“CODM”) in deciding how to allocate resources to an individual segment and in assessing performance. The Company’s CODM is its Chief Executive Officer. 

The CODM reviews financial information presented on a consolidated basis for purposes of making operating decisions, allocating resources and evaluating financial performance. As a result, the Company identified that it has one operating and reportable segment. 

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The following table presents the activity related to the Company’s net revenue from Direct Retail sales derived through the Company’s sites and Other sales derived through sites operated by third parties and fees from third-party advertising distribution providers (in thousands):

	Three months ended June 30,				Six months ended June 30,
	2016		2015		2016		2015
Net revenue
Direct Retail	$	755,657	$	440,297	$	1,467,503	$	809,694
Other	31,271		51,455		66,773		106,429
Net revenue	$	786,928	$	491,752	$	1,534,276	$	916,123

Revenue from external customers for each group of similar products and services are not reported to the CODM. Separate identification of this information for purposes of segment disclosure is impractical, as it is not readily available and the cost to develop it would be excessive. No individual country outside of the United States provided greater than 10% of total revenue.

The following table presents revenue and long-lived assets by geographic area (in thousands):

	Three months ended June 30,				Six months ended June 30,
	2016		2015		2016		2015
Geographic net revenue:
United States	$	732,673	$	464,667	$	1,438,594	$	865,244
International (1)	54,255		27,085		95,682		50,879
Total	$	786,928	$	491,752	$	1,534,276	$	916,123

(1) In the three and six months ended June 30, 2015, international net revenue included $2.3 million and $4.7 million, respectively, from our Australian business, which we sold in July 2015.  

	June 30, 2016		December 31, 2015
Geographic long-lived assets:
United States	$	174,070	$	110,042
International	5,072		2,283
Total	$	179,142	$	112,325

9. Income Taxes

Income tax expense was $0.3 million and less than $0.1 million for the three months ended June 30, 2016 and 2015, respectively, and $0.6 million and $0.1 million for the six months ended June 30, 2016 and 2015, respectively. The income tax expense recorded in the three and six months ended June 30, 2016 and 2015 is primarily related to various foreign income tax assessments, state income taxes and to a lesser extent the amortization of goodwill for tax purposes for which there is no corresponding book deduction.

Deferred income taxes reflect the impact of temporary differences between the amounts of assets and liabilities for financial reporting purposes and such amounts as measured by tax laws. The Company has deferred tax assets related to its net operating loss carryforwards accumulated since the fourth quarter of 2014 and related to net operating loss carryforwards of certain of its foreign subsidiaries. A valuation allowance against net deferred tax assets is required if, based upon the available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. The Company reassesses the valuation allowance on a quarterly basis and has provided a valuation allowance for the full amount of its net deferred tax assets.

The Company had no unrecognized tax benefits as of June 30, 2016 and December 31, 2015. The Company’s policy is to recognize interest and penalties related to unrecognized tax benefits as a component of income tax expense. 

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10. Stockholders’ Equity

Preferred Stock

The Company authorized 10,000,000 shares of undesignated preferred stock, $0.001 par value per share, for future issuance. As of June 30, 2016, the Company had no shares of undesignated preferred stock issued or outstanding.

Common Stock

The Company authorized 500,000,000 shares of Class A common stock, $0.001 par value per share, and 164,000,000 shares of Class B common stock, $0.001 par value per share, of which 48,105,571 and 45,814,237 shares of Class A common stock and 36,800,012 and 38,496,562 shares of Class B common stock were outstanding as of June 30, 2016 and December 31, 2015, respectively. The rights of the holders of Class A common stock and Class B common stock are identical, except with respect to voting and conversion rights. Each share of Class A common stock is entitled to one vote per share and each share of Class B common stock is entitled to ten votes per share. The Class B common stock also has approval rights over certain corporate actions. Each share of Class B common stock may be converted into one share of Class A common stock at the option of its holder and will be automatically converted into one share of Class A common stock upon transfer thereof, subject to certain exceptions. In addition, upon the date on which the outstanding shares of Class B common stock represent less than 10% of the aggregate number of shares of the then outstanding Class A common stock and Class B common stock, or in the event of the affirmative vote or written consent of holders of at least 66 2/3% of the outstanding shares of Class B common stock, all outstanding shares of Class B common stock shall convert automatically into Class A common stock. Subject to preferences that may apply to any shares of preferred stock outstanding at the time, the holders of common stock are entitled to receive dividends out of funds legally available if the Board, in its discretion, determines to issue dividends and then only at the times and in the amounts that the Board may determine. Since the IPO through June 30, 2016, 33,853,994 shares of Class B common stock were converted to Class A common stock. 

11. Credit Agreement

The Company has a credit agreement with Bank of America, which was renewed on July 31, 2016. The credit agreement provides the Company with a $20.0 million revolving line of credit to support direct borrowings and letters of credit, provided that a maximum of $5.0 million may be applied to direct borrowings under the revolving line of credit, plus an additional $45.0 million credit card program, for a maximum aggregate commitment of $65.0 million. The credit agreement is renewable on an annual basis and, if not renewed, will expire on July 31, 2017. The renewed credit agreement is on substantially the same terms and conditions as the prior credit agreement. Subject to the terms and conditions of the credit agreement, advances under the line of credit, if any, will bear interest at the LIBOR rate, plus 1.75%. Under the credit agreement, the Company is also required to maintain certain covenants, including debt service coverage, tangible net worth and unencumbered liquid assets, with which the Company was compliant at June 30, 2016 and December 31, 2015. The Company did not borrow any amounts under the credit agreement during the three and six months ended June 30, 2016 and the year ended December 31, 2015.

12. Net Loss per Share

Basic and diluted net loss per share is presented using the two class method required for participating securities. Class A and Class B common stock are the only outstanding equity in the Company since our IPO in October 2014. For additional information on the rights of the holders of Class A and Class B common stock, see Note 10, Stockholders' Equity, in the Notes to the Unaudited Consolidated and Condensed Financial Statements included in Part I, Item 1, Unaudited Consolidated and Condensed Financial Statements, of this Quarterly Report on Form 10-Q.

Basic net loss per share is computed using the weighted-average number of shares of common stock outstanding during the period. Diluted net loss per share is computed using the weighted-average number of shares of common stock and, if dilutive, common stock equivalents outstanding during the period. The Company's common stock equivalents consist of shares issuable upon the release of restricted stock units, and to a lesser extent, the incremental shares of common stock issuable upon the exercise of stock options and unvested restricted stock. The dilutive effect of these common stock equivalents is reflected in diluted earnings per share by application of the treasury stock method. The Company's basic and diluted net loss per share are the same because the Company has generated net loss and common stock equivalents are excluded from diluted net loss per share because they have an antidilutive impact.

The Company allocates undistributed earnings between the classes on a one-to-one basis when computing net loss per share. As a result, basic and diluted net loss per Class A and Class B shares are equivalent.

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The following table presents the calculation of basic and diluted net loss per share (in thousands, except per share data): 

	Three months ended June 30,						Six months ended June 30,
	2016			2015			2016			2015
Net loss	$	(48,274	)	$	(19,334	)	$	(89,479	)	$	(46,470	)
Weighted average common shares used for basic and diluted net loss per share computation	84,786			83,603			84,615			83,407
Net loss per share:
Basic and Diluted	$	(0.57	)	$	(0.23	)	$	(1.06	)	$	(0.56	)

The following have been excluded from the computation of basic and diluted net loss per share as their effect would have been antidilutive:

	Three and six months ended June 30,
	2016	2015
Stock options	235,721	337,148
Restricted stock	—	12,563
Restricted stock units	6,612,349	4,841,186
Total	6,848,070	5,190,897

13. Recent Accounting Pronouncements

Stock Compensation

In March 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2016-09, "Compensation - Stock Compensation" ("ASU 2016-09"). This ASU revises the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and an option to recognized gross stock compensation expense with actual forfeitures recognized as they occur, as well as certain classifications on the statement of cash flows. This ASU is effective for annual reporting periods beginning after December 15, 2016 and early adoption is permitted. Management is currently evaluating the impact of the adoption of this ASU on the Company's consolidated financial statements.

Leases

In February 2016, the FASB issued ASU No. 2016-02, "Leases" ("ASU 2016-02"). This ASU revises the accounting related to leases by requiring lessees to recognize a lease liability and a right-of-use asset for all leases. The new lease guidance also simplifies the accounting for sale and leaseback transactions. This ASU is effective for annual reporting periods beginning after December 15, 2018 and early adoption is permitted. Management is currently evaluating the impact of the adoption of this ASU on the Company’s consolidated financial statements.

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Revenue Recognition

In May 2014, the FASB issued ASU No. 2014-09, "Revenue from Contracts with Customers" ("ASU 2014-09"). This ASU is a comprehensive new revenue recognition model that requires a company to recognize revenue to depict the transfer of goods or services to a customer at an amount that reflects the consideration it expects to receive in exchange for those goods or services. This ASU was originally effective for annual reporting periods beginning after December 15, 2016 and early adoption was not permitted.

In August 2015, the FASB issued ASU No. 2015-14, "Revenue from Contracts with Customers – Deferral of the Effective Date" (ASU-2015-14), which defers the effective date of ASU 2014-09 for one year and permits early adoption as early as the original effective date of ASU 2014-09. Accordingly, ASU 2014-09 is now effective for annual reporting periods beginning after December 15, 2017 and early adoption is permitted only as of annual reporting periods beginning after December 31, 2016, including interim reporting periods within that reporting year.

In March 2016, the FASB issued ASU No. 2016-08, "Revenue from Contracts with Customers - Principal versus Agent Considerations" ("ASU 2016-08"). This ASU clarifies the implementation guidance for principal versus agent considerations in ASU 2014-09. This ASU is effective at the same period as ASU 2015-14 and ASU 2014-09.

Management is currently evaluating when to adopt the revenue recognition accounting pronouncements, which transition approach to use, and the impact of the adoption of this ASU on the Company’s consolidated financial statements.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion of our financial condition and results of operations should be read in conjunction with the consolidated and condensed financial statements and the notes thereto included elsewhere in this Quarterly Report on Form 10-Q and our audited consolidated financial statements and related notes included in our Annual Report on Form 10-K for the year ended December 31, 2015.

 Unless the context requires otherwise, references in this Quarterly Report on Form 10-Q to “Wayfair,” “the Company,” “we,” “us” or “our” refer to Wayfair Inc. and its consolidated subsidiaries. 

Overview

Through our e-commerce business model, we offer visually inspiring browsing, compelling merchandising, easy product discovery and attractive prices for over seven million products from over 7,000 suppliers across five distinct brands—Wayfair.com, Joss & Main, AllModern, DwellStudio and Birch Lane. We have built one of the largest online selections of furniture, décor, decorative accents, housewares, seasonal décor and other home goods.

We founded our company in May 2002 and have since delivered over 32 million orders. From 2003 to 2011, we grew our net revenue organically from $7.7 million to $517.3 million, representing a 69.2% CAGR. In late 2011, we made the strategic decision to close and permanently redirect over 240 of our niche websites into Wayfair.com to create a one-stop shop for furniture, décor, decorative accents, housewares, seasonal décor and other home goods and to build brand awareness, drive customer loyalty and increase repeat purchasing. We also changed our name from CSN Stores LLC to Wayfair LLC.

We plan to grow our customer base by attracting more unique visitors to our sites through two main strategies—increasing brand awareness and expanding direct online marketing—and then converting those visitors to active customers. Our online efforts are focused on building brand awareness to drive visitor traffic via direct navigation, search engine optimization and email marketing campaigns. In addition, we have made significant investments to improve the consumer experience on our sites, such as creating highly engaging visual imagery and merchandising, as well as easy-to-use navigation tools and personalization features that enable better product discovery. We plan to continue investing in our infrastructure, including enhancing our merchandising, data, analytics, and technology platform, as well as developing additional logistics and transportation solutions, self-service tools for our suppliers, fulfillment offerings and enhancing our development, testing and deployment systems.

Until late 2012, we were primarily focused on growing our U.S. business. In 2012, we began laying the groundwork for expanding our international business by building our international infrastructure, developing deeper country-specific knowledge, building international supplier networks and establishing our brand presence in select international regions. We currently deliver products to customers in a number of countries, including the United States, the United Kingdom, Canada, and Germany. In the year ended December 31, 2015, we generated net revenue outside of the U.S. of $114.4 million or 5.1% of our total net revenue.

In the three and six months ended June 30, 2016, we generated net revenue of $786.9 million and $1,534.3 million, increases of 60.0% and 67.5%, respectively, over the same periods in 2015. Our net revenue in the three and six months ended June 30, 2016 included $755.7 million and $1,467.5 million, respectively, from Direct Retail, which we define as sales generated primarily through the sites of our five brands. Our net revenue in the three and six months ended June 30, 2016 included $31.3 million and $66.8 million, respectively, from Other, which we define as net revenue generated primarily online through third parties, which we refer to as our retail partners, net revenue from media advertisers, and net revenue from our logistics program.

In the three months ended June 30, 2016, we generated a net loss of $48.3 million and Adjusted EBITDA of $(24.9) million, increases of $28.9 million and $19.9 million, respectively, over the same periods in 2015. Our net loss and Adjusted EBITDA results were driven primarily by our increased investment in advertising, including in Europe and Canada, and investment in headcount across our global business. For additional information about Adjusted EBITDA, our use of this measure, the limitations of this measure as an analytical tool, and the reconciliation of Adjusted EBITDA to net loss, the most directly comparable generally accepted accounting principle (“GAAP”) financial measure, refer to Key Financial and Operating Metrics below. 

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Key Financial and Operating Metrics

We measure our business using both financial and operating metrics. Our net revenue, Adjusted EBITDA and free cash flow metrics are measured on a consolidated basis. All other key financial and operating metrics are derived and reported from our Direct Retail sales, which includes sales generated primarily through the sites of our five distinct brands. These metrics do not include net revenue derived from the sites operated by our retail partners. We do not have access to certain customer level information on net revenue derived through our retail partners and therefore cannot measure or disclose it.

We use the following metrics to assess the near-term and longer-term performance of our overall business (in thousands, except LTM Net Revenue per Active Customer and Average Order Value): 

	Three months ended June 30,
	2016			2015			% Change
Consolidated Financial Metrics
Net Revenue	$	786,928		$	491,752		60.0	%
Adjusted EBITDA	$	(24,857	)	$	(4,972	)
Free cash flow	$	(19,418	)	$	10,989
Direct Retail Financial and Operating Metrics
Direct Retail Net Revenue	$	755,657		$	440,297		71.6	%
Active Customers	6,672			4,044			65.0	%
LTM Net Revenue per Active Customer	$	404		$	357		13.2	%
Orders Delivered	2,930			1,959			49.6	%
Average Order Value	$	258		$	225		14.7	%

	Six months ended June 30,
	2016			2015			% Change
Consolidated Financial Metrics
Net Revenue	$	1,534,276		$	916,123		67.5	%
Adjusted EBITDA	$	(45,817	)	$	(17,312	)
Free cash flow	$	(100,000	)	$	(40,379	)
Direct Retail Financial and Operating Metrics
Direct Retail Net Revenue	$	1,467,503		$	809,694		81.2	%
Active Customers	6,672			4,044			65.0	%
LTM Net Revenue per Active Customer	$	404		$	357		13.2	%
Orders Delivered	5,926			3,756			57.8	%
Average Order Value	$	248		$	216		14.8	%

Non-GAAP Financial Measures

Adjusted EBITDA

To provide investors with additional information regarding our financial results, we have disclosed here and elsewhere in this Quarterly Report on Form 10-Q Adjusted EBITDA, a non-GAAP financial measure that we calculate as loss before depreciation and amortization, equity-based compensation and related taxes, interest and other income and expense, provision for income taxes, and non-recurring items. We have provided a reconciliation below of Adjusted EBITDA to net loss, the most directly comparable GAAP financial measure. 

We have included Adjusted EBITDA in this Quarterly Report on Form 10-Q because it is a key measure used by our management and board of directors to evaluate our operating performance, generate future operating plans and make strategic decisions regarding the allocation of capital. In particular, the exclusion of certain expenses in calculating Adjusted EBITDA facilitates operating performance comparisons on a period-to-period basis. Accordingly, we believe that Adjusted EBITDA provides useful information to investors and others in understanding and evaluating our operating results in the same manner as our management and board of directors.

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Adjusted EBITDA has limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of our results as reported under GAAP. Some of these limitations are: 

▪ 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; and

▪ Other companies, including companies in our industry, may calculate Adjusted EBITDA differently, which reduces its usefulness as a comparative measure.

Because of these limitations, you should consider Adjusted EBITDA alongside other financial performance measures, including various cash flow metrics, net loss and our other GAAP results.

The following table reflects the reconciliation of net loss to Adjusted EBITDA for each of the periods indicated (in thousands):

	Three months ended June 30,						Six months ended June 30,
	2016			2015			2016			2015
Reconciliation of Adjusted EBITDA
Net loss	$	(48,274	)	$	(19,334	)	$	(89,479	)	$	(46,470	)
Depreciation and amortization	12,578			7,400			23,065			14,144
Equity based compensation and related taxes	11,295			7,101			21,957			15,263
Interest (income), net	(531		)	(308		)	(1,083		)	(572		)
Other (income) expense, net	(246		)	96			(915		)	204
Provision for income taxes	321			73			638			119
Adjusted EBITDA	$	(24,857	)	$	(4,972	)	$	(45,817	)	$	(17,312	)

Free Cash Flow

To provide investors with additional information regarding our financial results, we have also disclosed here and elsewhere in this Quarterly Report on Form 10-Q free cash flow, a non-GAAP financial measure that we calculate as net cash provided by (used in) operating activities less net cash used to purchase property and equipment and site and software development costs. We have provided a reconciliation below of free cash flow to net cash provided by (used in) operating activities, the most directly comparable GAAP financial measure.

We have included free cash flow in this Quarterly Report on Form 10-Q because it is an important indicator of our business performance as it measures the amount of cash we generate. Accordingly, we believe that free cash flow provides useful information to investors and others in understanding and evaluating our operating results in the same manner as our management.

Free cash flow has limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of our results as reported under GAAP. There are limitations to using non-GAAP financial measures, including that other companies, including companies in our industry, may calculate free cash flow differently. Because of these limitations, you should consider free cash flow alongside other financial performance measures, including net cash provided by (used in) operating activities, capital expenditures and our other GAAP results.

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The following table presents a reconciliation of free cash flow to net cash provided by operating activities for each of the periods indicated (in thousands):

	Three months ended June 30,						Six months ended June 30,
	2016			2015			2016			2015
Net cash provided by (used in) operating activities	$	24,903		$	28,453		$	(26,301	)	$	(6,749	)
Purchase of property and equipment	(37,509		)	(13,153		)	(61,436		)	(25,204		)
Site and software development costs	(6,812		)	(4,311		)	(12,263		)	(8,426		)
Free cash flow	$	(19,418	)	$	10,989		$	(100,000	)	$	(40,379	)

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Key Operating Metrics (Direct Retail)

Active Customers

As of the last date of each reported period, we determine our number of active customers by counting the total number of individual customers who have purchased at least once directly from our sites during the preceding twelve-month period. The change in active customers in a reported period captures both the inflow of new customers as well as the outflow of existing customers who have not made a purchase in the last twelve months. We view the number of active customers as a key indicator of our growth.

LTM Net Revenue Per Active Customer

We define LTM net revenue per active customer as our total net revenue derived from Direct Retail sales in the last twelve months divided by our total number of active customers for the same preceding twelve-month period. We view LTM net revenue per active customer as a key indicator of our customers' purchasing patterns, including their initial and repeat purchase behavior.

Orders Delivered

We define orders delivered as the total Direct Retail orders delivered in any period, inclusive of orders that may eventually be returned. As we ship a large volume of packages through multiple carriers, actual delivery dates may not always be available, and as such we estimate delivery dates based on historical data. We recognize net revenue when an order is delivered and therefore orders delivered, together with average order value, is an indicator of the net revenue we expect to recognize in a given period. We view orders delivered as a key indicator of our growth.

Average Order Value

We define average order value as total Direct Retail net revenue in a given period divided by the orders delivered in that period. We view average order value as a key indicator of the mix of products on our sites, the mix of offers and promotions and the purchasing behavior of our customers.

Factors Affecting our Performance

We believe that our performance and future success depend on a number of factors that present significant opportunities for us but also pose risks and challenges, including those discussed in Part II, Item 1A, Risk Factors, of this Quarterly Report on Form 10-Q and those set forth under Part I, Item 1A, Risk Factors, in our Annual Report on Form 10-K for the year ended December 31, 2015.

Growth in Brand Awareness and Visitors to our Sites

We intend to continue investing in our brand awareness strategy and direct online marketing efforts. In late 2011, we made a strategic decision to close and permanently redirect over 240 of our niche websites into Wayfair.com. Since late 2011, we have marketed our brands, in particular Wayfair.com, through TV advertising, display advertising, paid search advertising, social media advertising and direct mail, catalog and print advertising. We believe that attracting new visitors to our sites and converting them into customers is key to driving our net revenue growth and operating results.

Growth in Customer Acquisition and Customer Retention

Our goal is to convert visitors into active customers and then encourage repeat purchases because it increases our operating leverage since it costs more to acquire a customer than to retain one. Our continued investments in infrastructure, including enhancing our merchandising, data, analytics, and technology platform, allow us to deliver increasingly tailored and personalized shopping experiences for customers across our sites. We believe our focus on a personalized shopping experience drives sales from new customers as well as repeat customers.

Revenue Growth Through Mobile Platform

Mobile is an increasingly important part of our business. We launched our mobile applications for Joss & Main in 2012, Wayfair.com in 2014, and AllModern in 2015, and all of our sites are mobile-optimized. Due to the relative newness of smartphones, tablets, and mobile shopping in general, we do not know if this increase in mobile use will continue. 

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Investment in Growth

We have aggressively invested in the growth of our business and this investment will continue. We anticipate that our operating expenses will increase substantially as we continue to increase our advertising spending, hire additional personnel primarily in merchandising, technology, operations, customer service and general and administrative functions and continue to develop features on our sites. We have continued to increase our office space to accommodate the anticipated growth of our headcount in our corporate headquarters and have expanded our warehouse space. These investments are expected to continue to generate losses near term and yield returns in the long term, but there is no guarantee that we will be able to realize the return on our investments.

Net Revenue

Net revenue consists primarily of sales of product from our sites and through the sites of our online retail partners and includes related shipping fees. We deduct cash discounts, allowances and estimated returns from gross revenue to determine net revenue. We recognize product revenue upon delivery to our customers. Net revenue is primarily driven by growth of new and active customers and the frequency with which customers purchase. The products offered on our sites are primarily fulfilled with product we ship to our customers directly from our suppliers and, to a lesser extent, from our fulfillment centers. We also generate net revenue through third-party advertisers that pay us based on the number of advertisement related clicks, actions, or impressions for advertisements placed on our sites. Net revenue earned under these arrangements is included in net revenue and is recognized in the period in which the click, action or impression occurs. This revenue has not been material to date.

Cost of Goods Sold

Cost of goods sold consists of the cost of product sold to customers, shipping and handling costs and shipping supplies and fulfillment costs. Fulfillment costs include costs incurred in operating and staffing the fulfillment centers, such as costs attributed to receiving, inspecting, picking, packaging and preparing customer orders for shipment. Cost of goods sold also includes direct and indirect labor costs including equity-based compensation for fulfillment center oversight, including payroll and related benefit costs. The increase in cost of goods sold is primarily driven by growth in orders delivered, the mix of the product available for sale on our sites and transportation costs related to delivering orders to our customers. We earn rebates on our incentive programs with our suppliers. These rebates are earned upon shipment of goods. Amounts due from suppliers as a result of these rebate programs are included as a receivable and are reflected as a reduction of cost of goods sold on the consolidated statements of operations. We expect cost of goods sold expenses to remain relatively stable as a percentage of net revenue but some fluctuations are expected due to the wide variety of products we sell.

Customer Service and Merchant Fees

Customer service and merchant fees consist of labor-related costs including equity-based compensation of our employees involved in customer service activities and merchant processing fees associated with customer payments made by credit cards. Increases in our customer service and merchant fees are driven by the growth in our revenue and are expected to remain relatively consistent as a percentage of revenue.

Advertising

Advertising consists of direct response performance marketing costs, such as television advertising, display advertising, paid search advertising, social media advertising, search engine optimization, comparison shopping engine advertising, direct mail, catalog and print advertising. We expect advertising expense to continue to increase but decrease as a percentage of net revenue over time due to our increasing mix of orders from repeat customers.

Merchandising, Marketing and Sales

Merchandising, marketing and sales expenses include labor-related costs including equity-based compensation for our category managers, buyers, site merchandisers, merchants, marketers and the team who executes our advertising strategy. Sales, marketing and merchandising expenses are primarily driven by investments to grow and retain our customer base. We expect merchandising, marketing and sales expenses to continue to increase as we grow our net revenue.

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Operations, Technology and General and Administrative

Operations, technology, general and administrative expenses primarily include labor-related costs including equity-based compensation of our operations group that lead our supply chain and logistics, our technology team, building and supporting our sites, and our corporate general and administrative, which includes human resources, finance and accounting personnel. Also included are administrative and professional service fees including audit and legal fees, insurance and other corporate expenses, including depreciation and rent. We anticipate that we will incur additional personnel expenses, professional service fees, including audit and legal, investor relations, costs of compliance with securities laws and regulations, and higher director and officer insurance costs related to operating as a public company. We expect operations, technology, general and administrative expenses will continue to increase as we grow our net revenue and operations.

Interest Income, Net

Interest income, net consists primarily of interest earned on cash, cash equivalents and short-term and long-term investments held by us.

Other Income (Expense), Net

Other income (expense), net consists primarily of foreign currency gains (losses).

Results of Consolidated Operations (in thousands)

Comparison of the three months ended June 30, 2016 and 2015

Net revenue

	Three months ended June 30,
	2016		2015		% Change
Net revenue
Direct Retail	$	755,657	$	440,297	71.6	%
Other	31,271		51,455		(39.2	)%
Net revenue	$	786,928	$	491,752	60.0	%

In the three months ended June 30, 2016, net revenue increased by $295.2 million, or 60.0% compared to the same period in 2015, primarily as a result of an increase in Direct Retail net revenue. In the three months ended June 30, 2016, Direct Retail net revenue increased by $315.4 million, or 71.6% compared to the same period in 2015, primarily due to sales to a larger customer base, as the number of active customers increased65.0% in the three months ended June 30, 2016 compared to the same period in 2015. Additionally, LTM net revenue per active customer increased13.2% in the three months ended June 30, 2016 compared with the same period in 2015. The $20.2 million or 39.2%decrease in other revenue in the three months ended June 30, 2016 as compared to the same period in 2015 was primarily due to decreased sales through our retail partners, as we continue to focus more on our Direct Retail business over time.

Cost of goods sold

	Three months ended June 30,
	2016			2015			% Change
Cost of goods sold
Cost of goods sold	$	598,414		$	370,951		61.3	%
As a percentage of net revenue	76.0		%	75.4		%

In the three months ended June 30, 2016, cost of goods sold increased by $227.5 million, or 61.3%, compared to the same period in 2015. Of the increase in cost of goods sold, $186.3 million was due to the increase in products sold to our larger customer base. In addition, shipping and fulfillment costs increased$41.2 million as a result of the increase in products sold during the period. Cost of goods sold as a percentage of net revenue increased in the three months ended June 30, 2016 compared to the same period in 2015 as a result of changes in the mix of the products sold.

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Operating expenses  

	Three months ended June 30,
	2016			2015			% Change
Customer service and merchant fees (1)	$	30,064		$	18,330		64.0	%
Advertising	94,426			61,539			53.4	%
Merchandising, marketing and sales (1)	43,273			23,814			81.7	%
Operations, technology, general and administrative (1)	69,481			36,591			89.9	%
	$	237,244		$	140,274		69.1	%
As a percentage of net revenue:
Customer service and merchant fees (1)	3.8		%	3.7		%
Advertising	12.0		%	12.5		%
Merchandising, marketing and sales (1)	5.5		%	4.7		%
Operations, technology, general and administrative (1)	8.8		%	7.6		%
	30.1		%	28.5		%

(1) Includes equity-based compensation and related taxes as follows:  

	Three months ended June 30,
	2016		2015
Customer service and merchant fees	$	528	$	288
Merchandising, marketing and sales	5,221		3,204
Operations, technology, general and administrative	5,459		3,530

The following table summarizes operating expenses as a percentage of net revenue, excluding equity-based compensation and related taxes:

	Three months ended June 30,
	2016		2015
Customer service and merchant fees	3.8	%	3.7	%
Merchandising, marketing and sales	4.8	%	4.2	%
Operations, technology, general and administrative	8.1	%	6.7	%

Excluding the impact of equity based compensation and related taxes, customer service costs and merchant processing fees increased by $11.5 million in the three months ended June 30, 2016 compared to the same period in 2015, primarily due to the increase in net revenue during the three months ended June 30, 2016.

Our advertising expenses increased by $32.9 million in the three months ended June 30, 2016 compared to the same period in 2015, primarily as a result of an increase in online and television advertising. Advertising decreased as a percentage of net revenue in the three months ended June 30, 2016 compared to the same period in 2015, primarily due to increased leverage from our growing base of repeat customers, and television advertising expense not increasing at the same rate as revenue growth in the United States, partially offset by advertising investments in Europe and Canada.

Excluding the impact of equity based compensation and related taxes, merchandising, marketing and sales expenses increased by $17.5 million in the three months ended June 30, 2016 compared to the same period in 2015, primarily due to the increase in headcount to grow and retain our customer base.

Excluding the impact of equity based compensation and related taxes, operations, technology, general and administrative expense increased by $30.9 million in the three months ended June 30, 2016 compared to the same period in 2015. As our revenue continues to grow, we have invested in headcount in both operations and technology to continue to deliver a great experience for our customers. The increase in operations, technology, general and administrative expense was primarily attributable to personnel costs, rent, information technology, and depreciation and amortization.

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Comparison of the six months ended June 30, 2016 and 2015

Net revenue

	Six months ended June 30,
	2016		2015		% Change
Net revenue
Direct Retail	$	1,467,503	$	809,694	81.2	%
Other	66,773		106,429		(37.3	)%
Net revenue	$	1,534,276	$	916,123	67.5	%

In the six months ended June 30, 2016, net revenue increased by $618.2 million, or 67.5% compared to the same period in 2015, primarily as a result of an increase in Direct Retail net revenue. In the six months ended June 30, 2016, Direct Retail net revenue increased by $657.8 million, or 81.2% compared to the same period in 2015, primarily due to sales to a larger customer base, as the number of active customers increased65.0% in the six months ended June 30, 2016 compared to the same period in 2015. Additionally, LTM net revenue per active customer increased13.2% in the six months ended June 30, 2016 compared with the same period in 2015. The $39.7 million or 37.3%decrease in other revenue in the six months ended June 30, 2016 as compared to the same period in 2015 was primarily due to decreased sales through our retail partners, as we continue to focus more on our Direct Retail business over time.

Cost of goods sold

	Six months ended June 30,
	2016			2015			% Change
Cost of goods sold
Cost of goods sold	$	1,166,706		$	692,487		68.5	%
As a percentage of net revenue	76.0		%	75.6		%

In the six months ended June 30, 2016, cost of goods sold increased by $474.2 million, or 68.5%, compared to the same period in 2015. Of the increase in cost of goods sold, $387.4 million was due to the increase in products sold to our larger customer base. In addition, shipping and fulfillment costs decreased$86.8 million as a result of the increase in products sold during the period. Cost of goods sold as a percentage of net revenue increased in the six months ended June 30, 2016 compared to the same period in 2015 as a result of changes in the mix of the products sold.

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Operating expenses  

	Six months ended June 30,
	2016			2015			% Change
Customer service and merchant fees (1)	$	57,414		$	34,308		67.3	%
Advertising	192,103			119,538			60.7	%
Merchandising, marketing and sales (1)	81,129			47,048			72.4	%
Operations, technology, general and administrative (1)	127,763			69,461			83.9	%
	$	458,409		$	270,355		69.6	%
As a percentage of net revenue
Customer service and merchant fees (1)	3.7		%	3.7		%
Advertising	12.5		%	13.1		%
Merchandising, marketing and sales (1)	5.3		%	5.1		%
Operations, technology, general and administrative (1)	8.3		%	7.6		%
	29.8		%	29.5		%

(1) Includes equity-based compensation and related taxes as follows:  

	Six months ended June 30,
	2016		2015
Customer service and merchant fees	$	861	$	507
Merchandising, marketing and sales	10,322		7,070
Operations, technology, general and administrative	10,629		7,536

The following table summarizes operating expenses as a percentage of net revenue, excluding equity-based compensation and related taxes:

	Six months ended June 30,
	2016		2015
Customer service and merchant fees	3.7	%	3.7	%
Merchandising, marketing and sales	4.6	%	4.4	%
Operations, technology, general and administrative	7.6	%	6.7	%

Excluding the impact of equity based compensation and related taxes, customer service costs and merchant processing fees increased by $22.8 million in the six months ended June 30, 2016 compared to the same period in 2015, primarily due to the increase in net revenue during the six months ended June 30, 2016.

Our advertising expenses increased by $72.6 million in the six months ended June 30, 2016 compared to the same period in 2015, primarily as a result of an increase in online and television advertising. Advertising decreased as a percentage of net revenue in the six months ended June 30, 2016 compared to the same period in 2015 primarily due to increased leverage from our growing base of repeat customers, and television advertising expense not increasing at the same rate as revenue growth in the United States, partially offset by advertising investments in Europe and Canada.

Excluding the impact of equity based compensation and related taxes, merchandising, marketing and sales expenses increased by $30.8 million in the six months ended June 30, 2016 compared to the same period in 2015, primarily due to an increase in headcount to grow and retain our customer base.

Excluding the impact of equity based compensation and related taxes operations, technology, general and administrative expense increased by $55.2 million in the six months ended June 30, 2016 compared to the same period in 2015. As our revenue continues to grow, we have invested in headcount in both operations and technology to continue to deliver a great experience for our customers. The increase in operations, technology, general and administrative expense was primarily attributable to personnel costs, rent, information technology, and depreciation and amortization.

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Liquidity and Capital Resources

Sources of Liquidity

	June 30,			December 31,
	2016			2015
	(in thousands)
Cash and cash equivalents	$	220,299		$	334,176
Short-term investments	$	82,712		$	51,895
Accounts receivable, net	$	14,163		$	9,906
Long-term investments	$	50,527		$	79,883
Working capital	$	(2,454	)	$	95,297

Historical Cash Flows

	Six months ended June 30,
	2016			2015
	(in thousands)
Net loss	$	(89,479	)	$	(46,470	)
Net cash used in operating activities	$	(26,301	)	$	(6,749	)
Net cash used in investing activities	$	(74,859	)	$	(104,639	)
Net cash used in financing activities	$	(12,244	)	$	(7,565	)

Since our inception, we have financed our operations, capital expenditures and acquisitions primarily through cash flows generated by operations and, since 2011, also through private sales of convertible redeemable preferred stock and sales of common stock in connection with our IPO. Since inception through June 30, 2016, we have raised a total of approximately $646.0 million from the sale of preferred stock and common stock, net of costs and expenses associated with such financings, or approximately $453.8 million, net of repurchases of our securities and dividends paid to Series A redeemable convertible preferred stockholders.

On October 7, 2014, we completed our IPO of 12,650,000 shares of our Class A common stock at a public offering price of $29.00 per share, of which 10,500,000 shares were sold by us and 2,150,000 shares were sold by selling stockholders, including 1,650,000 shares pursuant to the underwriters’ option to purchase additional shares, resulting in net proceeds to us of approximately $282.9 million, after deducting underwriting discounts and offering expenses. We did not receive any proceeds from the sale of shares by the selling stockholders. We used these proceeds to distribute $24.5 million of cash to our Series A redeemable convertible preferred stockholders and pay $22.6 million in minimum tax withholding obligations on the vesting of our restricted stock units upon the closing of our initial public offering.

We believe that our existing cash and cash equivalents and investments, together with cash generated from operations, will be sufficient to meet our anticipated cash needs for at least the foreseeable future. However, our liquidity assumptions may prove to be incorrect, and we could exhaust our available financial resources sooner than we currently expect. In addition, we may elect to raise additional funds at any time through equity, equity linked or debt financing arrangements. Capital expenditures were 2.8% of net revenue for the year ended December 31, 2015, and related primarily to additional capacity to support our supply chain infrastructure, including warehouses and our distribution network, investments in our technology and operational platform, including our mobile platform, and additional resources required to establish and expand our international operations. Capital expenditures were 5.6% of net revenue for the three months ended June 30, 2016, and related primarily to putting a new data center online, our ongoing investments in our technology infrastructure, and equipment purchases and improvements for leased warehouses within our expanding supply chain network. We expect capital expenditures to be approximately 4.0% of net revenue for the full year 2016, as we continue our investment in our technology infrastructure and roll out our supply chain network. Our future capital requirements and the adequacy of available funds will depend on many factors, including those described herein and in our other filings with the SEC, including those set forth under in Part I, Item 1A, Risk Factors, in our Annual Report on Form 10-K for the year ended December 31, 2015. We may not be able to secure additional financing to meet our operating requirements on acceptable terms, or at all. 

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Operating Activities

Cash provided by operating activities consisted of net loss adjusted for certain non-cash items including depreciation and amortization, equity-based compensation, and certain other non-cash expenses, as well as the effect of changes in working capital and other activities.

Cash used in operating activities in the six months ended June 30, 2016 was $26.3 million and was driven primarily by net loss of $89.5 million, partially offset by certain non-cash items including depreciation and amortization expense of $23.1 million and equity based compensation of $20.5 million, cash provided by operating assets and liabilities of $19.2 million, and other non-cash items of $0.4 million. Operating cash flows can be volatile and are sensitive to many factors, including changes in working capital and our net loss.

Cash used in operating activities in the six months ended June 30, 2015 was $6.7 million and was driven primarily by net loss of $46.5 million, partially offset by cash provided by operating assets and liabilities of $10.7 million, certain non-cash items including depreciation and amortization expense of $14.1 million, equity based compensation of $14.2 million, and other non-cash items of $0.8 million. Operating cash flows can be volatile and are sensitive to many factors, including changes in working capital and our net loss.

Investing Activities

Our primary investing activities consisted of purchases of property and equipment, particularly purchases of servers and networking equipment, investment in our sites and software development, purchases and disposal of short-term and long-term investments, and leasehold improvements for our facilities.

Cash used in investing activities in the six months ended June 30, 2016 was $74.9 million and was primarily driven by purchases of short-term and long-term investments of $69.1 million, purchases of property and equipment of $61.4 million, and site and software development costs of $12.3 million, partially offset by net increase in the maturity of short-term investments of $67.9 million.

Cash used in investing activities in the six months ended June 30, 2015 was $104.6 million and was primarily driven by purchases of short-term and long-term investments of $108.3 million, purchases of property and equipment of $25.2 million, and site and software development costs of $8.4 million, partially offset by net increase in the maturity of short-term investments of $37.0 million and other net investing activities of $0.3 million.

Financing Activities

Cash used in financing activities in the six months ended June 30, 2016 was $12.2 million and was primarily due to $12.3 million statutory minimum taxes paid related to net share settlements of equity awards, partially offset by $0.1 million net proceeds from exercise of stock options.

Cash used in financing activities in the six months ended June 30, 2015 was $7.6 million and was primarily due to $7.8 million statutory minimum taxes paid related to net share settlements of equity awards, partially offset by $0.2 million net proceeds from exercise of stock options.

Credit Agreement

For information regarding our credit agreement, see Note 11, Credit Agreement, in the Notes to the Unaudited Consolidated and Condensed Financial Statements included in Part I, Item 1, Unaudited Consolidated and Condensed Financial Statements, of this Quarterly Report on Form 10-Q.

Off-Balance Sheet Arrangements

We do not engage in any off-balance sheet activities. We do not have any off-balance sheet interest in variable interest entities, which include special purpose entities and other structured finance entities.

Contractual Obligations

There have been no material changes to our contractual obligations and estimates as compared to the contractual obligations described in Contractual Obligations included in Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, of the Company’s Annual Reporton Form 10-K for the year ended December 31, 2015, except as disclosed in Note 6, Commitments and Contingencies, in the Notes to the Unaudited Consolidated and Condensed Financial Statements included in Part I, Item 1, Unaudited Consolidated and Condensed Financial Statements, of this Quarterly Report on Form 10-Q.

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Critical Accounting Policies

Our financial statements are prepared in accordance with accounting principles generally accepted in the United States. The preparation of our financial statements and related disclosures requires us to make estimates, assumptions and judgments that affect the reported amount of assets, liabilities, net revenue, costs and expenses and related disclosures. We believe that the estimates, assumptions and judgments involved in the accounting policies described below have the greatest potential impact on our financial statements and, therefore, we consider these to be our critical accounting policies. Accordingly, we evaluate our estimates and assumptions on an ongoing basis. Our actual results may differ from these estimates under different assumptions and conditions. 

There have been no material changes to our critical accounting policies and estimates as compared to the critical accounting policies and estimates described in Note 2, Summary of Significant Accounting Policies, in the Notes to the Consolidated Financial Statements included in Part II, Item 8, Financial Statements and Supplementary Data, of the Company’s Annual Report on Form 10-K for the year ended December 31, 2015. 

Recent Accounting Pronouncements

For information about recent accounting pronouncements, see Note 13, Recent Accounting Pronouncements, included in Part I, Item 1, Unaudited Consolidated and Condensed Financial Statements, of this Quarterly Report on Form 10-Q.

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We have operations both within the United States and internationally, and we are exposed to market risks in the ordinary course of our business, including the effects of foreign currency fluctuations, interest rate changes and inflation. Information relating to quantitative and qualitative disclosures about these market risks is set forth below.

Interest Rate Sensitivity

Cash and cash equivalents and short-term and long-term investments were held primarily in cash deposits, certificates of deposit, money market funds, and corporate debt. The fair value of our cash, cash equivalents and short-term and long-term investments would not be significantly affected by either an increase or decrease in interest rates due mainly to the short-term nature of these instruments. Interest on the revolving line of credit incurred pursuant to the credit agreement described above would accrue at a floating rate based on a formula tied to certain market rates at the time of incurrence; however, we do not expect that any change in prevailing interest rates will have a material impact on our results of operations.

Foreign Currency Risk

Most of our sales are denominated in U.S. dollars, and therefore, our revenue is not currently subject to significant foreign currency risk. Our operating expenses are denominated in the currencies of the countries in which our operations are located, and may be subject to fluctuations due to changes in foreign currency exchange rates, particularly changes in the British Pound, and Euro. Fluctuations in foreign currency exchange rates may cause us to recognize transaction gains and losses in our statement of operations. To date, foreign currency transaction gains and losses have not been material to our financial statements, and we have not engaged in any foreign currency hedging transactions.

Inflation

We do not believe that inflation has had a material effect on our business, financial condition or results of operations. We continue to monitor the impact of inflation in order to minimize its effects through pricing strategies, productivity improvements and cost reductions. If our costs were to become subject to significant inflationary pressures, we may not be able to fully offset such higher costs through price increases. Our inability or failure to do so could harm our business, financial condition and results of operations.

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ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our chief executive officer and chief financial officer, evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this Quarterly Report on Form 10-Q. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act of 1934, as amended, or the Exchange Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the rules and forms of the Securities and Exchange Commission, or SEC. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on the evaluation of our disclosure controls and procedures as of the end of the period covered by this Quarterly Report on Form 10-Q, our chief executive officer and chief financial officer concluded that, as of such date, our disclosure controls and procedures were effective at the reasonable assurance level.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting identified in connection with the evaluation required by Rule 13a-15(d) or 15d-15(d) of the Exchange Act during the period covered by this Quarterly Report on Form 10-Q that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

31

PART II

OTHER INFORMATION

Item 1.    Legal Proceedings

On September 2, 2015, a putative class action complaint was filed against us in the U.S. District Court for the Southern District of New York (Dingee v. Wayfair Inc., et al., Case No. 1:15-cv-06941) by an individual on behalf of himself and on behalf of all other similarly situated individuals, under sections 10(b) and 20(a) of the Exchange Act related to a drop in stock price that had followed a report issued by Citron Research. We moved to dismiss all counts in February 2016. On May 24, 2016, the court granted our motion to dismiss the Dingee complaint in its entirety, with prejudice.

On February 2, 2016, a putative class action complaint was filed against us in the U.S. District Court for the Central District of California (Carson, et al., v. Wayfair Inc., Case No. 2:16-cv-00716) by two individuals on behalf of themselves and on behalf of all other similarly situated individuals (collectively, the "Carson Plaintiffs"). The complaint alleged that Wayfair engaged in a deceptive marketing campaign in which we advertised certain “original” or “regular” retail prices, which the Carson Plaintiffs alleged were false. In May 2016, the Carson Plaintiffs voluntarily withdrew this action without prejudice.

From time to time we are involved in claims that arise during the ordinary course of business. Although the results of litigation and claims cannot be predicted with certainty, we do not currently believe that the outcome of any of these other legal matters will have a material adverse effect on our results of operation or financial condition. Regardless of the outcome, litigation can be costly and time consuming, as it can divert management’s attention from important business matters and initiatives, negatively impacting our overall operations. In addition, we may also find ourselves at greater risk to outside party claims as we increase our operations in jurisdictions where the laws with respect to the potential liability of online retailers are uncertain, unfavorable, or unclear.

For information regarding our legal proceedings, see Note 6, Commitments and Contingencies, in the Notes to the Consolidated and Condensed Financial Statements included in Part I, Item 1, Unaudited Consolidated and Condensed Financial Statements, of this Quarterly Report on Form 10-Q. 

Item 1A. Risk Factors

RISK FACTORS

There are no material changes from the risk factors previously disclosed in Part I, Item 1A, Risk Factors, of our Annual Report on Form 10-K for the year ended December 31, 2015.

Item 2.    Unregistered Sales of Equity Securities and Use of Proceeds

Sales of Unregistered Securities

During the three months ended June 30, 2016, we issued 248,431 shares of Class B common stock upon the vesting of outstanding restricted stock units, net of shares withheld to satisfy statutory minimum tax withholding obligations. The issuance of these securities were pursuant to written compensatory plans or arrangements with our employees, consultants, advisors and directors in reliance on the exemption provided by Rule 701 promulgated under the Securities Act, relative to transactions by an issuer not involving any public offering, to the extent an exemption from registration was required.

Use of Proceeds from Public Offering of Common Stock

On October 1, 2014 the SEC declared our Registration Statement on Form S-1 (File No. 333-198171), as amended, effective in connection with our IPO.

There have been no material changes in the planned use of proceeds from the offering as described in the Registration Statement and in our Annual Report on Form 10-K for the year ended December 31, 2015.

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Item 6.    Exhibits.

Exhibit		Incorporated by Reference
Number	Exhibit Description	Form	Filing Date/Period End Date
10.1	Amendment No. 4 to Loan Agreement, dated as of July 31, 2016, by and between Bank of America, N.A. and Wayfair LLC.	8-K	8/4/2016
31.1*	Certification of Chief Executive Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*	Certification of Chief Financial Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1**	Certification of Chief Executive Officer pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2**	Certification of Chief Financial Officer pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS*	XBRL Instance Document
101.SCH*	XBRL Taxonomy Extension Schema Document
101.CAL*	XBRL Taxonomy Calculation Linkbase Document
101.DEF*	XBRL Taxonomy Definition Linkbase Document
101.LAB*	XBRL Taxonomy Labels Linkbase Document
101.PRE*	XBRL Taxonomy Presentation Linkbase Document

*	Exhibits filed herewith.
**	Exhibits furnished herewith.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

		WAYFAIR INC.
Date: August 9, 2016	By:	/s/ NIRAJ SHAH
		Niraj Shah
		President and Chief Executive Officer
		(Principal Executive Officer)
Date: August 9, 2016	By:	/s/ MICHAEL FLEISHER
		Michael Fleisher
		Chief Financial Officer
		(Principal Financial Officer)

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EX-31.1

Exhibit 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

I, Niraj Shah, certify that:

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 Rule 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. 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

c. 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: August 9, 2016	/s/ NIRAJ SHAH
	Niraj Shah
	President and Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER

I, Michael Fleisher, certify that:

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 Rule 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. 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

c. 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: August 9, 2016	/s/ MICHAEL FLEISHER
	Michael Fleisher
	Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of Wayfair Inc. (the “Company”) for the quarter ended June 30, 2016, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Niraj Shah, Chief Executive Officer of the Company, certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that:

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: August 9, 2016	/s/ NIRAJ SHAH
	Niraj Shah
	President and Chief Executive Officer

EX-32.2

Exhibit 32.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of Wayfair Inc. (the “Company”) for the quarter ended June 30, 2016, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Michael Fleisher, Chief Financial Officer of the Company, certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that:

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: August 9, 2016	/s/ MICHAEL FLEISHER
	Michael Fleisher
	Chief Financial Officer

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Document and Entity Information - shares	6 Months Ended
	Jun. 30, 2016	Jul. 31, 2016
Entity Information [Line Items]
Entity Registrant Name	Wayfair Inc.
Entity Central Index Key	0001616707
Current Fiscal Year End Date	--12-31
Entity Filer Category	Large Accelerated Filer
Entity Current Reporting Status	Yes
Document Type	10-Q
Document Period End Date	Jun. 30, 2016
Document Fiscal Year Focus	2016
Document Fiscal Period Focus	Q2
Amendment Flag	false
Class A common stock
Entity Information [Line Items]
Entity Common Stock, Shares Outstanding		48,191,578
Class B common stock
Entity Information [Line Items]
Entity Common Stock, Shares Outstanding		36,803,486

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CONSOLIDATED AND CONDENSED BALANCE SHEETS - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
Current assets
Cash and cash equivalents	$ 220,299	$ 334,176
Short-term investments	82,712	51,895
Accounts receivable, net of allowance of $3,229 and $2,767 at June 30, 2016 and December 31, 2015, respectively	14,163	9,906
Inventories	17,396	19,900
Prepaid expenses and other current assets	88,117	76,446
Total current assets	422,687	492,323
Property and equipment, net	179,142	112,325
Goodwill and intangible assets, net	3,309	3,702
Long-term investments	50,527	79,883
Other noncurrent assets	8,303	6,348
Total assets	663,968	694,581
Current liabilities
Accounts payable	265,775	270,913
Accrued expenses	73,500	51,560
Deferred revenue	53,522	50,884
Other current liabilities	32,344	23,669
Total current liabilities	425,141	397,026
Property and equipment, gross	262,498	176,201
Lease financing obligation	29,856	0
Other liabilities	46,887	55,010
Total liabilities	501,884	452,036
Commitments and contingencies
Convertible preferred stock, $0.001 par value per share: 10,000,000 shares authorized and none issued at June 30, 2016 and December 31, 2015	0	0
Stockholders’ equity:
Additional paid-in capital	387,186	378,162
Accumulated deficit	(225,044)	(135,565)
Accumulated other comprehensive loss	(143)	(136)
Total stockholders’ equity	162,084	242,545
Total liabilities and stockholders’ equity	663,968	694,581
Class A common stock
Stockholders’ equity:
Common stock	48	46
Class B common stock
Stockholders’ equity:
Common stock	$ 37	$ 38

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CONSOLIDATED AND CONDENSED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
Accounts receivable allowance for doubtful accounts	$ 3,229	$ 2,767
Convertible redeemable preferred units, par value (in dollars per share)	$ 0.001	$ 0.001
Convertible redeemable preferred units, shares authorized (in shares)	10,000,000	10,000,000
Convertible redeemable preferred units, shares issued (in shares)	0	0
Class A common stock
Common stock, par value (in dollars per share)	$ 0.001	$ 0.001
Common stock, shares authorized (in shares)	500,000,000	500,000,000
Common stock, shares issued (in shares)	48,105,571	45,814,237
Common stock, shares outstanding (in shares)	48,105,571	45,814,237
Class B common stock
Common stock, par value (in dollars per share)	$ 0.001	$ 0.001
Common stock, shares authorized (in shares)	164,000,000	164,000,000
Common stock, shares issued (in shares)	36,800,012	38,496,562
Common stock, shares outstanding (in shares)	36,800,012	38,496,562

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CONSOLIDATED AND CONDENSED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Income Statement [Abstract]
Net revenue	$ 786,928	$ 491,752	$ 1,534,276	$ 916,123
Cost of goods sold	598,414	370,951	1,166,706	692,487
Gross profit	188,514	120,801	367,570	223,636
Operating expenses:
Customer service and merchant fees	30,064	18,330	57,414	34,308
Advertising	94,426	61,539	192,103	119,538
Merchandising, marketing and sales	43,273	23,814	81,129	47,048
Operations, technology, general and administrative	69,481	36,591	127,763	69,461
Total operating expenses	237,244	140,274	458,409	270,355
Loss from operations	(48,730)	(19,473)	(90,839)	(46,719)
Interest income, net	531	308	1,083	572
Other income (expense), net	246	(96)	915	(204)
Loss before income taxes	(47,953)	(19,261)	(88,841)	(46,351)
Provision for income taxes	321	73	638	119
Net loss	$ (48,274)	$ (19,334)	$ (89,479)	$ (46,470)
Net loss per share, basic and diluted (in dollars per share)	$ (0.57)	$ (0.23)	$ (1.06)	$ (0.56)
Weighted average number of common stock outstanding used in computing per share amounts, basic and diluted (in shares)	84,786	83,603	84,615	83,407

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CONSOLIDATED AND CONDENSED STATEMENTS OF COMPREHENSIVE LOSS - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Statement of Comprehensive Income [Abstract]
Net loss	$ (48,274)	$ (19,334)	$ (89,479)	$ (46,470)
Other comprehensive loss:
Foreign currency translation adjustments	(302)	(192)	(635)	(48)
Net unrealized gain (loss) on available-for-sale investments	131	(48)	628	(2)
Comprehensive loss	$ (48,445)	$ (19,574)	$ (89,486)	$ (46,520)

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CONSOLIDATED AND CONDENSED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015
Cash flows from operating activities
Net loss	$ (89,479)	$ (46,470)
Adjustments to reconcile net loss to net cash used in operating activities
Depreciation and amortization	23,065	14,144
Equity based compensation	20,462	14,234
Other non-cash adjustments	408	749
Changes in operating assets and liabilities:
Accounts receivable	(4,218)	(1,199)
Inventories	2,508	(1,548)
Prepaid expenses and other current assets	(11,650)	(19,533)
Accounts payable and accrued expenses	9,748	2,438
Deferred revenue and other liabilities	22,862	30,583
Other assets	(7)	(147)
Net cash used in operating activities	(26,301)	(6,749)
Cash flows from investing activities
Purchase of short-term and long-term investments	(69,055)	(108,311)
Sale and maturities of short-term investments	67,895	37,000
Purchase of property and equipment	(61,436)	(25,204)
Site and software development costs	(12,263)	(8,426)
Other investing activities, net	0	302
Net cash used in investing activities	(74,859)	(104,639)
Cash flows from financing activities
Taxes paid related to net share settlement of equity awards	(12,374)	(7,837)
Net proceeds from exercise of stock options	130	272
Net cash used in financing activities	(12,244)	(7,565)
Effect of exchange rate changes on cash and cash equivalents	(473)	(332)
Net decrease in cash and cash equivalents	(113,877)	(119,285)
Cash and cash equivalents
Beginning of period	334,176	355,859
End of period	220,299	236,574
Supplemental disclosure of non-cash investing activities
Purchase of property and equipment included in accounts payable and accrued expenses and in other liabilities	8,295	6,312
Construction costs capitalized under finance lease obligations	$ 8,102	$ 165

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Basis of Presentation

6 Months Ended

Jun. 30, 2016

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Basis of Presentation

Basis of Presentation

Wayfair Inc. (the “Company”) is an e-commerce business offering visually inspiring browsing, compelling merchandising, easy product discovery and attractive prices for over seven million products from over 7,000 suppliers across five distinct brands—Wayfair.com, Joss & Main, AllModern, DwellStudio, and Birch Lane. In addition to generating net revenue through Direct Retail sales, which includes all sales generated primarily through the Company’s websites, mobile optimized websites, and mobile applications (“sites”), net revenue is also generated through sites operated by third parties and through third party advertising distribution providers that pay the Company based on the number of advertisement related clicks, actions, or impressions for advertisements placed on the Company’s sites.

The consolidated and condensed financial statements and other disclosures contained in this Quarterly Report on Form 10-Q are those of the Company. The consolidated and condensed balance sheet data as of December 31, 2015 was derived from audited financial statements. The accompanying consolidated and condensed balance sheet as of June 30, 2016, the consolidated statements of operations, consolidated statements of comprehensive loss, and consolidated statements of cash flows for the periods ended June 30, 2016 and 2015 are unaudited. The unaudited interim financial statements have been prepared on the same basis as the audited consolidated financial statements and in the opinion of management, reflect all adjustments, consisting of only normal recurring adjustments, necessary for the fair statement of the Company’s financial position as of June 30, 2016 and statements of operations, comprehensive loss, and cash flows for the periods ended June 30, 2016 and 2015. The financial data and the other information disclosed in these notes to the consolidated and condensed financial statements related to these periods are unaudited.

The consolidated and condensed statements of operations, comprehensive loss, and cash flows for the period ended June 30, 2016 are not necessarily indicative of the results of operations and cash flows that may be expected for the year ending December 31, 2016, or for any other period.

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Summary of Significant Accounting Policies

6 Months Ended

Jun. 30, 2016

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

Summary of Significant Accounting Policies

The Company has identified the significant accounting policies that are critical to understanding its business and results of operations. The Company believes that there have been no significant changes during the six months ended June 30, 2016 to the items disclosed in Note 2, Summary of Significant Accounting Policies, in the Notes to the Consolidated Financial Statements included in Part II, Item 8, Financial Statements and Supplementary Data, of the Company’s Annual Report on Form 10-K for the year ended December 31, 2015 other than those noted below.

Property and Equipment

Property and equipment are stated at cost, net of depreciation and amortization. Depreciation and amortization on property and equipment is calculated on the straight-line method over the estimated useful lives of the assets as follows:

Class	Range of Life (In Years)
Furniture and computer equipment	3 to 7
Site and software development costs	2
Leasehold improvements	Lesser of useful life or lease term
Building	30

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Marketable Securities and Fair Value Measurements

6 Months Ended

Jun. 30, 2016

Fair Value Disclosures [Abstract]

Marketable Securities and Fair Value Measurements

Marketable Securities and Fair Value Measurements

Marketable Securities

As of June 30, 2016 and December 31, 2015, all of the Company’s marketable securities were classified as available-for-sale and their estimated fair values were $98.2 million and $96.8 million, respectively. We periodically review our available-for-sale securities for other-than-temporary impairment. We consider factors such as the duration, severity and the reason for the decline in value, the potential recovery period, and our intent to sell. As of June 30, 2016, the Company’s available-for-sale securities primarily consisted of corporate bonds and other government obligations that are priced at fair value. During the three and six months ended June 30, 2016 and 2015, we did not recognize any other-than-temporary impairment loss. The maturities of the Company’s long-term marketable securities generally range from one to three years.

The following tables present details of the Company’s marketable securities as of June 30, 2016 and December 31, 2015 (in thousands):

	June 30, 2016
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
Short-term:
Investment securities	$	44,780	$	51	$	(3	)	$	44,828
Commercial paper	2,883		1		—			2,884
Long-term:
Investment securities	50,250		284		(7		)	50,527
Total	$	97,913	$	336	$	(10	)	$	98,239

	December 31, 2015
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
Short-term:
Investment securities	$	16,908	$	—	$	(13	)	$	16,895
Long-term:
Investment securities	80,172		2		(291		)	79,883
Total	$	97,080	$	2	$	(304	)	$	96,778

Fair Value Measurements

The Company's financial assets and liabilities are measured at fair value, which is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). The three levels of inputs used to measure fair value are as follows:

▪ 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

This hierarchy requires the Company to use observable market data, when available, and to minimize the use of unobservable inputs when determining fair value. The Company measures its cash equivalents and short-term and long-term investments at fair value. The Company classifies its cash equivalents and restricted cash within Level 1 because the Company values these investments using quoted market prices. The fair value of the Company's Level 1 financial assets is based on quoted market prices of the identical underlying security. The Company classifies short-term and long-term investments within Level 2 because unadjusted quoted prices for identical or similar assets in markets are not active. The Company does not have any assets or liabilities classified as Level 3 financial assets.  

The following tables set forth the fair value of the Company’s financial assets measured at fair value on a recurring basis as of June 30, 2016 and December 31, 2015 based on the three-tier value hierarchy (in thousands):

	June 30, 2016
	Level 1		Level 2		Level 3		Total
Cash equivalents:
Money market funds	$	130,644	$	—	$	—	$	130,644
Commercial paper	—		2,884		—		2,884
Short-term investments:
Certificates of deposit	35,000		—		—		35,000
Investment securities	—		44,828		—		44,828
Restricted cash:
Certificate of deposit	5,000		—		—		5,000
Long-term:
Investment securities	—		50,527		—		50,527
Total	$	170,644	$	98,239	$	—	$	268,883

	December 31, 2015
	Level 1		Level 2		Level 3		Total
Cash equivalents:
Money market funds	$	267,300	$	—	$	—	$	267,300
Short-term investments:
Certificates of deposit	35,000		—		—		35,000
Investment securities	—		16,895		—		16,895
Restricted cash:
Certificate of deposit	5,000		—		—		5,000
Long-term:
Investment securities	—		79,883		—		79,883
Total	$	307,300	$	96,778	$	—	$	404,078

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Intangible Assets and Goodwill

6 Months Ended

Jun. 30, 2016

Goodwill and Intangible Assets Disclosure [Abstract]

Intangible Assets and Goodwill

Intangible Assets and Goodwill

The following table summarizes intangible assets as of June 30, 2016 and December 31, 2015 (in thousands): 

	Weighted - Average Amortization Period (Years)	June 30, 2016
		Gross Carrying Amount		Accumulated Amortization			Net Book Value
Trademarks	5	$	1,900	$	(1,109	)	$	791
Customer relationships	5	1,300		(758		)	542
Non-compete agreements	3 - 5	100		(97		)	3
Other intangibles	3	373		(326		)	47
Domain names	5	2,687		(2,685		)	2
Total		$	6,360	$	(4,975	)	$	1,385

	Weighted-Average	December 31, 2015
	Amortization Period (Years)	Gross Carrying Amount		Accumulated Amortization			Net Book Value
Trademarks	5	$	1,900	$	(918	)	$	982
Customer relationships	5	1,300		(628		)	672
Non-compete agreements	3 - 5	100		(81		)	19
Other intangibles	3	373		(270		)	103
Domain names	5	2,687		(2,685		)	2
Total		$	6,360	$	(4,582	)	$	1,778

Amortization expense related to intangible assets was $0.2 million for the three months ended June 30, 2016 and 2015 and $0.4 million and $0.5 million for the six months ended June 30, 2016 and 2015, respectively.

Goodwill as of June 30, 2016 was $1.9 million, unchanged from December 31, 2015.

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Property and Equipment, net

6 Months Ended

Jun. 30, 2016

Property, Plant and Equipment [Abstract]

Property and Equipment, net

Property and Equipment, net

The following table summarizes property and equipment, net as of June 30, 2016 and December 31, 2015 (in thousands): 

	June 30, 2016			December 31, 2015
Furniture and computer equipment	$	107,449		$	68,416
Site and software development costs	60,968			50,907
Leasehold improvements	49,733			29,315
Construction in progress	14,492			27,563
Building	29,856			—
	262,498			176,201
Less accumulated depreciation and amortization	(83,356		)	(63,876		)
Property and equipment, net	$	179,142		$	112,325

Property and equipment depreciation and amortization expense was $12.4 million and $7.2 million for the three months ended June 30, 2016 and 2015, respectively, and $22.7 million and $13.7 million for the six months ended June 30, 2016 and 2015, respectively.

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Commitments and Contingencies

6 Months Ended

Jun. 30, 2016

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Commitments and Contingencies

Leases

The Company leases office and warehouse spaces under non-cancelable leases. These leases expire at various dates through 2027 and include discounted rental periods and fixed escalation clauses, which are amortized straight-line over the terms of the lease. Rent expense under operating leases was $7.9 million and $4.6 million in the three months ended June 30, 2016 and 2015, respectively, and $14.8 million and $8.7 million in the six months ended June 30, 2016 and 2015, respectively. The Company has issued letters of credit for approximately $10.4 million and $5.9 million as security for these lease agreements as of June 30, 2016 and December 31, 2015, respectively. The Company has entered into additional leases throughout the United States ("U.S.") and Europe subsequent to December 31, 2015, where the future minimum rental commitments under non-cancelable leases with initial or remaining terms in excess of one year are $359.1 million in the aggregate.

The Company establishes assets and liabilities for the estimated construction costs incurred under lease arrangements where the Company is considered the owner for accounting purposes only, or build-to-suit leases, to the extent the Company is involved in the construction of structural improvements or takes construction risk prior to commencement of a lease. Upon occupancy of facilities under build-to-suit leases, the Company assesses whether these arrangements qualify for sales recognition under the sale-leaseback accounting guidance. If the Company continues to be the deemed owner, the facilities are accounted for as financing leases.

The construction of one warehouse lease arrangement was completed during the three months ended June 30, 2016, and because the Company concluded it had a letter of credit of $1.2 million, the Company did not meet the sale-leaseback criteria for derecognition of the building asset and liability. Therefore, the lease is accounted for as a financing obligation and is recorded in "Lease financing obligation" in the Company’s unaudited consolidated and condensed balance sheets. The monthly rent payments made to the lessor under the lease agreement are recorded in the Company’s financial statements as land lease expense and principal and interest on the financing obligation. Interest expense on the lease financing obligation reflects the portion of the Company's monthly lease payments that is allocated to interest expense. For the three and six months ended June 30, 2016, land lease expense and interest expense on lease financing obligation was not material. As of June 30, 2016, future minimum commitments related to the financing obligation were $2.7 million and $11.2 million for principal and interest, respectively, through June 30, 2021.

Collection of Sales or Other Similar Taxes

 Based on the location of the Company’s current operations, it collects and remits sales tax in Kentucky, Massachusetts, New York, Utah, California, Illinois, Texas, New Jersey, and North Carolina. The Company does not currently collect sales or other similar taxes for the sale of goods in states where no obligation to collect these taxes is required under applicable law. Several states have presented the Company with assessments, alleging that it is required to collect and remit sales or other similar taxes. The aggregate amount of claims from these states, not including taxes allegedly owed for periods subsequent to such assessments or interest and penalties after the date the Company last received such assessments, is approximately $28.1 million. The Company does not believe that it was obligated to collect and remit such taxes, and intends to vigorously defend its position. At this time, the Company believes a loss is not probable and therefore has not recorded a liability; however, no assurance can be given as to the outcome of these assessments.

Legal Matters

 On September 2, 2015, a putative class action complaint was filed against the Company in the U.S. District Court for the Southern District of New York (Dingee v. Wayfair Inc., et al., Case No. 1:15-cv-06941) by an individual on behalf of himself and on behalf of all other similarly situated individuals, under sections 10(b) and 20(a) of the Exchange Act related to a drop in stock price that had followed a report issued by Citron Research. The Company moved to dismiss all counts in February 2016. On May 24, 2016, the court granted the Company's motion to dismiss the Dingee complaint in its entirety, with prejudice.

On February 2, 2016, a putative class action complaint was filed against the Company in the U.S. District Court for the Central District of California (Carson, et al., v. Wayfair Inc., Case No. 2:16-cv-00716) by two individuals on behalf of themselves and on behalf of all other similarly situated individuals (collectively, the "Carson Plaintiffs"). The complaint alleged that Wayfair engaged in a deceptive marketing campaign in which the Company advertised certain “original” or “regular” retail prices, which the Carson Plaintiffs alleged were false. In May 2016, the Carson Plaintiffs voluntarily withdrew this action without prejudice.

The Company is subject to legal proceedings and claims in the ordinary course of business. However, the Company is not currently aware of any legal proceedings or claims that it believes will have, individually or in the aggregate, a material adverse effect on the Company’s financial position, results of operations or cash flows.

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Equity-Based Compensation

6 Months Ended

Jun. 30, 2016

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Equity-Based Compensation

Equity-Based Compensation

In 2010, the Company established an equity incentive plan and, in 2011, the plan was amended and restated as the Wayfair LLC Amended and Restated 2010 Common Unit Plan (the “2010 Plan”). The 2010 Plan was administered by the board of directors of Wayfair LLC and provided for the issuance of common option units, restricted common units (all common units), and deferred units, which currently represent Class A or Class B common stock of the Company.

In connection with the IPO, the board of directors of the Company adopted the 2014 Incentive Award Plan ("2014 Plan") to grant cash and equity incentive awards to eligible service providers in order to attract, motivate and retain the talent for which the Company competes. The 2014 Plan is administered by the board of directors of the Company with respect to awards to non-employee directors and by the compensation committee with respect to other participants and provides for the issuance of stock options, SARs, restricted stock, RSUs, performance shares, stock payments, cash payments, dividend awards and other incentives. The 2014 Plan authorizes up to 8,603,066 shares of Class A common stock to be issued, of which RSUs for 5,208,379 shares had been issued as of June 30, 2016. Shares or RSUs forfeited, withheld for minimum statutory tax obligations, and unexercised stock option lapses from the 2010 and 2014 Plans are available for grants of awards under the 2014 Plan. In addition, on the first day of each calendar year beginning January 1, 2016 and ending on and including January 1, 2024, the shares available for future grant are increased in accordance with the 2014 Plan.

The following table presents activity relating to stock options for the six months ended June 30, 2016: 

	Shares		Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term (Years)
Outstanding at December 31, 2015	279,591		$	2.98	5.5
Options exercised	(43,694	)	$	2.97
Options forfeited/canceled	(176	)	$	3.42
Outstanding at June 30, 2016	235,721		$	2.98	5.0
Exercisable at June 30, 2016	235,706		$	2.98	5.0
Expected to vest at June 30, 2016	15		$	3.42	5.0

Intrinsic value of stock options exercised was $1.6 million for the six months ended June 30, 2016. Aggregate intrinsic value of stock options outstanding and currently exercisable is $8.5 million. Unrecognized equity based compensation expense related to stock options expected to vest over time is less than $0.1 million with a weighted average remaining vesting term of less than 0.1 years at June 30, 2016.

The following table presents activity relating to restricted common stock for the six months ended June 30, 2016: 

	Shares		Weighted- Average Grant Date Fair Value
Outstanding at December 31, 2015	1,993		$	4.75
Restricted stock vested	(1,993	)	$	4.75
Unvested at June 30, 2016	—		$	—
Expected to vest at June 30, 2016	—		$	—

The intrinsic value of restricted common stock vested was less than $0.1 million for the six months ended June 30, 2016. All restricted common stock shares were fully vested at June 30, 2016. 

The following table presents activity relating to RSUs for the six months ended June 30, 2016: 

	Shares		Weighted- Average Grant Date Fair Value
Outstanding at December 31, 2015	5,607,867		$	28.30
RSUs granted	2,110,220		$	39.56
RSUs vested	(854,800	)	$	21.98
RSUs forfeited/canceled	(250,938	)	$	31.19
Outstanding at June 30, 2016	6,612,349		$	32.59
Expected to vest at June 30, 2016	4,897,025		$	33.04

The intrinsic value of RSUs vested was $35.2 million for the six months ended June 30, 2016. Aggregate intrinsic value of RSUs outstanding is $257.9 million as of June 30, 2016. Unrecognized equity based compensation expense related to RSUs expected to vest over time is $131.8 million with a weighted average remaining vesting term of 1.7 years at June 30, 2016.

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Segment and Geographic Information

6 Months Ended

Jun. 30, 2016

Segment Reporting [Abstract]

Segment and Geographic Information

Segment and Geographic Information

Operating segments are defined as components of an enterprise for which separate financial information is available that is evaluated on a regular basis by the Chief Operating Decision Maker (“CODM”) in deciding how to allocate resources to an individual segment and in assessing performance. The Company’s CODM is its Chief Executive Officer. 

The CODM reviews financial information presented on a consolidated basis for purposes of making operating decisions, allocating resources and evaluating financial performance. As a result, the Company identified that it has one operating and reportable segment. 

The following table presents the activity related to the Company’s net revenue from Direct Retail sales derived through the Company’s sites and Other sales derived through sites operated by third parties and fees from third-party advertising distribution providers (in thousands):

	Three months ended June 30,				Six months ended June 30,
	2016		2015		2016		2015
Net revenue
Direct Retail	$	755,657	$	440,297	$	1,467,503	$	809,694
Other	31,271		51,455		66,773		106,429
Net revenue	$	786,928	$	491,752	$	1,534,276	$	916,123

Revenue from external customers for each group of similar products and services are not reported to the CODM. Separate identification of this information for purposes of segment disclosure is impractical, as it is not readily available and the cost to develop it would be excessive. No individual country outside of the United States provided greater than 10% of total revenue.

The following table presents revenue and long-lived assets by geographic area (in thousands):

	Three months ended June 30,				Six months ended June 30,
	2016		2015		2016		2015
Geographic net revenue:
United States	$	732,673	$	464,667	$	1,438,594	$	865,244
International (1)	54,255		27,085		95,682		50,879
Total	$	786,928	$	491,752	$	1,534,276	$	916,123

(1) In the three and six months ended June 30, 2015, international net revenue included $2.3 million and $4.7 million, respectively, from our Australian business, which we sold in July 2015.  

	June 30, 2016		December 31, 2015
Geographic long-lived assets:
United States	$	174,070	$	110,042
International	5,072		2,283
Total	$	179,142	$	112,325

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Income Taxes

6 Months Ended

Jun. 30, 2016

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

Income tax expense was $0.3 million and less than $0.1 million for the three months ended June 30, 2016 and 2015, respectively, and $0.6 million and $0.1 million for the six months ended June 30, 2016 and 2015, respectively. The income tax expense recorded in the three and six months ended June 30, 2016 and 2015 is primarily related to various foreign income tax assessments, state income taxes and to a lesser extent the amortization of goodwill for tax purposes for which there is no corresponding book deduction.

Deferred income taxes reflect the impact of temporary differences between the amounts of assets and liabilities for financial reporting purposes and such amounts as measured by tax laws. The Company has deferred tax assets related to its net operating loss carryforwards accumulated since the fourth quarter of 2014 and related to net operating loss carryforwards of certain of its foreign subsidiaries. A valuation allowance against net deferred tax assets is required if, based upon the available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. The Company reassesses the valuation allowance on a quarterly basis and has provided a valuation allowance for the full amount of its net deferred tax assets.

The Company had no unrecognized tax benefits as of June 30, 2016 and December 31, 2015. The Company’s policy is to recognize interest and penalties related to unrecognized tax benefits as a component of income tax expense.

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Stockholders' Equity

6 Months Ended

Jun. 30, 2016

Equity [Abstract]

Stockholders' Equity

Stockholders’ Equity

Preferred Stock

The Company authorized 10,000,000 shares of undesignated preferred stock, $0.001 par value per share, for future issuance. As of June 30, 2016, the Company had no shares of undesignated preferred stock issued or outstanding.

Common Stock

The Company authorized 500,000,000 shares of Class A common stock, $0.001 par value per share, and 164,000,000 shares of Class B common stock, $0.001 par value per share, of which 48,105,571 and 45,814,237 shares of Class A common stock and 36,800,012 and 38,496,562 shares of Class B common stock were outstanding as of June 30, 2016 and December 31, 2015, respectively. The rights of the holders of Class A common stock and Class B common stock are identical, except with respect to voting and conversion rights. Each share of Class A common stock is entitled to one vote per share and each share of Class B common stock is entitled to ten votes per share. The Class B common stock also has approval rights over certain corporate actions. Each share of Class B common stock may be converted into one share of Class A common stock at the option of its holder and will be automatically converted into one share of Class A common stock upon transfer thereof, subject to certain exceptions. In addition, upon the date on which the outstanding shares of Class B common stock represent less than 10% of the aggregate number of shares of the then outstanding Class A common stock and Class B common stock, or in the event of the affirmative vote or written consent of holders of at least 66 2/3% of the outstanding shares of Class B common stock, all outstanding shares of Class B common stock shall convert automatically into Class A common stock. Subject to preferences that may apply to any shares of preferred stock outstanding at the time, the holders of common stock are entitled to receive dividends out of funds legally available if the Board, in its discretion, determines to issue dividends and then only at the times and in the amounts that the Board may determine. Since the IPO through June 30, 2016, 33,853,994 shares of Class B common stock were converted to Class A common stock.

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Credit Agreement

6 Months Ended

Jun. 30, 2016

Debt Disclosure [Abstract]

Credit Agreement

Credit Agreement

The Company has a credit agreement with Bank of America, which was renewed on July 31, 2016. The credit agreement provides the Company with a $20.0 million revolving line of credit to support direct borrowings and letters of credit, provided that a maximum of $5.0 million may be applied to direct borrowings under the revolving line of credit, plus an additional $45.0 million credit card program, for a maximum aggregate commitment of $65.0 million. The credit agreement is renewable on an annual basis and, if not renewed, will expire on July 31, 2017. The renewed credit agreement is on substantially the same terms and conditions as the prior credit agreement. Subject to the terms and conditions of the credit agreement, advances under the line of credit, if any, will bear interest at the LIBOR rate, plus 1.75%. Under the credit agreement, the Company is also required to maintain certain covenants, including debt service coverage, tangible net worth and unencumbered liquid assets, with which the Company was compliant at June 30, 2016 and December 31, 2015. The Company did not borrow any amounts under the credit agreement during the three and six months ended June 30, 2016 and the year ended December 31, 2015.

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Net Loss per Share

6 Months Ended

Jun. 30, 2016

Earnings Per Share [Abstract]

Net Loss per Share

Net Loss per Share

Basic and diluted net loss per share is presented using the two class method required for participating securities. Class A and Class B common stock are the only outstanding equity in the Company since our IPO in October 2014. For additional information on the rights of the holders of Class A and Class B common stock, see Note 10, Stockholders' Equity, in the Notes to the Unaudited Consolidated and Condensed Financial Statements included in Part I, Item 1, Unaudited Consolidated and Condensed Financial Statements, of this Quarterly Report on Form 10-Q.

Basic net loss per share is computed using the weighted-average number of shares of common stock outstanding during the period. Diluted net loss per share is computed using the weighted-average number of shares of common stock and, if dilutive, common stock equivalents outstanding during the period. The Company's common stock equivalents consist of shares issuable upon the release of restricted stock units, and to a lesser extent, the incremental shares of common stock issuable upon the exercise of stock options and unvested restricted stock. The dilutive effect of these common stock equivalents is reflected in diluted earnings per share by application of the treasury stock method. The Company's basic and diluted net loss per share are the same because the Company has generated net loss and common stock equivalents are excluded from diluted net loss per share because they have an antidilutive impact.

The Company allocates undistributed earnings between the classes on a one-to-one basis when computing net loss per share. As a result, basic and diluted net loss per Class A and Class B shares are equivalent.

The following table presents the calculation of basic and diluted net loss per share (in thousands, except per share data): 

	Three months ended June 30,						Six months ended June 30,
	2016			2015			2016			2015
Net loss	$	(48,274	)	$	(19,334	)	$	(89,479	)	$	(46,470	)
Weighted average common shares used for basic and diluted net loss per share computation	84,786			83,603			84,615			83,407
Net loss per share:
Basic and Diluted	$	(0.57	)	$	(0.23	)	$	(1.06	)	$	(0.56	)

The following have been excluded from the computation of basic and diluted net loss per share as their effect would have been antidilutive:

	Three and six months ended June 30,
	2016	2015
Stock options	235,721	337,148
Restricted stock	—	12,563
Restricted stock units	6,612,349	4,841,186
Total	6,848,070	5,190,897

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Recent Accounting Pronouncements

6 Months Ended

Jun. 30, 2016

Accounting Changes and Error Corrections [Abstract]

Recent Accounting Pronouncements

Recent Accounting Pronouncements

Stock Compensation

In March 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2016-09, "Compensation - Stock Compensation" ("ASU 2016-09"). This ASU revises the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and an option to recognized gross stock compensation expense with actual forfeitures recognized as they occur, as well as certain classifications on the statement of cash flows. This ASU is effective for annual reporting periods beginning after December 15, 2016 and early adoption is permitted. Management is currently evaluating the impact of the adoption of this ASU on the Company's consolidated financial statements.

Leases

In February 2016, the FASB issued ASU No. 2016-02, "Leases" ("ASU 2016-02"). This ASU revises the accounting related to leases by requiring lessees to recognize a lease liability and a right-of-use asset for all leases. The new lease guidance also simplifies the accounting for sale and leaseback transactions. This ASU is effective for annual reporting periods beginning after December 15, 2018 and early adoption is permitted. Management is currently evaluating the impact of the adoption of this ASU on the Company’s consolidated financial statements.

Revenue Recognition

In May 2014, the FASB issued ASU No. 2014-09, "Revenue from Contracts with Customers" ("ASU 2014-09"). This ASU is a comprehensive new revenue recognition model that requires a company to recognize revenue to depict the transfer of goods or services to a customer at an amount that reflects the consideration it expects to receive in exchange for those goods or services. This ASU was originally effective for annual reporting periods beginning after December 15, 2016 and early adoption was not permitted.

In August 2015, the FASB issued ASU No. 2015-14, "Revenue from Contracts with Customers – Deferral of the Effective Date" (ASU-2015-14), which defers the effective date of ASU 2014-09 for one year and permits early adoption as early as the original effective date of ASU 2014-09. Accordingly, ASU 2014-09 is now effective for annual reporting periods beginning after December 15, 2017 and early adoption is permitted only as of annual reporting periods beginning after December 31, 2016, including interim reporting periods within that reporting year.

In March 2016, the FASB issued ASU No. 2016-08, "Revenue from Contracts with Customers - Principal versus Agent Considerations" ("ASU 2016-08"). This ASU clarifies the implementation guidance for principal versus agent considerations in ASU 2014-09. This ASU is effective at the same period as ASU 2015-14 and ASU 2014-09.

Management is currently evaluating when to adopt the revenue recognition accounting pronouncements, which transition approach to use, and the impact of the adoption of this ASU on the Company’s consolidated financial statements.

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Summary of Significant Accounting Policies (Policies)

6 Months Ended

Jun. 30, 2016

Accounting Policies [Abstract]

Recent Accounting Pronouncements

Stock Compensation

In March 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2016-09, "Compensation - Stock Compensation" ("ASU 2016-09"). This ASU revises the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and an option to recognized gross stock compensation expense with actual forfeitures recognized as they occur, as well as certain classifications on the statement of cash flows. This ASU is effective for annual reporting periods beginning after December 15, 2016 and early adoption is permitted. Management is currently evaluating the impact of the adoption of this ASU on the Company's consolidated financial statements.

Leases

In February 2016, the FASB issued ASU No. 2016-02, "Leases" ("ASU 2016-02"). This ASU revises the accounting related to leases by requiring lessees to recognize a lease liability and a right-of-use asset for all leases. The new lease guidance also simplifies the accounting for sale and leaseback transactions. This ASU is effective for annual reporting periods beginning after December 15, 2018 and early adoption is permitted. Management is currently evaluating the impact of the adoption of this ASU on the Company’s consolidated financial statements.

Revenue Recognition

In May 2014, the FASB issued ASU No. 2014-09, "Revenue from Contracts with Customers" ("ASU 2014-09"). This ASU is a comprehensive new revenue recognition model that requires a company to recognize revenue to depict the transfer of goods or services to a customer at an amount that reflects the consideration it expects to receive in exchange for those goods or services. This ASU was originally effective for annual reporting periods beginning after December 15, 2016 and early adoption was not permitted.

In August 2015, the FASB issued ASU No. 2015-14, "Revenue from Contracts with Customers – Deferral of the Effective Date" (ASU-2015-14), which defers the effective date of ASU 2014-09 for one year and permits early adoption as early as the original effective date of ASU 2014-09. Accordingly, ASU 2014-09 is now effective for annual reporting periods beginning after December 15, 2017 and early adoption is permitted only as of annual reporting periods beginning after December 31, 2016, including interim reporting periods within that reporting year.

In March 2016, the FASB issued ASU No. 2016-08, "Revenue from Contracts with Customers - Principal versus Agent Considerations" ("ASU 2016-08"). This ASU clarifies the implementation guidance for principal versus agent considerations in ASU 2014-09. This ASU is effective at the same period as ASU 2015-14 and ASU 2014-09.

Management is currently evaluating when to adopt the revenue recognition accounting pronouncements, which transition approach to use, and the impact of the adoption of this ASU on the Company’s consolidated financial statements.

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Summary of Significant Accounting Policies (Tables)

6 Months Ended

Jun. 30, 2016

Accounting Policies [Abstract]

Schedule of Estimated Useful Lives of Property and Equipment

Depreciation and amortization on property and equipment is calculated on the straight-line method over the estimated useful lives of the assets as follows:

Class	Range of Life (In Years)
Furniture and computer equipment	3 to 7
Site and software development costs	2
Leasehold improvements	Lesser of useful life or lease term
Building	30

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Marketable Securities and Fair Value Measurements (Tables)

6 Months Ended

Jun. 30, 2016

Fair Value Disclosures [Abstract]

Schedule of Marketable Securities

The following tables present details of the Company’s marketable securities as of June 30, 2016 and December 31, 2015 (in thousands):

	June 30, 2016
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
Short-term:
Investment securities	$	44,780	$	51	$	(3	)	$	44,828
Commercial paper	2,883		1		—			2,884
Long-term:
Investment securities	50,250		284		(7		)	50,527
Total	$	97,913	$	336	$	(10	)	$	98,239

	December 31, 2015
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
Short-term:
Investment securities	$	16,908	$	—	$	(13	)	$	16,895
Long-term:
Investment securities	80,172		2		(291		)	79,883
Total	$	97,080	$	2	$	(304	)	$	96,778

Schedule of the Fair Value of the Company's Financial Assets Measured at Fair Value on a Recurring Basis Based on the Three-Tier Value Hierarchy

The following tables set forth the fair value of the Company’s financial assets measured at fair value on a recurring basis as of June 30, 2016 and December 31, 2015 based on the three-tier value hierarchy (in thousands):

	June 30, 2016
	Level 1		Level 2		Level 3		Total
Cash equivalents:
Money market funds	$	130,644	$	—	$	—	$	130,644
Commercial paper	—		2,884		—		2,884
Short-term investments:
Certificates of deposit	35,000		—		—		35,000
Investment securities	—		44,828		—		44,828
Restricted cash:
Certificate of deposit	5,000		—		—		5,000
Long-term:
Investment securities	—		50,527		—		50,527
Total	$	170,644	$	98,239	$	—	$	268,883

	December 31, 2015
	Level 1		Level 2		Level 3		Total
Cash equivalents:
Money market funds	$	267,300	$	—	$	—	$	267,300
Short-term investments:
Certificates of deposit	35,000		—		—		35,000
Investment securities	—		16,895		—		16,895
Restricted cash:
Certificate of deposit	5,000		—		—		5,000
Long-term:
Investment securities	—		79,883		—		79,883
Total	$	307,300	$	96,778	$	—	$	404,078

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Intangible Assets and Goodwill (Tables)

6 Months Ended

Jun. 30, 2016

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of Intangible Assets

The following table summarizes intangible assets as of June 30, 2016 and December 31, 2015 (in thousands): 

	Weighted - Average Amortization Period (Years)	June 30, 2016
		Gross Carrying Amount		Accumulated Amortization			Net Book Value
Trademarks	5	$	1,900	$	(1,109	)	$	791
Customer relationships	5	1,300		(758		)	542
Non-compete agreements	3 - 5	100		(97		)	3
Other intangibles	3	373		(326		)	47
Domain names	5	2,687		(2,685		)	2
Total		$	6,360	$	(4,975	)	$	1,385

	Weighted-Average	December 31, 2015
	Amortization Period (Years)	Gross Carrying Amount		Accumulated Amortization			Net Book Value
Trademarks	5	$	1,900	$	(918	)	$	982
Customer relationships	5	1,300		(628		)	672
Non-compete agreements	3 - 5	100		(81		)	19
Other intangibles	3	373		(270		)	103
Domain names	5	2,687		(2,685		)	2
Total		$	6,360	$	(4,582	)	$	1,778

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Property and Equipment, net (Tables)

6 Months Ended

Jun. 30, 2016

Property, Plant and Equipment [Abstract]

Schedule of Property and Equipment, Net

The following table summarizes property and equipment, net as of June 30, 2016 and December 31, 2015 (in thousands): 

	June 30, 2016			December 31, 2015
Furniture and computer equipment	$	107,449		$	68,416
Site and software development costs	60,968			50,907
Leasehold improvements	49,733			29,315
Construction in progress	14,492			27,563
Building	29,856			—
	262,498			176,201
Less accumulated depreciation and amortization	(83,356		)	(63,876		)
Property and equipment, net	$	179,142		$	112,325

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Equity-Based Compensation (Tables)

6 Months Ended

Jun. 30, 2016

Equity based compensation

Summary of Activity Relating to Stock Options

The following table presents activity relating to stock options for the six months ended June 30, 2016: 

	Shares		Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term (Years)
Outstanding at December 31, 2015	279,591		$	2.98	5.5
Options exercised	(43,694	)	$	2.97
Options forfeited/canceled	(176	)	$	3.42
Outstanding at June 30, 2016	235,721		$	2.98	5.0
Exercisable at June 30, 2016	235,706		$	2.98	5.0
Expected to vest at June 30, 2016	15		$	3.42	5.0

Restricted common units

Equity based compensation

Summary of Activity Relating to Restricted Stock

The following table presents activity relating to restricted common stock for the six months ended June 30, 2016: 

	Shares		Weighted- Average Grant Date Fair Value
Outstanding at December 31, 2015	1,993		$	4.75
Restricted stock vested	(1,993	)	$	4.75
Unvested at June 30, 2016	—		$	—
Expected to vest at June 30, 2016	—		$	—

Restricted stock units

Equity based compensation

Summary of Activity Relating to Restricted Stock

The following table presents activity relating to RSUs for the six months ended June 30, 2016: 

	Shares		Weighted- Average Grant Date Fair Value
Outstanding at December 31, 2015	5,607,867		$	28.30
RSUs granted	2,110,220		$	39.56
RSUs vested	(854,800	)	$	21.98
RSUs forfeited/canceled	(250,938	)	$	31.19
Outstanding at June 30, 2016	6,612,349		$	32.59
Expected to vest at June 30, 2016	4,897,025		$	33.04

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Segment and Geographic Information (Tables)

6 Months Ended

Jun. 30, 2016

Segment Reporting [Abstract]

Activity Related to Net Revenue

The following table presents the activity related to the Company’s net revenue from Direct Retail sales derived through the Company’s sites and Other sales derived through sites operated by third parties and fees from third-party advertising distribution providers (in thousands):

	Three months ended June 30,				Six months ended June 30,
	2016		2015		2016		2015
Net revenue
Direct Retail	$	755,657	$	440,297	$	1,467,503	$	809,694
Other	31,271		51,455		66,773		106,429
Net revenue	$	786,928	$	491,752	$	1,534,276	$	916,123

Schedule of Net Revenue and Long-Lived Assets by Geographic Area

The following table presents revenue and long-lived assets by geographic area (in thousands):

	Three months ended June 30,				Six months ended June 30,
	2016		2015		2016		2015
Geographic net revenue:
United States	$	732,673	$	464,667	$	1,438,594	$	865,244
International (1)	54,255		27,085		95,682		50,879
Total	$	786,928	$	491,752	$	1,534,276	$	916,123

(1) In the three and six months ended June 30, 2015, international net revenue included $2.3 million and $4.7 million, respectively, from our Australian business, which we sold in July 2015.  

	June 30, 2016		December 31, 2015
Geographic long-lived assets:
United States	$	174,070	$	110,042
International	5,072		2,283
Total	$	179,142	$	112,325

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Net Loss per Share (Tables)

6 Months Ended

Jun. 30, 2016

Earnings Per Share [Abstract]

Schedule of Calculation of Basic and Diluted Net Loss Per Share

The following table presents the calculation of basic and diluted net loss per share (in thousands, except per share data): 

	Three months ended June 30,						Six months ended June 30,
	2016			2015			2016			2015
Net loss	$	(48,274	)	$	(19,334	)	$	(89,479	)	$	(46,470	)
Weighted average common shares used for basic and diluted net loss per share computation	84,786			83,603			84,615			83,407
Net loss per share:
Basic and Diluted	$	(0.57	)	$	(0.23	)	$	(1.06	)	$	(0.56	)

Schedule of Computation of Basic and Diluted Net Loss Per Share Attributable to Common Stockholders as their Effect Would Have Been Antidilutive

The following have been excluded from the computation of basic and diluted net loss per share as their effect would have been antidilutive:

	Three and six months ended June 30,
	2016	2015
Stock options	235,721	337,148
Restricted stock	—	12,563
Restricted stock units	6,612,349	4,841,186
Total	6,848,070	5,190,897

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Basis of Presentation (Details) supplier in Thousands, product in Millions	6 Months Ended
	Jun. 30, 2016 brand product supplier
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Minimum number of products offered | product	7
Minimum number of suppliers providing products offered | supplier	7
Number of distinct brands | brand	5

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Summary of Significant Accounting Policies (Details)	6 Months Ended
	Jun. 30, 2016
Furniture and computer equipment | Minimum
Property and equipment, net
Useful life	3 years
Furniture and computer equipment | Maximum
Property and equipment, net
Useful life	7 years
Site and software development costs
Property and equipment, net
Useful life	2 years
Building
Property and equipment, net
Useful life	30 years

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Marketable Securities and Fair Value Measurements (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015	Dec. 31, 2015
Marketable securities and fair value measurements
Other than temporary impairment losses	$ 0	$ 0	$ 0	$ 0
Amortized Cost	97,913,000		97,913,000		$ 97,080,000
Gross Unrealized Gains	336,000		336,000		2,000
Gross Unrealized Losses	(10,000)		(10,000)		(304,000)
Estimated Fair Value	98,239,000		98,239,000		96,778,000
Investment securities
Marketable securities and fair value measurements
Amortized Cost	44,780,000		44,780,000		16,908,000
Gross Unrealized Gains	51,000		51,000		0
Gross Unrealized Losses	(3,000)		(3,000)		(13,000)
Estimated Fair Value	44,828,000		44,828,000		16,895,000
Commercial paper
Marketable securities and fair value measurements
Amortized Cost	2,883,000		2,883,000
Gross Unrealized Gains	1,000		1,000
Gross Unrealized Losses	0		0
Estimated Fair Value	2,884,000		2,884,000
Investment securities
Marketable securities and fair value measurements
Amortized Cost	50,250,000		50,250,000		80,172,000
Gross Unrealized Gains	284,000		284,000		2,000
Gross Unrealized Losses	(7,000)		(7,000)		(291,000)
Estimated Fair Value	$ 50,527,000		$ 50,527,000		$ 79,883,000
Minimum | Investment securities
Marketable securities and fair value measurements
Maturity period of marketable securities			1 year
Maximum | Investment securities
Marketable securities and fair value measurements
Maturity period of marketable securities			3 years

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Marketable Securities and Fair Value Measurements (Details 2) - Recurring - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
Marketable securities and fair value measurements
Total	$ 268,883	$ 404,078
Cash equivalents
Marketable securities and fair value measurements
Money market funds	130,644	267,300
Commercial paper	2,884
Investment securities
Marketable securities and fair value measurements
Certificates of deposit	35,000	35,000
Investment securities	44,828	16,895
Restricted cash
Marketable securities and fair value measurements
Certificates of deposit	5,000	5,000
Investment securities
Marketable securities and fair value measurements
Investment securities	50,527	79,883
Level 1
Marketable securities and fair value measurements
Total	170,644	307,300
Level 1 | Cash equivalents
Marketable securities and fair value measurements
Money market funds	130,644	267,300
Level 1 | Investment securities
Marketable securities and fair value measurements
Certificates of deposit	35,000	35,000
Level 1 | Restricted cash
Marketable securities and fair value measurements
Certificates of deposit	5,000	5,000
Level 2
Marketable securities and fair value measurements
Total	98,239	96,778
Level 2 | Cash equivalents
Marketable securities and fair value measurements
Commercial paper	2,884
Level 2 | Investment securities
Marketable securities and fair value measurements
Investment securities	44,828	16,895
Level 2 | Investment securities
Marketable securities and fair value measurements
Investment securities	$ 50,527	$ 79,883

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Intangible Assets and Goodwill (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015	Dec. 31, 2015
Intangible assets
Gross Carrying Amount	$ 6,360		$ 6,360		$ 6,360
Accumulated Amortization	(4,975)		(4,975)		(4,582)
Net Book Value	1,385		1,385		1,778
Amortization expense related to intangibles	200	$ 200	400	$ 500
Goodwill	1,900		$ 1,900		$ 1,900
Trademarks
Intangible assets
Weighted - Average Amortization Period (Years)			5 years		5 years
Gross Carrying Amount	1,900		$ 1,900		$ 1,900
Accumulated Amortization	(1,109)		(1,109)		(918)
Net Book Value	791		$ 791		$ 982
Customer relationships
Intangible assets
Weighted - Average Amortization Period (Years)			5 years		5 years
Gross Carrying Amount	1,300		$ 1,300		$ 1,300
Accumulated Amortization	(758)		(758)		(628)
Net Book Value	542		542		672
Non-compete agreements
Intangible assets
Gross Carrying Amount	100		100		100
Accumulated Amortization	(97)		(97)		(81)
Net Book Value	3		$ 3		$ 19
Non-compete agreements | Minimum
Intangible assets
Weighted - Average Amortization Period (Years)			3 years		3 years
Non-compete agreements | Maximum
Intangible assets
Weighted - Average Amortization Period (Years)			5 years		5 years
Other intangibles
Intangible assets
Weighted - Average Amortization Period (Years)			3 years		3 years
Gross Carrying Amount	373		$ 373		$ 373
Accumulated Amortization	(326)		(326)		(270)
Net Book Value	47		$ 47		$ 103
Domain names
Intangible assets
Weighted - Average Amortization Period (Years)			5 years		5 years
Gross Carrying Amount	2,687		$ 2,687		$ 2,687
Accumulated Amortization	(2,685)		(2,685)		(2,685)
Net Book Value	$ 2		$ 2		$ 2

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Property and Equipment, net (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015	Dec. 31, 2015
Property and equipment, net
Property and equipment, gross	$ 262,498		$ 262,498		$ 176,201
Less accumulated depreciation and amortization	(83,356)		(83,356)		(63,876)
Property and equipment, net	179,142		179,142		112,325
Depreciation and amortization	12,400	$ 7,200	22,700	$ 13,700
Furniture and computer equipment
Property and equipment, net
Property and equipment, gross	107,449		107,449		68,416
Site and software development costs
Property and equipment, net
Property and equipment, gross	60,968		60,968		50,907
Leasehold improvements
Property and equipment, net
Property and equipment, gross	49,733		49,733		29,315
Construction in progress
Property and equipment, net
Property and equipment, gross	14,492		14,492		27,563
Building
Property and equipment, net
Property and equipment, gross	$ 29,856		$ 29,856		$ 0

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Commitments and Contingencies (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015	Dec. 31, 2015
Property and Equipment, Net
Rental expense under operating leases	$ 7.9	$ 4.6	$ 14.8	$ 8.7
Letter of credit issued as security for lease agreements	10.4		10.4		$ 5.9
Future minimum lease payments for non-cancelable lease	359.1		359.1
Future minimum commitments related to financing obligation, principal	2.7		2.7
Future minimum commitments related to financing obligation, interest	11.2		11.2
Lease Financing Obligation
Property and Equipment, Net
Letter of credit issued as security for lease agreements	$ 1.2		$ 1.2

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Commitments and Contingencies (Details 2) $ in Millions	Jun. 30, 2016 USD ($)
Sales and other similar tax assessments
Contingencies
Aggregate amount of claims	$ 28.1

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Equity-Based Compensation (Details) - USD ($) $ / shares in Units, $ in Millions	6 Months Ended	12 Months Ended
	Jun. 30, 2016	Dec. 31, 2015
2014 Plan
Equity based compensation
Number of shares authorized	8,603,066
Restricted stock units
Equity based compensation
Shares issued under plan	2,110,220
Restricted stock units | 2014 Plan
Equity based compensation
Shares issued under plan	5,208,379
Stock options
Common stock options
Outstanding at the beginning of the period (in shares)	279,591
Options exercised (in shares)	(43,694)
Options forfeited/canceled (in shares)	(176)
Outstanding at the end of the period (in shares)	235,721	279,591
Exercisable at the end of the period (in shares)	235,706
Expected to vest at the end of the period (in shares)	15
Weighted- Average Exercise Price
Outstanding at the beginning of the period (in dollars per share)	$ 2.98
Exercised (in dollars per share)	2.97
Options forfeited/canceled (in dollars per share)	3.42
Outstanding at the end of the period (in dollars per share)	2.98	$ 2.98
Exercisable at the end of the period (in dollars per share)	2.98
Expected to vest at the end of the period (in dollars per share)	$ 3.42
Weighted- Average Remaining Contractual Term (Years)
Outstanding at the beginning of the period	4 years 355 days	5 years 6 months
Outstanding at the end of the period	4 years 355 days	5 years 6 months
Exercisable at the end of the period	4 years 355 days
Expected to vest at the end of the period	4 years 355 days
Additional disclosures
Aggregate intrinsic value of stock options exercised	$ 1.6
Aggregate intrinsic value of stock options outstanding and repurchased	8.5
Unrecognized share-based compensation (less than)	$ 0.1
Weighted average remaining vesting term for options expected to vest (less than)	31 days

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Equity-Based Compensation (Details 2) $ / shares in Units, $ in Millions	6 Months Ended
	Jun. 30, 2016 USD ($) $ / shares shares
Restricted stock
Restricted stock and units
Outstanding at the beginning of the period (in shares) | shares	1,993
Vested (in shares) | shares	(1,993)
Unvested at the end of the period (in shares) | shares	0
Expected to vest at the end of the period (in shares) | shares	0
Weighted-Average Grant-Date Fair Value
Outstanding at the beginning of the period (in dollars per share) | $ / shares	$ 4.75
Vested (in dollars per share) | $ / shares	4.75
Unvested at the end of the period (in dollars per share) | $ / shares	0.00
Expected to vest at the end of the period (in dollars per share) | $ / shares	$ 0.00
Additional information
Intrinsic value of stock vested and repurchased (less than) | $	$ 0.1
Restricted stock units
Restricted stock and units
Outstanding at the beginning of the period (in shares) | shares	5,607,867
Granted (in shares) | shares	2,110,220
Vested (in shares) | shares	(854,800)
Forfeited/canceled (in shares) | shares	(250,938)
Unvested at the end of the period (in shares) | shares	6,612,349
Expected to vest at the end of the period (in shares) | shares	4,897,025
Weighted-Average Grant-Date Fair Value
Outstanding at the beginning of the period (in dollars per share) | $ / shares	$ 28.30
Granted (in dollars per share) | $ / shares	39.56
Vested (in dollars per share) | $ / shares	21.98
Forfeited/canceled (in dollars per share) | $ / shares	31.19
Unvested at the end of the period (in dollars per share) | $ / shares	32.59
Expected to vest at the end of the period (in dollars per share) | $ / shares	$ 33.04
Additional information
Intrinsic value of stock vested | $	$ 35.2
Aggregate intrinsic value | $	257.9
Unrecognized share-based compensation | $	$ 131.8
Weighted average remaining vesting term for options expected to vest	1 year 252 days

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Segment and Geographic Information (Details) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2016 USD ($)	Jun. 30, 2015 USD ($)	Jun. 30, 2016 USD ($) segment	Jun. 30, 2015 USD ($)
Segment Reporting [Abstract]
Number of operating segments | segment			1
Number of reportable segments | segment			1
Net revenue
Direct Retail	$ 755,657	$ 440,297	$ 1,467,503	$ 809,694
Other	31,271	51,455	66,773	106,429
Net revenue	$ 786,928	$ 491,752	$ 1,534,276	$ 916,123

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Segment and Geographic Information (Details 2) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015	Dec. 31, 2015
Geographic net revenue:
Direct Retail	$ 755,657	$ 440,297	$ 1,467,503	$ 809,694
Other	31,271	51,455	66,773	106,429
Geographic net revenue	786,928	491,752	1,534,276	916,123
Geographic long-lived assets:
Geographic long-lived assets	179,142		179,142		$ 112,325
United States
Geographic net revenue:
Geographic net revenue	732,673	464,667	1,438,594	865,244
Geographic long-lived assets:
Geographic long-lived assets	174,070		174,070		110,042
International
Geographic net revenue:
Geographic net revenue	54,255	27,085	95,682	50,879
Geographic long-lived assets:
Geographic long-lived assets	$ 5,072		$ 5,072		$ 2,283
AUSTRALIA
Geographic net revenue:
Geographic net revenue		$ 2,300		$ 4,700

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Income Taxes (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015	Dec. 31, 2015
Income Tax Disclosure [Abstract]
Income tax expense	$ 321,000	$ 73,000	$ 638,000	$ 119,000
Unrecognized tax benefits	$ 0		$ 0		$ 0

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Stockholders' Equity (Details)	6 Months Ended	21 Months Ended
	Jun. 30, 2016 vote $ / shares shares	Jun. 30, 2016 $ / shares shares	Dec. 31, 2015 $ / shares shares
Stockholders' Equity
Preferred stock, shares authorized (in shares)	10,000,000	10,000,000
Preferred stock, par value (in dollars per share) | $ / shares	$ 0.001	$ 0.001
Preferred stock, shares issued (in shares)	0	0
Preferred stock, shares outstanding (in shares)	0	0
Class A common stock
Common stock
Common stock, shares authorized (in shares)	500,000,000	500,000,000	500,000,000
Common stock, par value (in dollars per share) | $ / shares	$ 0.001	$ 0.001	$ 0.001
Common stock, shares outstanding (in shares)	48,105,571	48,105,571	45,814,237
Number of votes each holder is entitled | vote	1
Class B common stock
Common stock
Common stock, shares authorized (in shares)	164,000,000	164,000,000	164,000,000
Common stock, par value (in dollars per share) | $ / shares	$ 0.001	$ 0.001	$ 0.001
Common stock, shares outstanding (in shares)	36,800,012	36,800,012	38,496,562
Number of votes each holder is entitled | vote	10
Conversion ratio following the completion of the offering	1
Conversion ratio upon transfer	1
Number of shares converted into Class A shares		33,853,994
Class B common stock | Minimum
Common stock
Percentage of outstanding shares of Class B common stock that shall convert automatically in the event of the affirmative vote or written consent of holders	66.67%
Class B common stock | Maximum
Common stock
Aggregate number of shares outstanding Class A common stock and Class B common stock that shall convert automatically (less than)	10.00%

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Credit Agreement (Details) - USD ($)	Jul. 31, 2016	Jun. 30, 2016	Dec. 31, 2015
Line of Credit Facility [Line Items]
Amount borrowed under the agreement		$ 0	$ 0
Line of credit | Subsequent Event
Line of Credit Facility [Line Items]
Maximum borrowing capacity	$ 65,000,000.0
Line of credit | Subsequent Event | LIBOR
Line of Credit Facility [Line Items]
Basis spread	1.75%
Line of credit | Subsequent Event | Revolving credit facility
Line of Credit Facility [Line Items]
Maximum borrowing capacity	$ 20,000,000.0
Line of credit | Subsequent Event | Credit card program
Line of Credit Facility [Line Items]
Maximum borrowing capacity	45,000,000.0
Direct Borrowings | Line of credit | Subsequent Event | Revolving credit facility
Line of Credit Facility [Line Items]
Maximum borrowing capacity	$ 5,000,000.0

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Net Loss per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Earnings Per Share [Abstract]
Net loss	$ (48,274)	$ (19,334)	$ (89,479)	$ (46,470)
Weighted average common shares used for basic and diluted net loss per share computation (in shares)	84,786	83,603	84,615	83,407
Net loss per share:
Basic and Diluted (in dollars per share)	$ (0.57)	$ (0.23)	$ (1.06)	$ (0.56)

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Net Loss per Share (Details 2) - shares	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Number of antidilutive shares excluded from computation of basic and diluted net loss per share	6,848,070	5,190,897	6,848,070	5,190,897
Stock options
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Number of antidilutive shares excluded from computation of basic and diluted net loss per share	235,721	337,148	235,721	337,148
Restricted stock
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Number of antidilutive shares excluded from computation of basic and diluted net loss per share	0	12,563	0	12,563
Restricted stock units
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Number of antidilutive shares excluded from computation of basic and diluted net loss per share	6,612,349	4,841,186	6,612,349	4,841,186